PHARMACEUTICAL SECTOR OF SERBIA

Vekoslav Šošević, Secretary of Association of Chemical and Pharmaceutical Industry, Rubber and Non-Metal Industry

25 th October 2012, Rome

PHARMACEUTICAL INDUSTRY - ECONOMIC OVERVIEW

Share of pharmaceutical sector in GDP - 0,7% Gross production of the industry - over 450 mil. Euro (2011) Total consumption of medicines in Serbia - 740 mil. Euro Annual production rate ~10% Number of employees - 7000 Export oriented (155 mil Euro of goods were exported in 2011) Direct contribution to the budget of the Republic of Serbia (2011) ~40 mil. Euro (taxes,

contribution, customs)

For years, domestic pharmaceutical industry has been a carrier of stable supply of the market with medicines of all forms and dosages Total consumption of medicines in Serbia for 2011 is estimated to around 740 mil. Euros. Share of imported medicines is 370 mil. Euros According to number of boxes of medicines sold: domestic producers supply the market with around 75% of medicines, reaching around 45% of the cash flow (this difference is caused by the difference in price of domestic medicines which is significantly lower than the price of imported medicines)

TRADE FLOW OF DOMESTIC PRODUCERS FROM SERBIA IN 2011

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TRADE FLOW OF MEDICINES IN SERBIA IN 2011

26%

13%6%

4%3%3%3%2%2%

2%

2%

2%2%

2%1%1%1%1%1%

1%21%

Hemofarm A.D.

Galenika A.D

Zdravlje A.D.

F.Hoffmann-La Roche LTD.

Glaxosmithkline SPA

Pfizer H.C.P. Corporation

Sanofi-Aventis S.P.A.

Novo Nordisk A/S

Alkaloid A.D.

Jugoremedija A.D.

Krka Tovarna Zdravil D.D.

Bristol-Myers Squibb

Pharmaswiss D.O.O.

Novartis Pharma AG

Ferring international center SA

Schering AG

Janssen-Cilag International N.V.

Astra Zeneca UK Limited

Merck Sharp & Dohme BV

Habit Pharm A.D.

Ostalo

Export of medicines in 2011 was 208,3 mil. dollars (index for 2011 / 2010 was109) The highest export was in Russian Federation (50 mil.), Germany (40 mil.), Montenegro, Bosnia and Herzegovina, Bulgaria, Macedonia Export in Italy was 2,2 mil. dollars in 2011 We believe that opportunities are a lot bigger Import of medicines was (mostly from EU): it is growing on yearly basis - export in 2011 reached 525,9 mil USD (index for 2011 / 2010 was 101) The highest import was from Germany (99 mil.), France (76 mil.), Italy 47 mil. USD, Great Britain 30

mil. Denmark, etc.

TRADE BALANCE

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TRENDS IN IMPORT AND EXPORT OF MEDICINES IN SERBIA (CARTAR 3003, 3004)

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Participation of Italian companies is expected in process of privatization of not privatized companies (Galenika, Torlak, Jugoremedija)

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OWNERSHIP STRUCTURE

Privatized companies

Hemofarm - Stada Nemačka Zdravlje - Actavis Island Pharmaswiss Švajcarska Alkaloid Makedonija Pharmanova Slaviamed Ivančić i sinovi

Galenika Zemun - 2400 employees Institute for Immunology and Virology Torlak -

400 employees Jugoremedija - 450 employees

Non-privatized companies

The Highest number of multinational companies are present today in Serbian market through import and licensed products or through market agreements with domestic companies Around 70 foreign pharmaceutical companies have its representative offices in Serbia

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PRESENCE OF FOREIGN COMPANIES

Table 1ТОР10 foreign manufactures in Serbia pharmaceutical market ( by share in value terms), Q3 2011

Table 2ТОР10 foreign manufactures in Serbia pharmaceutical market ( by share in real terms), Q3 2011

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ITALIAN COMPANIES PRESENT IN SERBIA

ABBOT S.R.L. ACTAVIS ITALY S.P.A. BAYER HEALTHCARE

MANUFACTURING S.R.L. CATALENT ITALY S.P.A. DOMPE PHARMA S.P.A. ELI LILLY ITALIA S.P.A. FRESENIUS KABI ITALIA S.R.L. GLAXOSMITHKLINE SP HAUPT PHARMA LATINA ISTITUTO DE ANGELI S.R.L LABORATORI BALDACCI S.P.A. MERCK SERONO S.P.A. MERCK SHARP & DOHME S.P.A.

NOVARTIS FARMA S.P.A. PFIZER ITALIA S.R.L. PHARMATEX ITALIA SRL. ROTTAPHARM S.P.A. SIGMAR ITALIA S.P.A. ZAMBON S.P.A.

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DISTRIBUTION OF MEDICINES

Distribution of medicines in Serbia is done through wholesalers 75 % medicines and medical devices are done through 17 wholesales gathered in

group of wholesalers with around 2500 employees All wholesalers meet the requirements specified in the Book of rules on conditions for

wholesale of medicines and medical devices, and the majority of its members conduct their business with implemented ISO quality standards

Following link in supply chain of medicines in Serbia are pharmacies (state and privately owned)

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AGENCY FOR MEDICINES AND MEDICAL DEVICES OF SERBIA

Issues permits for medicines Registers medical devices in the Register of Medical Devices Conducts a registration of traditional herbal medicines Issues permits for clinical testing of medicines and medical devices Performs control of clinical testing Issues certificates for export of medicines and medical devices Approves import of medical devices for patient’s needs Approves import of medicines for scientific testing Controls the quality of medicines and medical devices Participates in development of regulations and national policy in the field of medicines and medical

devices

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PROCEDURE FOR MEDICINES REGISTRATION Agency for medicines and medical devices

In Serbia, a permit for medicine can be given to:

A producer that has a permit to produce medicines in the Republic of Serbia Representative of foreign producer that has headquarters in the Republic of Serbia Representative of foreign legal entity that is not a producer of that medicine but has a permit for

that medicine in the countries of the EU or in countries that proscribe same requirements for permits issuance as that of the Republic of Serbia

Legal entity with headquarters in the Republic of Serbia that received a permit for the medicine from a producer in Serbia, that is that provided him with conditions to become a receiver of the medicine permit from their own production program

Medicine permit is being renewed every five years, and after risk and benefits evaluations have been made

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ACCESSIBILITY VS AVAILABILITY

Who is responsible for access and availability of medicines?

Accessibility AVAILABILITY

Government Producers

Health Insurance Fund Wholesalers

Regulatory bodies (AMMD, Ministry of Health and Ministry of Trade)

Health institutions (pharmaceutical institutions, pharmacies, hospitals)

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REGULATIONS

Law on Medicines and Medical Devices (Official Gazette of RS no. 30, May 7th, 2010) Subact Regulation on conditions for trade with medicines and medical devices (Official Gazette of RS no. 27

March 17th , 2008) Guidelines for Good practice in Distribution of Medicines (Official Gazette of RS no. 28, March 18th

2008) Regulation on conditions for import of medicines and medical devices which do not have a permit to

be distributed (Official Gazette if RS no. 37, April 11, 2008) Book of rules on amendments and remarks, Book of rules on content and inner and outer labeling of

medicine packaging and on patient’s /user’s instructions (Official Gazette RS 104, December 16 th

2009) Regulation on Medical Waste Management (Official Gazette of RS no 78, October 25th 2010)

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CONCLUSION

Advantages Serbia has a status of potential candidate for EU membership Economy of the country needs significant investments in domestic pharmaceutical sector A lot more stable conditions for FDI and domestic development Good economic and political cooperation with Russia provide access to this big market

Opportunities Gradual integration in EU and future membership should provide quicker reforms Privatization and modernization of domestic pharmaceutical producers provide higher chances for

export Investments and improvements of healthcare program will be promoted by the Government Shortened procedures for registration of generics for both foreign and domestic producers

THANK YOU FOR YOUR ATTENTION!

phone: + 381 63 3233 671cell: + 381 63 336 743

e-mail: vekoslav.sosevic@pks.rs www.pks.rs