Export of medications may be suspended due to the NBU policy

Ukrainian drugs abroad can replace drugs from Russia and Belarus

Photo: Ukrainian photo

Ukrainian pharmaceutical companies have been deprived of the right to register their medications abroad, reads the letter released by the United Organization of Employers of the Medical and Micro-biological Industry of Ukraine, which was submitted to Governor of the National Bank of Ukraine Valeria Hontareva.

As a reminder, on September 22 the National Bank of Ukraine banned the settlements for import operations without the import of goods to the territory of Ukraine. As a result, producers of pharmaceutical products were deprived of the right to pay for the clinical and pre-clinical research services abroad, which is compulsory for registration of medications, as written in the letter that Capital has a copy of. As such, pharmaceutical companies will not be allowed to pay for registration or the re-registration of their medications.

Second time around

Pursuant to the legislation in effect, in order to sell medications manufacturers must register their products and every five years should go through the procedure of re-registration, says Chairman of the Supervisory Council of the Lekkhim group of pharmaceutical companies and President of the United Organization of Employers of the Medical and Micro-biology Industry Valeriy Pechayev.

The registration dossier must be supplemented in the event of modification of equipment, production technology and raw materials. The National Bank of Ukraine has not yet responded to the letter sent by operators in the pharmaceutical industry, says General Director of the Darnytsia Pharmaceuticals Company Andriy Myroniuk. “Director of the NBU Main Department of Monetary and Credit Policy Olena Shcherbakova and Deputy Director of the NBU Department of Methodology of Monetary and Credit Policy Lyudmyla Chepynoha refused to pick up the phone and turned them off,” says Pechayev.

This is already the second norm issued by the NBU that is having a negative impact on the export of Ukrainian pharmaceutical products. At the end of 2012, the NBU reduced the term of refund of hard currency proceeds from export contracts from 180 to 90 days. In the event of non-refunded proceeds within the deadline, the NBU will fine violators a penalty of 0.1% of the sum of money for every day of overdue payment, said Pechayev. “We are not shipping products as we cannot manage to return proceeds in hard currency on time,” he explained. For example, it takes of month for a railcar transporting medications from Ukraine to deliver them to Kazkhstan and then the process of customs clearance takes another two weeks.

It takes approximately another month for the issuing of all the referrals, passing through quality control inspections and so on, meaning that there is hardly any time left to sell the medications, Pechayev said.

Stop sign to export

The ban of payment of services for conducting research and registration of medications leads to a standstill of export, industry experts say. Last year, Ukrainian pharmaceutical companies exported 17.5% of the total volume of their medications produced in Ukraine worth nearly US $300 mn. Today, all of Ukraine’s major manufacturers and exporters of medications – Farmak, Darnytsia, Arterium, Farmastart and Indar, have ended up in dire straits. “The situation has reached a critical boiling point as pharmaceutical companies have outstanding debts for services of analyses and clinical research required for registration,” says Myroniuk. The most difficult situation was with deliveries to the main sales regions in the CIS: Uzbekistan, Georgia, Azerbaijan and Russia, says Myroniuk.

Pechayev notes that as a result of the ban the main competitors – Russian and Belarus producers – come out the winners. Indeed, the main companies producing medications are located in Ukraine, Russia and Belarus. Executive Director of the Pharmaceuticals Association of Ukraine Viktor Chumak added that Ukraine is today taking the first steps in the registration of medications in Southeast Asia. However, the problems that Ukrainian exporters face today could play into the hands of producers from India and the EU.