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WEBINAR | 23.06.2020 COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien Mit freundlicher Unterstützung von:

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Page 1: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

WEBINAR | 23.06.2020

COVID-19 & Geschäftschancen

im Medizinbereich in

Zentralasien

Mit freundlicher Unterstützung von:

Page 2: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

WEBINAR

AGENDA

• 13.00 – 13.10

Introduction & Overview

Lisa Kronreif, österr. Wirtschaftsdelegierte Stv.

AußenwirtschaftsCenter Almaty

• 13.10 – 13.25

Hospitals Programme in Kazakhstan

Business and consultancy opportunities

Svetlana Radchenko, Associate Director, Senior Banker,

Infrastructure – Eurasia

European Bank for Reconstruction & Development (EBRD)

• 13.25 – 13.35

New Reality – Transformation of Business and Opportunities

Nickolay Demidov, General Manager, IQVIA Russia/CIS

• 13.35 – 13.45

Panel Discussion with Austrian healthcare companies

Arminas Macevicius, Head of Asia-Caucasus Cluster, Takeda

Ralph Lugbauer, CEO, Askin

• 10.45 – 11.00

Q & A Session

WHAT‘S THE PLAN?

Page 3: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Entry and travel regulations

Regulations for freight transport of health products Support measures by the state for health industry Updated COVID-19 information

Kazakhstan From 20.06. flights to

and from Turkey,

China, South Korea,

Thailand, Georgia

and Japan

• Only drivers with a negative COVID test can enter.

Express tests at the border within 6-8 hrs.

• “Green corridor” for deliveries of food and

pharmaceuticals. Special regulation for health

products at border crossings that are otherwise

closed (Kolzhat (Almaty region), Bachty and

Maikaptschagai (Eastern Kazakhstan region).

• EEU export ban until 30.09. for disinfection products,

protective equipment (masks, respiratory masks, gloves,

disposable protective clothing and wipes, protective

glasses, etc.), wound closure materials and bandages,

propyl alcohol and isopropyl alcohol• Modernization plan of the health sector

LINK

Kyrgyzstan No international

flights

• Road transport: driver has to pass express test,

truck has to be disinfected regardless of type of

cargo

• Freight transport via air is allowed to land

• State improves healthcare facilities, buys express tests

and self-protection items via humanitarian aid

• Kyrgyzstan arranged a laboratory for PCR test in Bishkek

LINK

Tajikistan From 01.07. flights to

and from VAE and Uzbekistan

• Since 09.06.: foreign drivers and transports can

enter Tajikistan for 5 days with negative COVID test

• In case driver does not have negative COVID test:

express test at border and driver is quarantined at

border until test results available. If test is

negative: driver can travel to final destination

• 01.07.-01.09. exemption from customs duties for imports

of materials for the production of disinfectants,

medicine and protective clothing, equipment for medical

laboratories, testing equipment; exemption from

taxation also for medical institutions related to patient

treatment of COVID-19

• regulation of prices for medicines, medical supplies,

masks, antiseptics etc.

• soft loans to companies producing medical products

LINK

Uzbekistan From 01.07. flights to

and from Russia and Tajikistan

• Since 30.04.: mandatory COVID test for truck

drivers in special parking spots. Drivers required to

wear protective overalls, gloves, masks during their

stay in Uzbekistan. Foreign drivers obliged to leave

country within 10 days.

• At borders, truck drivers receive maps indicating

where they are allowed to stop.

• Reimbursement of 50% of transport costs for Uzbek

export companies for exports of certain medicines.

• Export ban of the following items for the production of

medical products from 01.05. until 31.12.2020: SMS non-

woven fabric, spunbond nonwoven fabric, non-woven fabric meltblown

LINK

* Turkmenistan – Officially there are no COVID-19 cases in the country.

Page 4: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

GET OUR

PUBLICATION!

BRANCHENPROFIL MEDIZINTECHNIK,

LABORBEDARF & PHARMAZEUTIK

Page 5: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

HEALTH

EXPENDITURE

GDP SHARE OF HEALTH EXPENDITURE IN KAZAKHSTAN

10,4% 10,4% 10,3%

8,9% 8,8% 8,8%

3,3% 3,5%3,9%

2016 2017 2018

Austria OECD Ø Kazakhstan

Source: OECD; Statistics committee of the Republic of Kazakhstan

Page 6: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

HOSPITAL BEDS

HOSPITAL BEDS PER THOUSAND INHABITANTS 2018

Source: OECD; Statistics committee of the Republic of Kazakhstan

7,6

5,0 6,7

Austria OECD Ø Kazakhstan

Page 7: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

IMPORTS

IMPORT PHARMACEUTICALS & MEDICAL DEVICES

IN MLN. USD

Source: OECD; Statistics committee of the Republic of Kazakhstan

1222

9611093

1177

185 144201 197

2015 2016 2017 2018

Pharmaceuticals CTN 30 Medical Equipment CTN 9018

Page 8: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

MEDTECH

COMPETITION

• State is the largest purchaser

• Imports of surgical devices

2016: 144 mln. USD (AT: 0,9 mln. USD)

2017: 201 mln. USD (AT: 1,8 mln. USD)

2018: 197 mln. USD (AT: 1,3 mln. USD)

2019: 222 mln. USD (AT: 0,7 mln. USD)

• High dependence on imports

Import shares of main supplier countries 2019:

Germany: 19%

China: 15%

USA: 13%

Japan: 9%

Russia: 8,5%

South Korea: 8%

-----

Austria: 0,3%

MEDTECH COMPETITION SITUATION

HIGH DEPENDENCE ON IMPORTS

Page 9: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

PHARMA

COMPETITION

• 10 of the 70 Kazakh pharmaceutical

manufacturers produce 90% of the meds

"Made in Kazakhstan“

• High dependence on imports

• Local production covers 14% of own needs

(mainly production of generics)

• Annual needs: approx. 1 bln. USD

• Mainly importing from Germany, France, Russia

• Purchase of local products shall be increased from

currently 30 to 73 bln. Tenge by 2024

(approx. 66 mln. EUR to 160 mln. EUR)

PHARMA COMPETITION SITUATION

HIGH DEPENDENCE ON IMPORTS

Page 10: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

TRENDS I

• In recent years: fundamental improvements in

healthcare

• Healthcare development program 2020-2025

• COVID-19 pandemic requires modernization: from

inpatient to outpatient treatment

• Early detection of diseases

• Prevention

• Pediatric modernization

• Training and advanced education of medical

personnel

TRENDS IN THE HEALTH SECTOR

Page 11: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

TRENDS II

• Promotion of local production of medical

equipment

• Incentives for foreign investors active in high-

tech medical technology

• Medical tourism

Incoming: artificial fertilization, dentistry

Outgoing: cardio- and neuro-surgery, organ

transplantation, oncology

• State finances complicated treatments abroad

(tumors, transplants, etc.)

TRENDS IN THE HEALTH SECTOR

Page 12: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

OPPORTUNITIES

& CHANCES

• Digitalization (e-learning, robotics, etc.)

• Big Data and Artificial Intelligence

• 3D-printing

• Predicting patient needs

• Improving research and drug/therapy development

• Hospital infrastructure/PPP projects

• Hospital consulting/management

OPPORTUNITIES FOR AUSTRIAN COMPANIES

Page 13: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

EVENTS

PARTICIPATE IN OUR NEXT EVENTS!

YOU CAN FIND ALL OUR EVENTS HERE:

wko.at/aussenwirtschaft/veranstaltungsprogramm

• RECORD-TRADE MISSION UZBEKISTAN

24. – 28. February 2020 | TASHKENT & SAMARKAND | UZBEKISTAN

• WEBINAR VIRTUELLER EXPORTTAG

WACHSTUMSREGION ZENTRALASIEN: CHANCEN & POTENTIALE

30. June 2020

• GROUP EXHIBITION MINING & METALS CENTRAL ASIA 2020

16. – 18. September 2020 | ALMATY | KAZAKHSTAN

LINK TO EVENT

• AUSTRIA CONNECT GUS 2020

16. – 18. September 2020 | MOSCOW | RUSSIA

LINK TO EVENT

• TRADE MISSION TAJIKISTAN & KYRGYZSTAN

19. – 23. October 2020 | DUSHANBE & BISHKEK

LINK TO EVENT

• WIRTSCHAFTSDELEGIERTEN-SPRECHTAG AFRIKA, NAHOST, GUS, TÜRKEI, IRAN 2020

09. – 20. November 2020 | ÖSTERREICH

LINK TO EVENT

• TRADE MISSION TURKMENISTAN

30. November – 04. December 2020 | ASHGABAT | TURKMENISTAN

LINK TO EVENT

Page 14: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

14

Page 15: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

SILK ROAD BIZ

AWARD 2021

ERZÄHLEN SIE UNS

VON IHREN ERFOLGSGESCHICHTEN!

Bewerben Sie sich für den Silk Road Biz Award 2021 des

AußenwirtschaftsCenter Almaty, mit dem wir

Spitzenleistungen österreichischer Unternehmen in

Zentralasien prämieren.

Ein formloses E-Mail an [email protected] ist ausreichend.

Die Bewerbung läuft noch bis 25. Dezember 2020.

SILK ROAD BIZ AWARD 2020 | GEWINNER

• BERTSCHlaska

• Herz Armaturen

• Starlinger & Co

Page 16: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Hospitals Programme in Kazakhstan

Business and Consultancy Opportunities

Svetlana Radchenko

Associate Director, Senior Banker, Infrastructure – Eurasia

European Bank for Reconstruction and Development (EBRD)

EBRD

Page 17: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Hospitals Programme in Kazakhstan – business and consultancy opportunitiesJune 2020

Page 18: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Content

Sustainable Infrastructure Group 18

1. Business Opportunities in Hospitals Programme

2. PPP Projects supported by the EBRD

3. Consultancy Opportunities

4. PPP Regime & Legislation Issues

5. Contacts

Page 19: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

19

Business Opportunities

Page 20: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

20

19 new hospitals, total project cost 1 137 billion Tenge, including:

• 4 projects under quasi-PPP procurement mechanism (“direct selection” – not financed by IFIs)

• 11 PPPs projects, 6 of which are being prepared with EBRD

• 1 sovereign guaranteed Design-Build-Operate-Maintain contract

• Procurement modes for other projects are being contemplated

Business Opportunities in KZ – Hospitals

Page 21: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

21

• Government plans to procure up to

19 general hospitals in 2020-2025.

• Preliminary estimate of design and

CapEx is around $4.3 billion.

• Facility management will be a

working model for private sector

involvement.

• EBRD is supporting the Ministry of

Healthcare on preparation of 7

hospital projects worth $1.6 billion.

Hospital in Kyzylorda to be procured

via Design-Build-Operate&Maintain

contract, while other via PPP.

Location Beds

Almaty (PPP) 300

Kyzylorda (DBOM) 500

Kokshetau (PPP) 630

Kostanai (PPP) 500

Pavlodar (PPP) 500

Taraz (PPP) 500

Atyrau (PPP) 500

Business Opportunities in KZ – Hospitals

Page 22: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Location and preliminary design

Historica

l center

Nauryzbay

district

Key details

Construction and facility management of

multidisciplinary hospital in Almaty city (population

around 2 million) for 300 beds (medical services will

be provided by National Medical University);

Grantor: Ministry of Health;

Project: USD 170 million (including contingencies,

insurance, SPV, FIDIC advisor, excluding VAT);

Contract type: DBFM;

Term: 25 years;

Availability payment for facility management;

Revenues for non-clinical commercial services.

Current status

Consultancy support for project preparation is

provided by KPPF, local publicly owned PPP advisor

and IPPF;

Tender documentation was prepared by KPPF, and

was revised by international consultants hired under

IPPF management;

Tender documentation is on Government approvals

stage.

Tender announcement is expected in Q42020.

Almaty Hospital PPP a.k.a AsfendiyarovaHospital

22

Page 23: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Kyzylorda general hospital

Key details

Construction and facility management of multidisciplinary hospital in Kyzylorda city (population around 240k) for 500 beds

(medical services will be provided by the Ministry of Health);

Application of new hospital construction standards which are being developed for Kazakhstan;

Contract type: Design-Build-Operate-Maintain;

Contract term: 10-15 years;

Separate payments to contractor for construction and facility management;

Financing of construction: EBRD loan to National Medical Operator under the sovereign guarantee;

Financing of facility management: subsidy from the Government of Kazakhstan;

Status

EBRD is hiring healthcare planner to develop functional specifications for Kyzylorda and 5 other hospitals.

Consultant for the development of the Feasibility study, outline design and legal structure to be hired in August 2020.

Consultancy support for project preparation is funder by Kazakhstan TC fund;

Tender for DBOM contract is expected in 2H2021.

23

Page 24: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

EBRD support to bidders in PPP projects

24

EBRD support to bidders:

• EBRD can issue a general letter of interest to be included in the tender

• The Bank can have a pre-bidding dialogue with players

• Instruments offered: joint equity investment and/or capex loan

• Indicative terms: tenor, security

• Until tender award, EBRD cannot commit to exclusivity with anyone (‘open support’)

• Identical dialogue possible with all bidders

• Different teams established to guarantee Chinese walls

• After tender award, EBRD negotiates detailed terms and conditions with the preferred bidder subject to detailed due diligence of the project

Page 25: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

25 June, 2020

Financing by EBRD in tenge

EBRD can provide financing of projects in multiple currencies, including EUR, USD, RUB,

KZT and other

KZT funding with fixed interest rate can be provided for the term of up to [4] years.

Long-term financing in KZT is possible based on floating rate basis:

Floating rate base – Consumer Price Index (CPI)

Total interest rate = CPI + EBRD treasury margin + credit margin

EBRD treasury margin depends on money market and funding availability from

NBR, pension funds. Typically [0.5-2%]

Credit margin depends on creditworthiness of the borrowers

Page 26: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

26

Consultancy Opportunities

Page 27: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Consultancy Opportunities in KZ – Hospitals

27

• Healthcare planning for 6 regional hospitals

Cost up to €1m. Procurement is ongoing

• Preparation of a Feasibility study for Kyzylorda hospital

Cost up to €1m. Procurement is ongoing

• PPP Transaction Advisory for 5 Hospitals.

Cost tbd. Procurement will start in 2H2020.

• Project management and construction supervision for Kyzylorda

hospital

Cost of €5-6m. Procurement will start in 2021

Page 28: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

28

PPP Regime & Legislation Issues

Page 29: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Option 1: Concession Law Option 2: PPP Law

• The Concession Law (with only one PPP model

available – BTO) was developed for major

infrastructure projects and, therefore, has quite

detailed approval requirements for each project.

• Only contractual PPP – no JVs with private investors.

Concession agreement may have only 2 parties.

• Strict budgeting process - all obligations under

concessions should be approved by the Ministry of

Finance.

• Direct agreement – available for the “special

importance” projects.

• Only “special importance” projects can benefit from

an international arbitration.

• Use of SPVs is stipulated in the Law.

• The Law was created with intention to structure

small-scale infrastructure projects. Approval process

is more flexible than in Concession Law.

• 3-party agreement and JVs with private partners are

envisaged. Private Financial Initiative is allowed.

• Several models of PPP are envisaged– see Article 7

of the Law.

• Direct agreement – available for the “special

importance” projects.

• Only “special importance” projects can benefit from

an international arbitration.

• Use of SPV is not stipulated in the Law.

Since the existence of two laws is not practical the Government of KZ

discusses the merger option (single law) or strict separation of two

laws (PPP law – only for O&M contracts).

29

PPP legislation in Kazakhstan: two laws - two sets of regulation

Page 30: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Issue Description

Lenders direct agreement The concept of “direct agreement” is available only for PPP projects of “special importance”.

The criteria for projects of “special importance” are rather restrictive.

International arbitrationOnly “projects of special importance” can benefit from an international arbitration clause in a

PPP / concession agreement.

Budgeting of termination

payments

The budget legislation does not provide for a clear procedure for budgeting long-term

obligations under PPP / concession agreements or a procedure for budgeting termination

payments.

PPP budget limits PPP/concession budget limits set for regional Akimats are restrictive (1-2 projects maximum).

Tender process

The tender process for PPPs/concessions is not in line with best international practice: e.g.

requirement to submit technical pre-feasibility study, use of only financial criteria for PQ.

Acquisition of land plots

The process for acquiring land for the purposes of a PPP/concession project set out in the

national legislation is not fully in line with environmental and social requirements of

international financial institutions.

Security

The concept of a security agent is not recognized by the laws in Kazakhstan. Currently, it

appears that the only feasible option for structuring security in PPP/concession projects by a

syndicate of lenders requires one of the lenders to take on the role of a security agent.

Approval process for

concessions

The approval process of a concession concept and tender documentation under the

Concession Law is too complicated and rigid.

EBRD is actively working with all PPP stakeholders to resolve current

legal issues.

30

PPP legislation in Kazakhstan: substantial potential for improvement

Page 31: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Contact Us

31

Page 32: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Our Contacts

32

Ekaterina Miroshnik, Director, Head of Infrastructure Eurasia

E: [email protected] T: +44 7921039930

Svetlana Radchenko, Associate Director, Senior Banker

E: [email protected] T: +44 7843410142

Agris Preimanis, Director, Head of Kazakhstan

E: [email protected] T: +7 7017220690

Page 33: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

New Reality – Transformation of Business and Opportunities

Nickolay Demidov

General Manager

IQVIA Russia/CIS

IQVIA

Page 34: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

© 2020. All rights reserved. IQVIA® is a registered trademark of IQVIA Inc. in the United States, the European Union, and various other countries.

Evolvement of Central Asian countries

pharmaceutical markets

New reality - Transformation of

business and opportunities

Nickolai Demidov

GM IQVIA Russia&CIS

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35

EAEU&CIS region economic growth rate is expected to accelerate in 2019-2024; countries differ significantly in per capita GDP value

Population GDP

3

4

5

6

7

2 3 4 5 6

Fo

recaste

d 4

y C

AG

R [

2019

-2024]

Actual 4y CAGR [2015-2019]

Russia

North West Africa

EAEU w/t RussiaGULF & Middle East

CEE

Turkey

Ukraine

CIS

Size of the bubble refers to GDP value in 2019, USD

Region Population[M 2019]

GDP per capita[K USD, 2019]

Russia 147 29 642

EAEU w/t Russia 37 21 139

Kazakhstan 19 28 849

Belarus 9 20 644

Kyrgyzstan 6 4 056

Armenia 3 11 084

Ukraine 42 9 775

CIS 69 11 267

Uzbekistan 33 9 000

Azerbaijan 10 18 616

Mongolia 3 14 308

Georgia 4 12 227

Moldova 4 7 702

EAEU & CIS macroeconomic landscape

• CIS GDP is expected to grow 7-8% annually in 2019-2024 and exceed regional growth by 3-4% that will drive future outlook of the region

IQVIA power breakfast, Kazakhstan, 30 April 2020

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36

2019 Units per capita

EAEU & CIS region

Russia 38

EAEU w/t Russia 32

Ukraine 44

CIS 16

Benchmark regions

CEE region 37

North West Africa 16

GULF & Middle East 20

Turkey 31

CIS region is still behind the region with potential for further expansion in consumption and income level

Key indicators [2019], USD (TRD price) Pharmaceuticals consumption

GDP, PPP, Bn, intern. dollars

GDP per capita, PPP

Pharma market

Government share

RX share

Central East Europe 3 531 31 268 31.0 23% 65%

North West Africa 1 159 12 770 5.0 4% 88%

GULF & Middle East 2 399 43 684 11.3 53% n/a

Turkey 2 347 28 264 8.2 91% 95%

Russia 4 349 29 642 21.1 39% 71%

EAEU w/t Russia 792 21 139 2.7 26% 67%

Ukraine 409 9 775 4.1 12% 55%

CIS 760 11 024 1.9 26% 67%

EAEU & CIS vs. benchmark countries

• Top-5 EAEU & CIS countries (excluding Russia) represent ~76% of total region population: Ukraine (28%, 42 Mln), Uzbekistan (22%, 33 Mln),

Kazakhstan (13%, 19 Mln), Azerbaijan (7%, 10 Mln) and Belarus (6%, 9 Mln)

IQVIA power breakfast, Kazakhstan, 30 April 2020

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37

State funding is still low due to economic situation and frequent regulation changes although efforts to increase the state support are implementing

91%

Georgia

61%Russia

27%

65%

39% 61%Kazakhstan

73%

88%

Belarus

Ukraine

70%30%Kyrgyzstan

Moldova

39%

89%

Mongolia

11%Armenia

12%

85%15%Uzbekistan

80%Azerbaijan 20%

23%

35%

Budget

9%

Retail / OOP

77%

KZ

UZ

UA

AZ

Governments

develop programs

to extend the

support

• Compulsory Health Insurance from 2020

• National Complex Anti-Cancer Plan 2018-2022

• Stating HC system development as a

key priority for the state

• Compulsory Health Insurance from 2021

• Healthcare system reform

• Official parallel import

• Compulsory Health Insurance from 2020

RU• Increasing Government budget for

oncology, cardio TAs (NHIF budget

increase), INNs coverage

expansion

Pharma market value split by channel

EAEU & CIS pharmaceutical market

Low level of state funding is a result of unstable

economic environment and budget constraints

IQVIA power breakfast, Kazakhstan, 30 April 2020

CA

CA

CA

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38

Market structure: RX and OTC

Spending on Rx varied from 53% to 74% in EAEU & CIS; countries with higher income have much larger value share of OTC market

36% 29% 30%45%

30% 25% 28% 37% 40%27% 34% 33% 37%

26%

64% 71% 70%55%

70% 75% 72% 63% 60%73% 66% 67% 63%

74%

UkraineRussia KAZ GEOTotal

EAEU

& CIS

EAEU w/t

Russia

CIS UZBBLR ARM KRG AZE MOL MNG

OTC RX

14.6 9.8 10.5 28.8 20.6 4.029.6

23%

EAEU w/t

Russia

MNG

26%

Total

EAEU

& CIS

11%

ARMRussia Ukraine

35%

CIS KAZ BLR

15%

KRG UZB AZE GEO MOL

12%

38%

26%

37%

26%30%

20%23%

9%

Government share

11.1 9.0

Comments

Rx and OTC market

structure depends on

income level of population

along with government

coverage of the drugs and

prescription regulations

Pharma market structure [2019, bnUSD]

18.6 12.2 7.7 14.316.1

xx.x GDP2) per capita [k USD]

IQVIA power breakfast, Kazakhstan, 30 April 2020

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Price dynamics in the EAEU&CIS countries

Many countries within the region are mainly driven by consumption growth while prices are growing in average by 6%

Price dynamics across region 2017-2019 Growth drivers

3Y Volume CAGR

Price per SU 3Y CAGR %

-4

-2

0

2

4

6

8

10

12

14

16

18

-3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

MOL

UKR

UZB

KRG

ARM

BLRKAZ

AZE

GEO

-2%

8%

23%

Armenia

Belarus

11%

Moldova

10%

9%

Uzbekistan

Kazakhstan

Kyrgyzstan

8%

15%

12%

Ukraine

Azerbaijan

10%Georgia

6%

7%

3%

13%

18%

9%8%

3%

2% 8%

Russia

6%1%

-2%

15%

1%

3%

10% 2%

10% 13%

Volume growth Price growth

More than 540 new launches in EAEU & CIS countries (excluding Russia) over last 5Y (~10% of market growth in 2015-2019)1

IQVIA power breakfast, Kazakhstan, 30 April 2020

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Share of local players

Despite localization push and policies implementation in many countries share of local producers is still low

USD m

Market share by manufacturers presence1) [2019, m USD]

8.7 0.6 1.7 0.1 0.2 0.4 0.01 0.01 -6.3 0.01 0.01 0.03

24% 31%16%

45%

14%

39%

13%

76% 69%84%

55%

94%86%

61%

93% 97% 95% 97%87% 93% 100%

EAEU w/t

Russia

Total EAEU

& CIS

BLR

6%

ARMRussia

3%

KAZUkraine CIS

0%7% 3%

KRG

5%

UZB AZE GEO MNG

7%

MOL

• Highest local producers share in Russia, Ukraine and Belarus (30-45%) mainly due to strong heritage / many local producers presented on the market

over the years

• Benchmark countries: Turkey 41%, CEE average 16%, GULF & Middle East 27%, North West Africa 40%

1

0.05

IQVIA power breakfast, Kazakhstan, 30 April 2020

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COVID-19 played in favor of markets growth at the beginning of pandemic. Further impact is mainly about negative pressure on the markets

USD m

539,1

UZBEKISTANKAZAKHSTAN

491,2

52,6 57,6

KYRGYZSTAN

331,2288,9

+9,8%

+9,6%

-12,8%

YTD’04’19

YTD’04’20

57,8216,9 214,5 206,9

254,9

KAZAKHSTAN

47,3

UZBEKISTANKYRGYZSTAN

+17,5%

+22,1%

-3,5%

UNITS m

Sales by Countries, Growth (YTD’4’20/ YTD’4’19, Mln.USD, Mln.Units)

As well as at many other markets COVID-19 pandemic led to splashed sales in March, it also had immediate

affect on devaluation of national currencies and markets values had been grown rather slowly or even declining

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Current new estimation for market growth is more positive for 2020, long term COVID-19 impact is likely to slow down dynamic

IQVIA power breakfast, Kazakhstan, 30 April 2020

Key change drivers

Revised IQVIA market prognosis estimate: +11-15% vs +7,9% pre-COVID

Pharma market changes Impact

Economic recession as impact of COVID-19 outbreak (oil price drop, unemployment increase,

income level decrease, tenge devaluation)

Limitations on F2F visits / promotion to physicians boost as result of COVID-19 lockdowns and

hospitals quarantine

Introduction of obligatory health insurance with increase of patients coverage from 2 mln to 3,5 mln

patients and number of products covered (by 225 products)

Price regulation for all drugs on the market including wholesaler and retail margins

Digital and remote channels (e-commerce, telemedicine, remote promotion) expansion

Supply chain disruption as COVID-19 impact (e.g. API production and supply issues)

Increase in drugs consumption both in Retail and Budget channels in Q1’20 driven by COVID-19

situation

Kazakhstan example

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Introduction to selected market trends in EAEU & CIS region

Overall EAEU & CIS region remains attractive for pharma companies driven by consumption development, regulatory changes and higher transparency

CHALLENGES AND THREATS KEY MARKET DRIVERS

2

3

1

Government budgets expansion in two directions: selected therapies budget increase (oncology, cardio etc.) and additional budget sources (e.g. compulsory health insurance in Kazakhstan, Azerbaijan, Uzbekistan)

Regulatory changes: ongoing healthcare reform in Ukraine, tender process in Uzbekistan etc.)

Consumption acceleration driven by increasing diagnostic level, patients coverage, income growth and economic recovery, innovative therapies consumption increase

3

4

2

Low penetration of medical services / diagnostic level (low educational level of physicians, diagnostic level for special diseases etc.)

Pricing pressure: tight prices controls in Kazakhstan and Azerbaijan, potential introduction of price control in Ukraine, Uzbekistan, generics substitution)

Local government initiatives / promotional restrictions (e.g. f2f visits restriction in Kazakhstan, prescription controls, official parallel import in Ukraine)

IQVIA power breakfast, Kazakhstan, 30 April 2020

1COVID-19 Pandemic: Overcome the consequences of COVID-19 pandemic which provides challenges for both pharma business and whole economy

Page 44: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Panel Discussion with Austrian healthcare companies

• Arminas Macevicius

Head of Asia-Caucasus Cluster, Takeda GmbH

• Ralph Lugbauer

CEO, Askin GmbH

PANEL

DISCUSSION

Page 45: COVID-19 & Geschäftschancen im Medizinbereich in Zentralasien€¦ · • 10 of the 70 Kazakh pharmaceutical manufacturers produce 90% of the meds "Made in Kazakhstan“ • High

Lisa Kronreif, MSc.Die österr. Wirtschaftsdelegierte Stv.AußenwirtschaftsCenter AlmatyT +7 727 22 51 484E [email protected] W wko.at/aussenwirtschaft/kz

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