Kazakhstan's pharmaceuticals industry offers much in the way of investment potential, with the penetration of local products still having a way to go.
The pharmaceutical market is an important segment of the broader economy, and helps to measure the level of economic and social development. It is also a key indicator of innovation in the country. The pharmaceutical sector has become the most profitable industry for investors. The pharmaceutical industry in Kazakhstan comprises more than 80 companies, with both foreign and local pharmaceutical manufacturers engaged in the sector, including small manufacturers of medical products. The domestic market is currently estimated at $1.8 billion in retail prices. According to some reports, it was predicted that the growth of the pharmaceutical market in 2015 would be 5% more than the previous year. By year-end, the sector reached $2.27 billion, with a growth of 9% in retail prices. Despite these results, factors such as the devaluation of the currency, the establishment of an unique market for the countries of the Eurasian Economic Union (EAEC), and accession to the WTO created a difficult situation for the pharmaceutical industry. First of all, this situation has led to an increase in prices both for domestic and foreign products. It is predicted that the price of foreign pharmaceutical products will grow by 35-40%, in proportion to the foreign exchange rate. Accordingly, when there is a low level of solvency in the population there exists the possibility that demand for pharmaceutical products will fall.
In August 2010, the Kazakh government approved a program for the development of the pharmaceutical industry for the 2010-14 period. The main objective of this program was to provide 50% of the domestic market with local products. The results of this program were defined by market volume in terms of annual growth, with the 2013 volume amounting to $1.8 billion, rising by about 20% in 2012, and by 57% in 2011. The share of domestic production in the total volume of the Kazakhstani pharmaceutical market in 2013 was 12.2%, which is lower than that of 2012 by 0.8%, and also lower than 2011 by 2.9%. The main reason for this decrease was the demand for imported products. Imports of pharmaceutical products in 2013 amounted to $1.603 billion. Currently, the Industrialization Map Program includes 35 projects worth KZT30.5 billion, and has created more than 3,112 jobs. From these 35 projects, 14 are focused on the pharmaceutical or medical sector. Among the investment projects of the Industrialization Map are projects involving major investors in Shymkent, such as the European pharmaceutical holding Polpharma. They are implementing a project for the production of cancer, antiviral, gastrointestinal, and antibiotic medicines. All these investments are focused on the introduction of the international GMP standard. Today over $90 million has been invested.
In Almaty, Nobel has implemented the first investment project with a Turkish company in accordance with international GMP quality rules for the production of cancer, anti-diabetic, gastrointestinal, antiviral, and antibacterial agents and antibiotics. They have already invested $37 million. The company launched a second project with multinational company Sanofi in the industrial zone of the city of Almaty, with a volume of $55 million in investment. In Almaty, Global Farm has created a joint venture with Turkish company Abdi Ibrahim for the realization of the investment project in the Almaty region for the production of cardiology, gastrointestinal, and antibiotic drugs, all of which meet international quality standards.
Since the beginning of 2015 the government has started to develop a comprehensive plan for the 2015-2019 period to develop the industry and support the local pharmaceutical sector. Total production in 2015 increased in line with predicted figures, reaching a total amount of KZT28.823 million between January and November. The growth in the production of basic pharmaceutical products is associated with an increase in the volume of production of medicinal agents containing antibiotics, and also an increase in the production of vitamins and their derivates.
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