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.