The OTC and pharma market in Kazakhstan
The healthcare market in Kazakhstan is very young. After the collapse of the Soviet Union, Kazakhstan lacked any established pharmaceutical companies, infrastructure or experience.
Nevertheless, the 1990s saw the establishment Kazakhstan’s first Pharma companies, and over time more and more foreign companies found their way to the potential market there, which is very much influenced by imports. Eighty-eight percent of the OTC and Pharma drugs in the 10,000 pharmacies in Kazakhstan are imported. In terms of cosmetics and food supplements, the import number might be even higher. Now, Kazakhstan spends 7% of its GDP on healthcare, which varies from rural to urban areas. The average Kazakh spends US $400 a year on healthcare.
Germany is one of the leading exporters to Kazakhstan, followed by France, Russia, Austria and India. Over the past few years, the Kazakh Pharma market has had an average growth rate of 20%. This large growth rate can be explained by the increase in the population’s real income, as well as by the commercialisation of healthcare, the foundation of private surgeries and the suppression of shadow imports. The launch of more and more premium-price products also supports the growth in value terms.
The need for innovative products will increase because of the limited range the Kazakh OTC and Pharma industry currently offers and because of increasing patient demand for premium, high-quality products. In our opinion, the market in Kazakhstan will remain highly influenced by foreign imports in the coming years.
Kazakh governmental programs are designed to support new capabilities, the modernisation of national production and the implementation of the quality standard GMP. With an investment of US $250 million, the government wants to build new industry zones in Kazakhstan; the government also wants to invest US $3 billion to improve healthcare for its citizens. Kazakhstan’s pharmaceutical production capacity should be boosted substantially over the next five years as the government invests in building new plants and companies to realise its potential in domestic production and exports. The ministry also cited the success of the ‘Calamity Kazakhstan’ (Healthy Kazakhstan) initiatives, the main state-driven strategy for increasing access to healthcare. In addition, healthcare remains a priority of the president’s so-called ‘Kazakhstan 2050’ program, a blueprint for the long-term development of infrastructure and key social services in the coming decades.
The biggest Kazakh Pharma company, Chimpharm, owns 50% of local drug production and has just been taken over by the Polish Pharma company Polpharma. Chimpharm also owns the brand Santo.
As mentioned above, the market is still highly influenced by imports of foreign companies, but there are nevertheless seven large companies registered in Kazakhstan, in addition to 50 distributors, who allocate the 3,000 registered prescription drugs. Local companies produce basic generic drugs and unsophisticated medical utensils; specific and innovative products are usually imported. There are many companies distributing western OTC drugs, Rx medications and medical devices.
Many Kazakh people suffer from cardiovascular disorders, cancer, diabetes, respiratory diseases and other chronic diseases. The World Health Organization has also indicated increased tobacco consumption and high blood pressure among inhabitants.
Kazakhstan remains the most attractive pharmaceutical market in Central Asia in terms of the overall regulatory environment and ease of doing business compared to neighbouring countries. The domestic market is constrained by the still-small size of the population and daunting infrastructural challenges.
The government of Kazakhstan wants to enter the WTO, but some barriers, such as market entry and the non-liberal customs union with Russia and Belarus, still exist. Kazakhstan’s membership in the Customs Union (CU) with Russia and Belarus should drive continued improvements in regulation and harmonisation, assuming the contradictions of membership in the two groups (such as common external tariffs) can be ironed out.
The customs union with Russia, Belarus and Kazakhstan covers a total of 170 million inhabitants and offers big market potential. The idea is that registered OTC and prescription drugs in the union can be sold everywhere within the union without tariffs.
Leading market researchers state that the Kazakh market is going to be the market with the largest increasesin the CIS and CEE Region. It is supported by a healthy and strong economy, which was 6.9% in the past year and is expected to reach 6% in the current year.
All in all, Kazakhstan is a very promising country with its expected average growth rate of 20% over the next few years bolstered by the demand for innovative healthcare products such as prescription medications, medical devices, OTC and food supplements, as well as for medical expertise.
Kazakhstan in numbers
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