The Analytical Group of AzVision.az

Pharmaceutical industry: Which pill do we choose?! | Long Read

// The Big Pharma is expected to have a breakthrough. But will the regional countries be able to ride the wave?!

F

ood is not the only thing humankind needs to survive. There is another commodity as important: medicines. Each country has a special registry of strategically important drugs. Having these constantly available is a matter of national security of sorts. The list, which expands every year, may differ from country to country, but the main items are almost identical.

The pharma market grows as much as the importance of human life does. Pharmaceuticals has grown to become the
third largest sector of global economy. A quarter of expenses spent on health goes to medicines. Drugs are a unique, that is, irreplaceable commodity. You can substitute bread with potatoes, but if you need a medicine, you need to find the original.

Therefore, all states consider the drug supply, provision, and price control a matter of strategy. The experts prognosticate that
growth pattern in the global pharmaceuticals market will enhance some more in the coming years . The pandemic clearly showed how important it was for a country to provide itself with all required medicines.

Growth dynamics of the world pharmaceutical market

The World Health Organization has been publishing biennial lists of essential medicines since 1977. Over 160 countries have adopted this approach. Drugs considered vital in every country are classified as follows:

●       Medications used during resuscitation/at ICU

●       Anticoagulants (for cardiovascular diseases)

●       Insulin (for diabetes)

●       Anaesthetics

●       Antiepileptics

●       Antibiotics

●       Steroids.

The most crucial question for every country is how much of these medications it can supply domestically and where the dependence on foreign drugs stands.

No country in the world can provide itself with all the necessary medications

No country in the world can fully provide itself with all the necessary drugs , even the USA, the undisputed pharma leader in the world. The latest observations show that the USA can offer its patients somewhat around 75-78% , not all 100, of all molecules available today. Only 40-50% of these molecules are available in post-soviet countries.
808 drugs were considered ‘vital’ and strategic in Russia in 2021. 60-70% of these are produced through chemical synthesis, the rest biotechnologically. Synthesis, in its turn, requires raw materials.

The Roads Leading to Pharmacies

A country may have a developed pharmaceutical industry, but this may still not be the end. The drug safety of a county will be at risk 
should there be troubles with raw material supply . There is no country in the world that can fully provide itself. Everyone depends on others . Russian experts say that only 6-7% of the substances required for pharmaceutics are produced locally ; the rest is imported. The logistics in the area is getting worse by the day for reasons known.

There are 
over 5,500 medicines in the drug registry of Azerbaijan at the moment. More than 40% of them are procured from the large producers of the West, 19% from Turkey, another 9% from Russia. We also import from Ukraine, Belarus, Japan, Korea, and others.

Parviz Azizbayov 
, head of inspections for quality control at the Centre for Analytical Expertise at the Ministry of Health, says drug supply safety is currently one of the priorities globally, and Azerbaijan is no exception. All the countries feel the global problem locally.

Parviz Azizbeyov: ‘The drug problem is global, and every country feels it first-hand’

The deepening global logistics crisis requires the countries to prioritize regional relations in pharmaceutical industry . The logic behind is clear and simple: supplying the population with medicines should not be put at risk due to disruptions in global logistics chains . How does cooperation in this field look like in our region and how can we expand it?

Far and Near Medicines

The global pharmaceutical turnover is nearing whopping 
1.5 trillion USD . But there is also a huge imbalance , delivering hegemony to developed countries. The USA, China, Japan, Germany, and France have comfortably occupied the top five spots. They are followed by the group of ‘pharma markets with speedy growth’ comprising some 21 countries, called the pharmerging markets . Turkey, who has been finding its voice in the market, is also a part of the group.

Global pharmaceutical market share by region

Turkey is the 15 th largest pharmaceutical market in the world, surpassing 12 billion dollars . It is turning into a regional pharmaceutical hub. 83 pharma companies employ over 40,000 people and sell 12,000 different medications to more than 170 countries. In 2019 Turkey exported pharmaceuticals worth 1.442 billion USD , but still important some worth 5.556 million . This means that Turkey, too, cannot fully cover its domestic needs. Neither can any other country in the world.

‘Geopolitical upheavals have engulfed the planet. The current developments have once again confirmed that manufacturing medicines internally is one of the main pillars of national security ’, says CEO of SANTO pharma company in Kazakhstan, Jiri Urbanec in his interview to AzVision.az . He admits that Kazakhstan, too, is dependent on imported medicines, although they are hard at work to change the situation. President Kassym-Jomart Tokayev has emphasized the importance of developing domestic pharma industry and noted that the country expects to increase to share of local pharmaceutical production to 50% by 2025 .

‘ 
Our target is to build a pharmaceutical homeland of sorts, when a business project is not confined to geographical boundaries and a company operates in several states offering uniform standards and corporate culture. For instance, the best performing aspects of a project in Kazakhstan can be successfully introduced in Uzbekistan and Kyrgyzstan, where we have offices and employees’, Urbanec shared.

But the scope could be even larger. Collaboration among Russia, Central Asia, Azerbaijan, and Turkey could serve strengthening the drug safety of all parties involved.

Doctor of Pharmacy and head of the Department for Organization of Medicine Provision and Pharmacoeconomics at the I.M. Sechenov First Moscow State Medical University Professor Roza Yagudina shared in her interview to AzVision.az that such cooperation has potential: ‘ Everything will depend on how interested the administrative structures, the pharm business and the public are. Collaboration always brings new opportunities to exchange best practices. This is especially relevant for pharmaceuticals, which inherently solves pivotal social problems.’

Azerbaijan has adopted a suitable platform for this very purpose. Pharmaceuticals is one of the priority areas at the 
Pirallahi Industrial Park , established by the order of President Ilham Aliyev . Five pharma companies have already received a resident status.

Pirallahi Industrial Park offers great incentives for drug manufacturers

The park also offers numerous incentives for drug manufacturers. They are exempt from land and property tax, as well as the 20-percent profit tax in the country for up to 10 years. They are also exempt from import customs duties and VAT for imported tech and equipment to set up ready-made production lines.

Head of the Department for Investment and Economic Analysis at the Agency for Development of Economic Zones Emil Hajiyev 
says we are currently negotiating with companies from Russia, Turkey, Israel, Norway, Hungary, and Germany.

Emil Hajiyev: ‘Azerbaijan has opened doors for partnering in pharmaceuticals’

Vision for the Future

Drug safety is indeed important, but the regional countries have several 
other serious reasons to consolidate efforts in pharmaceutical field. The share of biotechnological drugs has been increasing. While this share stood at 17% in 2010, it is now nearing 30% . If we are determined to master and build on these new technologies and produce new medications on our own, having regional cooperation is a must. Otherwise, we will have to do with producing generics at the most .

Any given drug is nothing more than packaging one (or several) biologically active substance and marketing it under different trademarks. For example, we are all familiar with the molecule 
para-acetylaminophenol as Paracetamol, Panadol, Rapidol, Piaron, Efferalgan, Perfalgan , etc. All of these are generic names for paracetamol. When a company develops a new molecule, it becomes the sole party allowed to produce it for a certain period ( usually 15-25 years ). When the period is over, other companies are allowed to produce similar drugs based on the same molecule under different names, and these are called generics .

There is nothing wrong 
with producing generics in terms of patients’ interests, but the countries and companies that keep on following this path always lag some 15-20 years behind the innovators in pharma industry . Those, who do not want to be always towed, must do their own research, and develop medications, which is extremely arduous, sometimes even impossible, to do alone.

Candidate of biological sciences and Director of the Institute of Health Economics at the National Research University Higher School of Economics in Moscow Larisa Popovich 
says that the pandemic has uprooted the global pharmaceutical industry . It has enriched the drug and medical equipment manufacturers, who are now ready to invest this money into new research. 

Larisa Popovich: ‘We are expecting big things in the global pharmaceutical market’

Biopharma has significant resources to move towards researching and developing new drugs. Some analysts believe that the Big Pharma will soon come up with numerous interesting ideas in prospective fields . The global pharmaceutical market is growing; it has money; research and innovation continue. Despite all worries and problems in the world, the health system is growing and will continue the same trend. Some experts are even inclined to consider the expected breakthrough in pharmaceutical industry ‘Kondratiev’s sixth wave’ .

Even if the regional countries do consolidate efforts, catching up with the Big Pharma does not seem realistic. But at the very least, we have a chance to ride the wave and build our own innovative production. Moreover, joining research in the field, organizing full-cycle production, and building a common market could help reduce pharmaceutics prices in the region.

  09 December 2022    Read: 1661    Can be read: 0 min.

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