The reform process of consolidation and centralization has changed the face of the health sector, beginning with a reduction of the number of hospitals from 756 to 516 in 2011 so as to concentrate resources and improve standards. Further changes are expected, with the much anticipated medical insurance system due to be implemented in 2012. The pharmaceuticals sector also took steps forward, with more prospects for imports as well as local production.
Azerbaijan had been using the Soviet Semashko system, which was based on the principle of universal access to health care, until reforms in 1994 and 1998 began introducing charges to a number of services. However, the system remains highly centralized. The Ministry of Health is at the top of the planning hierarchy, and in 2012 it was assigned an additional AZN63.3 million over its 2011 budget of AZN546 million. The effects of the reforms appear to be paying off as the number of physicians increased by 200 in 2010. The benefits have yet to be seen in the number of physicians per 10,000 people; the ratio weighed in at approximately 37 in 2011.
Education is also seen as key to the future of the healthcare sector, and in 2010, 1,168 students graduated from higher educational institutions across a range of medical specializations, the most popular of which were general treatment, pediatrics, and stomatology. One such institution is Azerbaijan Medical University, which has 8,000 students currently enrolled, around 1,000 of which are foreign. Indeed, the study of Azerbaijani students abroad is also being promoted, and “more than 60% of the medical students who go on exchange programs come from our university,” Prof. Dr. Ahliman Amiraslanov, Rector of Azerbaijan Medical University, told TBY. “The most important thing, however, is to make sure that these students come back to Azerbaijan once they graduate,” he added. In that regard, the university has built a new therapeutic center with 17 departments and 400 beds, and a surgery clinic with 21 departments. “We work closely with the Ministry of Education in order to make sure we are ready to attract these students,” Amiraslanov concluded.
In pharmaceuticals, imports are also rising as investors turn to Azerbaijan as a base for manufacturing and distribution throughout the region. Avromed is one of the leading distributors in the country. The single pharmaceutical exporter is Azerfarm LLC, although it is set to be joined by Folium Farm in 2012, as the young local firm prepares to open its manufacturing facility with the help of a Canadian firm.
PRIVATE HEALTH CARE & INSURANCE
Despite the government’s centralized approach to health care, it is encouraging the development of private institutions to bolster the system. Out of the country’s 516 hospitals, some 10 are private, and a number of these institutions are operated under the Ministry of Health. There is, however, a burgeoning private healthcare clinic sector, of which Sağlam Aile is a prominent member. “At the moment, we employ about 40 doctors and 52 staff at Sağlam Aile, and have external consultants that come in when needed,” says Vugar Eldaroğlu Eyvazov, General Director of Sağlam Aile. “There used to be a lack of confidence and trust in doctors,” he commented. “We want to show that our main aim is not to make a profit, but to ensure the well-being of patients.” There are an estimated 300 private clinics in Azerbaijan, and all pharmacies and dental practices are also in private hands.
Due to the increasing list of medical services that incur a charge, Azerbaijan is also expecting a long-overdue health insurance scheme to begin operating soon. Under the plan, Azerbaijanis will continue to receive free basic health care, but additional treatment will be charged to their insurance policies. In 2012, the agency in charge of the state insurance scheme received AZN30 million in funding.
The pharmaceuticals sector has been open to foreign investment since 1997, and the sector remains highly competitive, with over 70 domestic and foreign companies supplying over 3,000 products to the sector, most of which are generics. Although the manufacturing sector has yet to take off significantly, the big players have long been involved in the country through local distributors. Avromed, with a market share of 20% in the distribution segment, has a supplier list of over 190 pharmaceutical companies from 42 countries. “Our suppliers are multinational companies such as GlaxoSmithKline, Aventis, Balkanpharma, Novartis, Les Laboratoires Servier, Sanofi, and Janssen-Cilag,” Elshad Abdullayev, General Manager of Avromed, told TBY. “Azerbaijan is a very open country and we can see representative offices of the best-known manufacturers in the world, such as Pfizer, GSK, Novartis, Aventis, and Sanofi.” Avromed and its partners, Azerimed, Riyad Farm, Farm Grup, and Pasha-K, make up 70% of the total distribution segment. However, the company has held back on making inroads into manufacturing, stating that “to open up a manufacturing line, we would need a much bigger market than Azerbaijan.”
In terms of manufacturing, Azerfarm LLC is set to be joined by Folium Farm in 2012 in a sector that has yet to take off in the same way as the distribution sector has. While no multinational pharmaceutical companies manufacture medicines locally, domestic manufacturing accounts for around 4% of the market. Its central location means Azerbaijan could attract attention as a manufacturing hub for the region, offsetting the low-population factor, though “we would need to export to other markets such as Central Asia and Georgia,” Abdullayev commented. Pharmaceuticals R&D is on the up, with 2,023 scientists working on medicine and pharmaceuticals in 2010, up from 1,860 in 2009, including researchers at higher educational
© The Business Year