Pharmaceutical Sector Brochure.Pdf
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GAREN MIKIRDITSIAN CHIEF EXECUTIVE OFFICER DEAR INVESTOR, DEVELOPMENT Pharmaceutical production is one of the fastest growing sectors of the Armenian economy: over the 2012-2015 period the annual growth rate of the Pharmaceutical FOUNDATION OF sector represented 18% and its share in Armenia’s GDP grew by 2.5 times over the past 8 years. ARMENIA The Pharmaceutical sector is an important part of Armenia’s economy, has great growth potential and as such has been declared a priority sector of the economy by the Government of the Republic of Armenia. A strong scientific school, the ambition of private enterprises, support of the private sector by the Government of Armenia, and assistance of donor organizations have been the most important factors contributing to the growth of Armenia's Pharmaceutical sector. Armenia's Pharmaceutical sector is open for investment, and the Development Foundation of Armenia (DFA) has deemed it essential to have an updated source of information about the sector's recent development and the capabilities of the companies involved within the sector. The Guide provides this information, and we are confident it will be of great value to investors, pharmaceutical companies and to consumers alike. The Development Foundation of Armenia is Armenia’s National Authority for Investment, Export and Tourism. It provides in depth services to foreign investors including the provision of requisite information on Armenia’s business climate, investment opportunities and relevant legislation, ground support in organizing site visits for investors, management of post-visit support, assistance with investment project implementation, business introductions, as well as liaison with governmental institutions. The DFA also provides after-care investment services to investors already established in Armenia. The DFA assists Armenia based businesses in expanding export volumes and diversifying export markets through promotion of Armenia made products at international trade fairs, assisting companies in increasing the level of export readiness, providing them with financial assistance within the scope of specific governmental programs and organizing trade fairs showcasing export products to international buyers and distributors. We trust this Pharmaceutical Guide will provide you with a good understanding of Armenia's Pharmaceutical sector and lay the ground for your increased involvement in one of the most promising sectors of the Armenian economy. SINCERELY YOURS, GAREN MIKIRDITSIAN CHIEF EXECUTIVE OFFICER DEVELOPMENT FOUNDATION OF ARMENIA WHY ARMENIAN PHARMACEUTICAL SECTOR? EU GMP STANDARDS THE FASTEST ADOPTED IN 2010 GROWING FULL IMPLEMENTATION PHARMACEUTICAL OF GMP AND OTHER GXP STANDARDS BY THE SECTORS IN THE CIS END OF 2019 TAX FREE STRONG SCIENTIFIC REGIMES FOR AND R&D POTENTIAL HIGHLY SKILLED AND RESIDENTS OF WELL EDUCATED THE FEZ WORKFORCE LOW WAGES FAVORABLE AND ENERGY BUSINESS ENVIRONMENT AND COSTS IN THE EFFECTIVE SUPPORT REGION INSTITUTIONS SIMPLE RECOGNITION OLD TRADITIONS PROCEDURE AND RICH FOR MEDICINES EXPERIENCE IN THE REGISTERED IN THE FINE CHEMICAL EU, USA OR JAPAN INDUSTRY OPEN AND HIGH COMPETITIVE 3,000 YEARS PHARMACEUTICAL MARKET OF HISTORY EXPORT-ORIENTED IN HERBAL PHARMACEUTICAL INDUSTRY MEDICINE 6 Introduction TABLE OF CONTENTS TABLE 7 Global Pharmaceutical 47 HUMAN RESOURCES Market 48 Labor Costs 9 Regional Pharmaceutical 50 Education, Skills and Market Research Institutes 10 Armenia’s Pharmaceutical Sector at a Glance 12 Introduction of the GXP Standards 65 PHARMACEUTICAL AND BIOTECHNOLOGY R&D INSTITUTES 75 INVESTMENT ENVIRONMENT 76 Investment Environment 13 PHARMACEUTICAL MANUFACTURING 76 Foreign Investments 14 Growth Performance 77 Investment Opportunities 16 Industry Snapshot and Competitive Advantages 28 Competitive Niche Sub-sectors 81 REGULATORY ENVIRONMENT AND QUALITY CONTROL 31 PHARMACEUTICAL WHOLESALE AND RETAIL 82 Pharmaceutical Policy and 32 Growth Performance Legislation 32 Market Structure 84 State Administration 87 State Registration of 43 EXPORT MARKETS Medicinal Products 44 Export Growth Performance 89 Pharmaceutical Manufacturing 45 Market Structure and 90 Pharmaceutical Sales Volumes 92 Intellectual Property 46 Eurasian Economic Union 93 USEFUL CONTACTS (EAEU) 98 ABBREVIATIONS GENERAL OVERVIEW 6 INTRODUCTION Armenia's pharmaceutical sector has Opportunities exist for manufacturing been one of the country's most dynamic low-volume medicines that larger sectors over the last decade, becoming producers find uneconomical to produce, increasingly relevant to the Armenian as well as herbal medicines. While economy. This fact is widely based upon investors need to carefully consider the qualifications of its personnel and many factors, this guide should give the driven innovation and research. The readers enough background information pharmaceutical sector has become a to assess the investment potential and strategic sector for growing the Armenian enable them to move forward quickly. economy due to both its growing export potential and investment attraction. This sector-specific guide supplements “Investment Guide Armenia 2016,” Over the past 10 years, the Armenian which provides general information pharmaceutical sector's production about the attractive Armenian volume has grown from about one million investment environment and business USD in 2005 to 15 million USD in 2015, procedures. This guide provides with an annual growth rate of about 20% a detailed review of the Armenian over the past five years. pharmaceutical industry's performance, regulatory environment and state More than half of the Armenian policy. The aim of this guide is to pharmaceutical sector's total production highlight industry potential and recent is exported. Exports of Armenian performance, backed by quantitative pharmaceutical products have grown and qualitative data. The guide also an average of 20% per year, and showcases competitive advantages continued growth is expected due to and opportunities in investment, rising incomes, state policy and the and provides details on investment introduction of international standards. incentives. Armenia’s domestic market may be At the end of the guide, the contact small, but Armenia offers easy access details of support institutions are to surrounding and fast-growing CIS provided to assist with gathering countries and other major emerging further information about the Armenian markets, including the Middle East. pharmaceutical industry. ■ MAIN MACROECONOMIC INDICATORS, 2011-2015 2011 2012 2013 2014 2015 Gross Domestic Product (USD billion) 10.1 9.9 10.4 11.6 10.5 Gross Domestic Product per capita (USD) 3,102 3,290 3,447 3,852 3,504 Gross Domestic Product real growth, % 4,7 7.2 3.5 3.6 3.0 Industry 13.5 7.0 6.8 2.7 5.2 Agriculture 13.7 9.5 7.6 7.2 11.7 Construction -12.5 3.3 -8.1 -4.3 0.3 Services 5.0 6.5 3.6 7.8 2.7 PHARMACEUTICAL Inflation (year-end) 4.7 3.2 6.6 4.6 -0.1 Budget balance (% of GDP) -3.0 -1.6 -1.7 -1.9 -4.6 SECTOR IS A Investment (USD million) 816.3 751.8 597.4 612.9 811.8 incl. FDI (USD million) 631.4 567.4 271.2 404.3 180.5 STRATEGIC SECTOR Exports FOB (USD million) 1,329.5 1,380.2 1,480.0 1,547.3 1,486.9 Imports CIF (USD million) 4,151.4 4,261.2 4,476.8 4,424.4 3,254.0 FOR THE ARMENIAN USD/AMD exchange rate (average) 372.5 401.8 409.6 415.9 477.9 ECONOMY SOURCE: NSS, MINISTRY OF FINANCE OF RA GLOBAL Historically, medicines were trillion by 2017. Absolute growth is prepared by physicians and later by expected to be USD 211-241 billion, PHARMACEUTICAL apothecaries, but today’s medicines compared to USD 228 billion over the typically are the products of the previous five years (using variable MARKET collaboration between university exchange rates) (see Figure 1). research scientists and private Oncology is the leading therapeutic corporations. The modern-era of class; other focus areas include pain medicine discovery and development management, diabetes, hypertension, began in the 19th century with mental health, and respiratory issues. scientists learning how to isolate and purify medicinal compounds Global pharmaceutical sales and developing methods for mass- exemplify the international spread production. of medical technology resulting from highly intensive Research and Advances in science and technology Development (R&D) that is occurring are bringing the research-based in exporting countries. In general, pharmaceutical industry into an the pharmaceutical industry is exciting new era for pharmaceutical the sector with the highest ratio of product development. Research R&D investment. According to the methods are evolving and improving, 2015 EU Industrial R&D Investment creating much promise for the Scoreboard, the Pharmaceuticals advancement of medicine. & Biotechnology sector ranks number one with a share of 19.2% The current global pharmaceutical of total business R&D expenditure market shows constant growth in worldwide, with an annual growth production, sales and profitability. rate of 4.1% since 2011. The largest The demand for medicines constantly number of companies involved grows despite the political and in pharmaceutical R&D in 2015 - economic forces that have the half of the world's activity - were opposite effect on other markets. concentrated in the U.S. where R&D costs are expected to reach about According to “IMS Health Consulting”, USD 91 billion in 2016. Twenty-six FIGURE 2. GEOGRAPHICAL STRUCTURE an international analytical company, percent of companies involved in OF THE R&D SEGMENT OF THE GLOBAL global pharmaceutical sales reached pharmaceutical R&D are in European PHARMACEUTICAL MARKET (BASED ON USD 959 billion in 2012 and USD 1 countries (see Figure 2). ► NUMBER OF COMPANIES INVOLVED IN trillion in 2014 and exceed USD 1.17 PHARMACEUTICAL DRUG R&D) 1% FIGURE 1. GLOBAL SPENDING AND GROWTH, 2008-2017 15% 4% $211-241Bn 4% 3% 50% 5% $228Bn 15% $1,170- 3% $959Bn $731Bn USA 1,200Bn Europe France Japan Central and South America/Africa Germany UK Canada 2007 2008-2012 2012 2013-2017 2017 Pacific Rim SOURCE: MEDICINE PRODUCERS AND SOURCE: IMS MARKET PROGNOSIS, SEPTEMBER 2015 IMPORTERS UNION OF ARMENIA GENERAL OVERVIEW 8 FIGURE 3.