03.09.2024
Economic growth and rising household incomes are key factors driving the market’s development. According to the State Statistics Service of Ukraine (SSSU), in the first quarter of 2024, the real gross domestic product (GDP) increased by 6.5%. The International Monetary Fund and the World Bank maintained their forecast for Ukraine’s economic growth in 2024 at 3.2%. Meanwhile, the National Bank of Ukraine (NBU) downgraded its GDP growth forecast from 3.6% to 3% due to the impacts of Russia’s large-scale attacks on Ukraine’s energy infrastructure.
Regarding the overall inflation rate in the country, according to the SSSU, it stood at 3.9% for the period from January to June 2024 compared to the same period last year. In the healthcare sector, inflation reached 9.3%, and in the pharmaceutical products, medical goods, and equipment segment, it was 8.8%. Although inflation accelerated in June 2024, partly due to rising electricity tariffs, the NBU improved its year-end inflation forecast from 8.6% to 8.2%. Wage growth has also returned to pre-war levels, and the NBU expects real wages to surpass pre-war levels in 2025. Rising wages and household incomes are expected to impact the pharmaceutical market’s growth in monetary terms positively.
Just as in the first quarter of 2024, the pharmaceutical market grew in the first half of 2024. This publication will review the key indicators and trends of Ukraine’s pharmaceutical market based on the results of the first half of 2024. The data used in this analysis is sourced from the Market Audit project, based on the analytical system “PharmXplorer” from Proxima Research.
The total volume of pharmacy sales for “pharmacy basket” products in the first half of 2024 amounted to UAH 92.4 billion, an increase of 17.9% compared to last year. In volume terms, retail sales reached 642.1 million packages, an increase of 1.6%. In dollar terms, sales grew by 10.7% during this period, amounting to USD 2.4 billion.
In monetary terms, pharmacy sales growth was observed across all “pharmacy basket” categories, although a slight decline in volume was recorded for the medicines category. The fastest growth was seen in the sale of dietary supplements. In the first half of 2024, sales of dietary supplements grew by +29.8% in monetary terms and +18.2% in volume, significantly exceeding the average market growth. This rapid growth supports the long-term trend of increasing their share in the overall market structure. As of the first half of 2024, dietary supplements accounted for 11.1% of the market in monetary terms and 8.8% in volume.
By the end of the first half of 2024, the structure of pharmacy sales by domestic and foreign manufacturers showed an increase in the share of domestic products in monetary terms compared to the same period in 2023. However, in volume terms, foreign manufacturers increased their market share. The average price of one package in the “pharmacy basket” was UAH 143.9, which is 16% higher compared to the first half of 2023. The most expensive category remains dietary supplements, with an average price of UAH 180.5 per package. For medicines, this figure is UAH 174.1, for cosmetics – UAH 152.8, and for medical devices – UAH 40.0.
By the end of the first half of 2024, retail sales of medicines reached UAH 72.7 billion, or USD 1.87 billion, with 417.7 million packages sold. Compared to the same period in 2023, sales in hryvnia increased by 16.5%, while in dollar terms, they grew by 9.3%. However, there was a slight decline in volume of -0.7%.
An analysis of the monthly dynamics shows that at the beginning of the year, the market demonstrated high growth rates in retail sales of medicines, but later, the market’s growth began to slow down. The decline in volumes can be attributed to the ongoing reduction in the population with access to the market due to migration abroad. According to the United Nations High Commissioner for Refugees (UNHCR), as of July 15, 2024, the number of refugees from Ukraine reached nearly 6.6 million people and continues to rise gradually.
In the short term, experts expect a continued trend of slowing market growth. Analysis of pharmacy sales growth indicators in 2024 suggests that inflation is one of the main drivers of the market’s monetary growth, reflecting price increases. In June 2024, the replacement index showed a negative value, indicating a decline in the physical consumption of medicines compared to the same period in 2023.
The first half of 2024 saw a continued increase in the share of prescription medicines in the overall market structure. In the consumption structure of domestic and foreign medicines, a slight increase in the share of Ukrainian products in monetary terms was recorded. However, in volume terms, there was a shift towards foreign medicines.
In the structure of pharmacy sales of medicines by ATC classification (level 2), growth was observed across all ATC classes in the top 10. The highest growth rates were seen in the antibiotics and antidiabetic drugs groups.
By the end of the first half of 2024, the leading positions in pharmacy sales of medicines and dietary supplements in monetary terms were held by three Ukrainian companies: Farmak, Darnitsa, and Arterium Corporation. Nearly all companies in the top 20 showed growth in pharmacy sales in monetary terms.
In the distribution segment, as of the first half of 2024, the leading positions in terms of supply of “pharmacy basket” products to pharmacies were held by companies BaDM, Optima-Pharm, and Venta LTD. Competition among the leaders remains intense, with ongoing shifts in leadership.
Economic recovery is expected to continue, but growth rates will remain subdued due to significant damage to energy infrastructure. Against this backdrop, the NBU has lowered its GDP growth forecast to 3% for the year. A significant energy shortage in June negatively impacted business and consumer confidence, as well as activity in several industries. Additionally, there is a trend of the hryvnia appreciating against the US dollar, with the exchange rate exceeding 41 UAH per USD. As of July 19, 2024, the official exchange rate stands at 41.42 UAH per USD, and experts forecast it may reach 42 UAH per USD by the end of the year. The hryvnia’s devaluation is likely to contribute to further price increases, especially for goods with a high import component.
Regarding the pharmaceutical market, with a declining population having access to the market and corresponding reductions in consumption in volume terms, market growth in monetary terms is primarily driven by price increases. Experts expect pharmacy sales of medicines to grow by around 18.6% in monetary terms, with a volume increase of +1.9% under the baseline scenario.
However, given the ongoing war and intensified attacks on critical infrastructure, future developments remain difficult to predict. Forecasts may change depending on the situation on the front lines, the duration of hostilities, international aid, the de-occupation of territories, and the pace of the population’s return to Ukraine.
Material provided by the editorial team of “Pharmacy Weekly”
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