PHARMA POSSIBILITIES

Azerbaijan 2016 | LABOR, HEALTH & EDUCATION | FOCUS: PHARMACEUTICALS

Azerbaijan is working to take steps toward achieving greater independence in a national pharmaceutical industry, currently dominated by imports.

Azerbaijan's healthcare spending has drastically increased over the past 10 years, totaling AZN665 million in 2014. The government has also increased the state budget allocation of healthcare funds by 3.2% and 8.7%, respectively, over the past two years alone, proving that its commitment to making changes in this industry is continuing each year. One of the most salient focal points in the healthcare field deals with the current state of the pharmaceutical industry in Azerbaijan. Pharmacies are the most popular consumer health outlets in Azerbaijan by far, with around 2,000 pharmacies located throughout the country. That aside, the current Azerbaijani market is characterized by massive amounts of foreign imports, with only a tiny portion of medicine produced domestically. Most of the pharmaceutical products available in Azerbaijan come from Germany and Russia, although many other European, CIS, and Asian countries are large contributors as well. In raw numbers, imported medicines comprise 97% of the market share in the country. Azerbaijan is working to close this production gap through independent and partner oriented projects.

The lack of domestic production is currently problematic for Azerbaijan because it raises the prices of consumer medicines for local citizens. The exact same medicine available for purchase in Azerbaijan would likely cost less in Georgia or in a nearby CIS country. The solution for this problem, manufacturing pharmaceuticals domestically, has been an elusive task for Azerbaijan over the past decade. However, alongside the large drop in the price of a barrel of oil, Azerbaijan has a renewed focus and fresh motivation to make some concrete steps in the right direction with regards to the pharmaceutical industry.

The Deputy Prime Minister made an announcement to the nation in which he spoke about initiating talks to commence the production of medicines in Azerbaijan. His current plan for this endeavor involves utilizing the strong business relationships that Azerbaijan has with upstanding foreign pharmaceutical companies. The resulting companies in Azerbaijan would be based off of the models created, or even started, by select foreign corporations. Meshing perfectly with the Deputy Prime Minister's vision, many different countries have already taken notice of this appealing sector. Iran and Russia have extended offers to Azerbaijan in the interest of producing medicines within the country. Russia sent a trade delegation of pharmaceutical companies to Azerbaijan in order to meet with the Healthcare Ministry and discuss business opportunities. Iran has shown interest in opening a plant in Azerbaijan expressly for the purpose of manufacturing modern medicines. Experts have noted that joint ventures between foreign companies and Azerbaijan could be created without much difficulty using the new and technically advanced industrial parks in the country. To help ensure the success of the domestic production of medicine, tax exemptions for pharmaceutical producers and free customs duties were some further ideas that the government has discussed. All of these smart new ideas for the promoting of this industry underscore a newfound proactivity on behalf of the government. As another positive step, the government cracked down on pharmacies that were selling non-registered medicines or allowing the sale of certain medicines to consumers without prescriptions. The government also placed regulations on the prices of all medications since September of 2015, effectively increasing their control on the market.

While the government and other firms work to make Azerbaijan less import-reliant in the pharmaceutical industry, other companies are looking to improve the current pharmacy model. In this vein, VITTA Scientific Technical Company is creating a mobile app called Aptek. As pharmacies around Azerbaijan begin to make the transition to electronic databases, Aptek will enable consumers to search for medications from the palm of their hand. This app will let consumers know which specific pharmacies have the medication they are looking for, the cost of the medication at each pharmacy, and it will provide the phone number on the screen of the pharmacy as well. Advancements in this field will continue to pile on as the domestic industry makes strides to become increasingly self-sufficient.