FORECAST OF THE MEDICINES MARKET DEVELOPMENT IN 2022

The country is currently experiencing difficult times. The military aggression of the Russian Federation against Ukraine has a significant impact on most spheres of life, including the economy. According to World Bank forecasts, Ukraine’s gross domestic product in 2022 may decline by 45% compared to 2021. Inflation in 2022 is expected at 15%. Cities, settlements, enterprises were destroyed, part of the territory of Ukraine was occupied by invaders, as a result of which the population was forced to migrate from the war zone both inside country and abroad. Thus, according to the United Nations, more than 4.5 million Ukrainians, mostly women and children, have gone abroad, and more than 7 million have been displaced within the country. Part of the population has lost their jobs and businesses, which has a negative impact on citizens’ incomes. Currently, certain areas, including Kyiv, Chernihiv and Sumy regions, have been liberated from the occupiers, which will allow part of the population to return home, including those who have left potentially dangerous places where hostilities may have taken place. However, the war continues, and it is extremely difficult to predict any further development of events. All these factors significantly affect the pharmaceutical market, and in conditions of uncertainty it is difficult to make predictions about its development. However, experts from Proxima Research together with experts from the V.M. Glushkov Institute of Cybernetics of the National Academy of Sciences of Ukraine developed a forecast for the development of the medicines retail market in Ukraine in 2022

At the beginning of the year, the market of medicines showed a significant increase in UAH (Ukrainian Hryvnia – national currency) terms (+ 31% in January and + 45% in February), however, according to preliminary data, in March there was already a decline of 11% (Fig. 1). In general, 19% growth is recorded in the Q1 2022. Significant growth in Q1 2022 has a positive effect on the annual forecast of market development, although the daily dynamics of pharmacy sales indicates a serious decrease in sales in April (about 40%).

Fig. 1 Volumes of retail sales of medicines in monetary terms in January 2021 – March 2022, indicating growth/decrease rates compared to the same period last year

On February 17, 2022, experts developed and presented  at the analytical forum “PharmaPogliad-2022” the forecast for the development of medicines retail sales during peacetime, according to which pharmacy sales of medicines in Ukraine were expected to increase by 8-13% in monetary terms. However, the full-scale war waged by Russia on February 24, 2022, necessitated significant adjustments to this forecast.

Based on this forecast of market development in early April, it was clarified. Among the main factors of influence on which the adjusted forecast is based, it is worth noting the following:

• expectations of a decline in hostilities either in June 2022 – an optimistic scenario, or in August – a pessimistic scenario;
• gradual return of the population to the country from June 2022 So far, more than 4 million people have gone abroad, mostly women and children (it is estimated that this is a category with a high level of medicine use);
• business and production will gradually revive, which will increase the income of the population. However, by the end of the year, household incomes will decline significantly, although medicines are a protected item in household expenditures;
• temporary occupation of territories will not allow to fully supply medicines to these territories;
• there will be significant Western assistance in finance and reconstruction, which will also increase incomes;
• the market will be affected by the volume of medical humanitarian aid.

Based on these factors, experts have adjusted the forecast, according to which medicine use in 2022 is expected to decline by 16.8% in the optimistic scenario, and by 28.6% in the pessimistic one (Fig. 2).

Fig. 2 Development forecast of the medicines retail sales market in Ukraine for 2022 in UAH under optimistic and pessimistic scenarios

The monthly development forecast of the medicines market in Ukraine indicates a significant decline in drug consumption from April 2022 with a gradual recovery from August 2022 (Fig. 3).

Fig. 3 Monthly forecast on the volume of medicines retail sales in Ukraine for 2022 in UAH in optimistic and pessimistic scenarios (growth/decline rates compared to the previous month of this year)

P.S. It should be understood that currently all forecasts are made in conditions of complete uncertainty about the further development of events.