Ukraine: The pharmacy market segment

On a first trip to Ukraine, one is equally amazed by the sheer vari­ety of spe­cial­ist phar­macy chains in the country as by how easy it is to buy cer­tain med­i­cines in these phar­ma­cies. In Ukraine, purchasing OTC med­i­cines goes hand in hand with self-prescription: they’re both very easy.

Throughout the former USSR countries, people are increasingly eager to avoid over-crowded hos­pi­tals. And as a result, the role of phar­ma­cies in these coun­tries should not be under-estimated.

The retail phar­macy mar­ket in Ukraine is dynamic yet frag­mented. Today, there are approx­i­mately 20,731 phar­ma­cies in the Ukraine alone. Still, open­ings of new phar­ma­cies mean the num­bers are con­stantly chang­ing. The num­ber of phar­ma­cies avail­able per capita is rather high (esti­mated at approx­i­mately 1.8–2.0), but it could decrease in the coming years. (See Fig 25.) After opening in 1995, one of Ukraine’s first pri­vate phar­macy chains, Med Ser­vice, now con­sists of over 320 points of sale in 109 cities and every Ukrain­ian region.

In 2003, a self-service style of phar­macy was intro­duced. Two years later, share­hold­ers set their sights on a new goal: become a national phar­macy chain. They plan to achieve this by open­ing new stores and acquiring smaller chains, and west­ern Ukraine and Kiev are the tar­get regions for these expansions. The sec­ond-ranked leader in the Ukrain­ian retail mar­ket is Far­ma­cia, a phar­macy chain from Lugansk, which con­sists of approx­i­mately 307 phar­ma­cies and 229 phar­macy points and kiosks. Next is the phar­macy chain Aptech­nyy Hold­ing (‘Phar­macy Hold­ing’), which was estab­lished in 1999 on the basis of munic­i­pal phar­ma­cies. Its struc­ture can be con­sid­ered both ver­ti­cal (wholesale-retail) and hor­i­zon­tal (numer­ous pri­vate phar­ma­cies). Cur­rently, Phar­macy Hold­ing con­sists of:

• Over 200 phar­ma­cies in Donetsk and Donetsk Oblast, as well as in Lugansk and the Lugansk region, Dne­propetro­vsk, Odessa, Zaporozhye and the Kiev region
• 38 phar­ma­cies oper­ating under the Zdrav­itsa brand
• 118 phar­ma­cies under the Dobri Liky brand

(The rest cur­rently have no brand affil­i­a­tions but might be added to the Dobri Liky chain in the future.)

For the ­first quar­ter of 2012, all cat­e­gories of the Ukrain­ian retail mar­ket amounted to a total vol­ume of US $911 million for 465 million pack­ages. In terms of value, growth was approx­i­mated at a total of 13%. The total mar­ket was worth US $3.4 billion in 2012 and is estimated to grow to US $9.66 billion by 2018.

The pres­ence of high-quality drugstore chains, such as KOSMO or Watsons (formerly DC) in Ukraine can­not go with­out men­tion­ing. With the open­ing of the first DC drugstore in Kiev, a new era of phar­macy ser­vices was born. High-qual­ity ser­vice, pro­fes­sional con­sul­ta­tions and a wide range of med­ica­tions, skin care prod­ucts, vit­a­mins and food sup­ple­ments—as well as a loy­alty pro­gram—are among the advan­tages of this chain.

Today, there are around 26 Wat­sons drugstores in seven Ukrain­ian cities, and 30 KOSMO drugstores in six Ukrain­ian regions—it is evi­dent that the net­work of Ukrain­ian phar­macy chains is wide and well-developed. Cur­rently, some minor improve­ments con­cern­ing the ser­vice and qual­ity of the stores would not be unwel­come; cat­e­gory man­age­ment is also still some­thing to be explored. But despite these drawbacks, the Ukrainian mar­ket offers a less costly way to enter the world of dou­ble-digit growth in OTC and Pharma.