Export potential of pharmaceutical industry of Kazakhstan

PRODUCTION ANALYSIS OF PHARMACEUTICAL INDUSTRY

Production volume in January-July 2020 amounted to 67.9 billion tenge, due to spread of COVID-19, production growth amounted to 38% (18.8 billion tenge) compared to the same period in 2019. Production dynamics of basic pharmaceutical products since 2013 has shown positive growth, having recorded  3% decline only in 2015. In general, production volume increased 2.5 times in 2019 compared to 2013.

In the context of RK regions, the main producers with a share of 93% of total production volume are four regions: Shymkent city 31%, Almaty region 26%, Almaty city 21% and Karaganda region 14%. As of August 1, 2020, there are 170 operating enterprises in the country engaged in production of basic pharmaceutical products and pharmaceuticals. The enterprises are concentrated (72%) in three regions: Almaty city – 52%, Shymkent city – 11% and Almaty region – 10%.

PRODUCTION STRUCTURE OF PHARMACEUTICAL INDUSTRY

Structure of basic pharmaceutical products and pharmaceuticals in January-July 2020 consists of 93% of drugs production and 7% of pharmaceuticals production. Compared to the same period in 2019, production structure did not change much: 92% of drugs production and 8% of pharmaceuticals production.

Structure of pharmaceutical production, %	January-July 2020
Other pharmaceuticals in physical terms	95,8%
Diagnostic reagents and other pharmaceuticals	4,1%
Serums and vaccines and other pharmaceuticals	0,2%

Structure of drugs production, %	January-July 2020
Drugs containing alkaloids or derivatives, but not hormones or antibiotics	42,6%
Drugs containing pure or mixed products, prepackaged for retail sale, not elsewhere classified	41,7%
Other drugs containing pure or mixed products, prepackaged for retail sale, not elsewhere classified	11,8%
Drugs containing penicillin or other antibiotics	1,4%
Drugs containing other antibiotics, prepackaged	1,0%
Other drugs for therapeutic or prophylactic purposes, belonging to class 21.20.13, not prepackaged	0,7%
Drugs containing penicillin or its derivatives, having structure of penicillic acid, or containing streptomycides and their derivatives, for therapeutic or prophylactic use, not prepackaged	0,4%
Other drugs	0,4%

In 2019, production capacities for manufacture of drugs were loaded by 34%, or in the amount of about 92 billion tenge, while total capacity of industry was 275.9 billion tenge – which indicates potential for production of products by additional 183.4 billion tenge. With additional capacity loading, domestic pharmaceutical industry has potential to expand its export positions in the EAEU and other countries.

ENTERPRISES OF PHARMACEUTICAL INDUSTRY OF THE REPUBLIC OF KAZAKHSTAN

ENTERPRISES OF PHARMACEUTICAL INDUSTRY OF THE REPUBLIC OF KAZAKHSTAN

Export of pharmaceutical industry from Kazakhstan in January-June 2020 decreased by 5.1% and amounted to $ 28.6 million. The main consumer of Kazakhstani pharmaceutical products as of January-June 2020 is Russia – 78.1% of the total export of Kazakhstan industry or $ 22.3 million. Also, five largest consumers include countries such as Kyrgyzstan – 7.6% ($ 2.2 million), Georgia – 3% ($ 845.4 thousand), Uzbekistan – 2.9% ($ 829.0 thousand) and Slovenia – 2.7% ($ 760.6 thousand). In general, export of pharmaceutical products has shown stable growth over the past three years. In 2019, exports amounted to $ 64.4 million, which is 66% more than a year earlier (2018 – $ 38.8 million).

Also, in the first half of 2020, import of pharmaceutical industry (24.2%) to Kazakhstan increased significantly due to COVID-19 pandemic. The growth in import is justified by increase in import of such goods as: medicines packaged for retail sale – by $ 75.8 million (17.5%), vaccines, blood serum, blood – $ 55.5 million (53.1%), medicines from two or more components, not packaged for retail sale – by $ 7.2 million (89.8%), other pharmaceutical products – by $ 5.5 million (69.6%), antibiotics – by $ 2.5 million (59.9%).

TRADE INDICATORS OF

PHARMACEUTICAL INDUSTRY

Export of pharmaceutical industry by RK regions in 2019

The main export-oriented regions of pharmaceutical industry in Kazakhstan are Almaty, Shymkent and Almaty region. In 2019, a total of $ 60.7 million (94.3%) of products were exported from these two cities. There was no export in four regions.

INVESTMENT IN THE INDUSTRY

In 2014, maximum indicators for investments in fixed assets of industry were achieved – 16 billion tenge, pharmaceutical industry, which made it possible to carry out a large-scale modernization of existing facilities, as well as to master new competencies by domestic producers and gain new knowledge in the industry. In subsequent years, volume of investment into the industry significantly decreased by 52% (compared to 2014) to 7.7 billion tenge at the end of 2018. During the first 7 months of 2020, investment into production of pharmaceutical products amounted to 3.67 billion tenge, which is only 5% less than the same period in 2019. With current heightened focus on healthcare, increase of investment volume into the industry is expected.

Due to the fact that pharmaceuticals industry was identified as one of the priority areas within the SPIID, significant measures were introduced to support domestic pharmaceutical manufacturers, which made it possible to attract solid foreign investments into the industry – such large manufacturers as Pfizer, Sanofi, Polpharma, Nobel, Pharmstandard, Kelun and others began their work in Kazakhstan. Despite small FDI indicator for 1sq. 2020 – $ 3.2 million, in the medium term, indicators are expected to increase to the level of 2018 and 2019. Source: NB RK

GLOBAL DEMAND FOR PHARMACEUTICAL DRUGS

Regression model: R-square – coefficient of determination. In our case – 0.9992, or 99.93%. This means that calculated parameters of the model explain relationship between studied parameters by 99.93%. The higher coefficient of determination, the better the model. Coefficient 1991.12 shows what Y will be if all the variables in the model are equal to 0. That is, other factors not described in the model also affect the value of analyzed parameter. Coefficient 5.44 shows the weight of variable X on Y. That is, demand within this model affects production volume and export with a weight of 5.44 (this is a small degree of influence).

WORLD HEALTH CARE CRISIS AS OPPORTUNITY FOR DEVELOPMENT OF PHARMACEUTICAL INDUSTRY

The number of patients with tuberculosis in the world by 2025 will increase by more than 6 million people. Death rate from tuberculosis can reach almost 1.5 million people. Also, about 300 million people are currently suffering from bronchial asthma in the world. It is the most common chronic illness among children. By 2025, the number of asthma patients will increase by 100 million. In the second half of the century, every second child will suffer from asthma.

Today 425 million people worldwide suffer from diabetes, which is more than 5 percent of the world’s population. 67% of all diabetics are from Asian countries. By 2030, diabetes will be the 7th leading cause of death worldwide.

REALIZATION OF KAZAKHSTAN EXPORT POTENTIAL IN THE WORLD ARENA

GLOBAL BIOTECHNOLOGY MARKET

Spread of COVID-19 has attracted new investment in the industry.

$ 15 billion allocated by PRC for treatment, subsidies for medical personnel, medical equipment and protective equipment.

$ 8.3 billion allocated by the US Congress to fight with spread of COVID-19 and to develop vaccines

$ 25 billion allocated by South Korea to fight against Covid19 virus.

$ 50 billion allocated by the IMF for affected countries and vulnerable economies in the fight against COVID-19.

TRADE IN BIOTECHNOLOGY PRODUCTS

Export of Kazakhstan to the WORLD of biotechnology products under the codes included into FEACN 3002 group is extremely insignificant, given great opportunities and high added value of products

DEVELOPMENT OF BIOTECHNOLOGIES IN KAZAKHSTAN

Despite the fact that biopharmaceuticals account for a large capacity of biotechnology market, there is imbalance in Kazakhstan towards agrobiotechnology. There are a number of private companies and laboratories dealing with biotechnology.

In fact, the only center closely dealing with practical biopharmaceuticals is National Center for Biotechnology