Perspectives of the Armenian Pharmaceutical

Industry

Armen Aghayants Executive Director

Union of Medicine Producers and Importers

Who We Are

• Union of Medicine Producers and Importers• Established in 2003• Mission: support the development of a

competitive Armenian pharmaceutical industry by representing and protecting the interests of its members

• Members: 10, of which 6 are producers• Producer member companies manufacture over

80% of local production• Importer-members represent approximately 60%

of the market

Ongoing Projects

Through active collaboration with CAPS

• Development of Union’s Strategic Development plan for

upcoming 3 years

• Creation of web portal for Pharmaceutical Industry

• Establishment of GXP Center of Excellence to provide

training and information on industry-related issues, such

as Good Manufacturing Practices

• Advocacy activities

Armenian Pharmaceutical Industry: Key Facts

• 61 importers of pharmaceutical products

• 17 licensed manufacturing companies

• 20 wholesale and 800 retail companies

• 4 major retail chains

• Local Production: 7.6 million USD*

• Exports: 3,7 million USD*

• Imports: 100 million USD*

*National Statistical Service, 2007

Armenian Pharmaceutical Industry: Major Producers

Company Product lineYear of

EstablishmentMajor Export

MarketsCertification

Liqvor Pharmaceuticals cjsc

Intravenous Infusion Solutions, Ophthalmological Preparations, Injection Solutions, Local Haemostatic PreparationsBranded products

1991 RussiaBelarusKazakhstanUzbekistanTajikistan TurkmenistanMoldovaGeorgia

GMP implementation in process

PharmaTech cjsc Intravenous Infusion Solutions, Ophthalmologic al Preparations (Eye drops)Branded products

1997 Georgia GMP audited and ISO certified

Arpimed cjsc Various tablets, ointments, capsules, solutions, disinfectants, dietary supplements, veterinary preparationsBranded products

2001 BelarusGeorgiaUzbekistanUkraine

GMP audited and ISO certified

Esculap LLC Various tablets, ointments, capsules, solutions, Herbal solutions, etc.

1998 Georgia N/A

Yerevan Chemical Pharmaceutical Firm ojsc

Injection preparations, solid and liquid medicines

1967Privatized in 1995

GeorgiaUzbekistanRussiaTurkmenistan

N/A

Vitamax-E LLC Various probiotics (capsules, tablets, powder, fruit, vegetable and meat powder, baby foods, etc)Branded products

1997 JapanUSABelarusUkraineBaltic States

GMP audited and ISO certified

Armenian Pharmaceutical Industry:Major Producers’ Turnover 2006-2008

$ 3,500,000Liqvor

Yerevan CPF

PharmaTech

Arpimed

Esculap

Vitamax-E

Armenian Pharmaceutical Industry: Major

Product Lines of Local Producers

• Sterilized liquid preparations, including intravenous infusion liquids

• Antiseptic preparations, etc.• Cardio vascular medicines • Galenic preparations • Herbal extractions and liquid preparations• Ophthalmologic medical preparations• Probiotic complexes (Narine)• Bioactive Food Additives

Physical forms: tablets, capsules, ointments and solutions.

Armenian Pharmaceutical Industry:Export Performance

Source: National Statistical Service

Export Destinations of Armenian Pharmaceutical Industry

Source: National Statistical Service

Armenian Pharmaceutical Industry:Imports

Source: National Statistical Service

Foreign Investment in Armenian Pharmaceutical Industry

As a result of investment, Armenian producers cover almost 100% of local demand for IV solutions.

Company Field of Activity InvestorInvestment

SizeYear

PharmaTech Production of intravenous solutions and eye drops

Diaspora N/A 1998

Liqvor Pharmaceuticals

Production of infusion, injection and ophthalmological preparations

European Bank for Reconstruction and Development

EUR 850,000

2005

AlfaPharm Wholesale, distribution and retail

European Bank for Reconstruction and Development

EUR 4.2 million

2007

Why Invest in PharmaceuticalIndustry

• High market growth perspectives both in domestic and Armenia’s major export markets within CIS

• Old traditions and rich experience in fine chemical industry

• Highly educated workforce, complemented every year by new graduates from Armenian internationally recognized universities with close educational cooperation with Western well-known universities

• State-of-the-art testing and laboratory facilities with cutting-edge equipment and highly skilled staff, conducting all types of laboratory testing and research

• Open and collaborative cluster with enthusiastic entrepreneurs

• Willingness of companies to adopt international standards and readiness to invest

Opportunities in CIS: High GrowthMarket for Pharmaceuticals

Imports of Pharmaceutical Products 2006/07

Compound Annual Growth Rate 2000/2001-2006/2007

Russia (2006) $6,220,687,525 30.6%

Ukraine (2006) $1,384,877,158 32.3%

Kazakhstan (2006) $494,036,920 33.0%

Belarus (2007) $376,362,600 8.9%

Georgia (2007) $159,023,819 18.6%

Moldova (2007) $114,194,744 16.4%

Kyrgyzstan (2007) $81,981,121 20.4%

Azerbaijan (2006) $48,287,415 3.3%

Imports from CIS countries totaled about 9 billion USD in 2006

Opportunities for Doing Business in Armenian Pharmaceutical Industry(1)

• Green field investment No restrictions for foreign investors/companies in starting and operating businesses in the Armenian pharmaceutical industry. Investors/companies require permits and licenses with the same conditions as local companies.

• Equity investment

Foreign investors/companies are allowed to buy and sell shares of local companies. Investors may consider the following exit strategies: a) sale of shares to strategic investors, b) IPO, c) management-buy-out (MBO) or d) management-buy-in (MBI). In 2007, the Armenian Stock Exchange was bought by Swedish OMX, which was later acquired by NASDAQ.

Opportunities for Doing Business in Armenian Pharmaceutical Industry(2)

• Contract Manufacturing for Local Distribution and Export

Through contract manufacturing the investors/companies may gain in terms of:

a) Benefiting from cost efficient production

b) Utilizing the knowledge and connections of local producers on local and CIS markets - having access to dynamically developing vast markets

c) Utilizing the advantage of small scale and flexible production capacities of Armenian producers, which are cost efficient for production of small volume products

Opportunities for Doing Business in Armenian Pharmaceutical Industry(3)

Our Members

• Alfa-Farm Major importer, the company has contemporary warehouses.

• Arpimed Major producer. GMP and ISO certified company.

• ErChF Major producer, functioning from USSR times, privatized in 1995. Main products are injection

preparations, solid and liquid medicines.

• Esculap Importer, producer and retailer. Main products are tablets, ointments, capsules, solutions.

• Farm Gohar Importer, the distributor of several Swiss and Arabian producers.

• Lambron Major importer, established in 1998 and collaborating with Gedeon Richter.

• Liqvor Major producer. Main products are intravenous infusion solutions, injection solutions.

• Mediqal-Horyzon Producer, main products are suppositories and syrups.

• Tonus-les Major importer and the distributor of several major international producers.

• Vitamax-E Major producer, main products are various probiotics and NARINE

T O N U S - L E S