Report on Pharmaceutical sector in Azerbaijan The pharmaceutical industry is seen as an essential non-oil sector of the economy. Pharmaceutical industry in Azerbaijan heavily depends on import at the moment. Import Azerbaijan imports pharmaceutical products (HS30) from more than 40 countries. In 2020, Azerbaijan imported pharmaceutical products (HS30) in the amount of 377 million USD increasing 27.2% compared to 2019. Total import of pharmaceutical products (HS30) from India was 14.9 million USD sharing 4% in Azerbaijan's global import of pharmaceutical products. Out of this, Azerbaijan imported drugs (HS 300490) in the amount of 264.251 million USD in 2020, Import from India amounted to 10.967 million USD sharing 4.2%. Turkey shared 19.5%, Germany shared 10.9%, Russia shared 8.2%, France shared 6.6%, Ukraine shared 4.6%, and Switzerland shared 3.7%. Import of human vaccine (HS 300220) was 4.032 million USD. India accounted for 44.5% of total vaccine import of Azerbaijan exporting to the country in the amount of 1.794 million USD human vaccines. France was the second exporter of human vaccines sharing 26.5%. Other exporting countries were Netherlands and USA. Azerbaijan imported animal vaccines (HS 300230) in the amount of USD 16.3 million increasing volume of import by two times compared to last year. In 2020, Azerbaijan imported from Turkey animal vaccine in the amount of USD 9.0 million which was 55.2% of the import. Other exporters were France sharing 10.1%, Netherland sharing 7.5%, Israel sharing 5.2% and Jordan sharing 4.1%. There is potential for indian vaccines in the market. During the four months of 2021, 29.0% increase was observed in the overall import pharmaceutical products (HS 30) by Azerbaijan amounting to 160 million USD. Import from India was 11.4 million USD sharing 7.1%. Total drug import by Azerbaijan was 118 million, Import from India made 8.6% of it with 10.2 million USD. Major Players Major Players are “AvroMed", “Azeri Med’, Zeytun Pharmaceuticals, Rinara Pharm (Keshali Group) and “Pasha-k’, Profarma, Aki-Pharma, Altes Pharma, HB Co Lid, MakroMedicine, Repharma. AvroMed is one of the biggest Importers accounting for more than 50% of the market.Avromed Is a distributor ot brands like Alcon, Aspen, Alpen Pharm Group, Abbott, Acino, Amring, Berlin-Chemie, Besins Healthcare, Novartis, Novo Nordisk, Normon, Orion, Sanovel, Santen, Promed, Polpharma, Stada, Sopharma, Vefa llac, Xantis Pharma, Sysmex, Kuzey pharma, Koru Pharma, Grindex, Icure Pharm, Olain Pharm etc. Pasha-K is a distributor of companies such as “VEFA ILAC Pharmaceuticals", “Sebapharma GmbH", “ILKO ILAC”, “DEVA’, “Berlin Chemie’, “Pharma Zentrale”, “Medial D&P” LTD of Sweden, “Sandoz D.D”, “EGIS Pharmaceuticals’, ‘Farmsintez”, “Mosximpreparat im. Semashki’, “Bukayev RU’, “Europharma” companies of Russia, “Lekxim”, “Omnifarma’, “Medibase SRL”, “Biofarma S.A”, “Grupo Reig Joffe”, “J.Uriach, “IBSS Biomed S.A” company of Poland, “Sumerian Trade”, “Bilim llac’, “Mersin llac’, “Shahin Tibbi !lac’, “Borisovski Zavod”, “Mega’ etc. According to international studies, over 75% of drug sales in the pharmacy network accounted for prescription by doctors recipes that can serve as evidence of the growing role of marketing companies in the country's hospitals. For this indicator, Azerbaijan is the leader in the post-Soviet space. In Armenia and Georgia, for example, a third drug is sold in pharmacies without a recipe. In Russia, this figure exceeds 50 % of retail sales Boosting domestic production There are few companies Azerfarm, Azeryod, Baku Chemical-Pharmaceutical Factory (original: Baki Kimya Ezcaciliq Zavodu) which are dealing with production of pharmaceutical products. However the production is very low. In 2015, the government approved the pian on stimulating the development of the pharmaceutical industry, which envisages the creation of many modem full-cycle manufacturing pants. The government established Pirallahi Industrial Park in 2015 for pharmaceuticals plants for boosting domestic production of pharmaceutical products and cease dependence on import. Up to now, three pharmaceutical plants are under construction in Pirallahi Industrial Park. The first plant is Hayat Pharm - joint venture with Russian group of companies R-Pharm. The foundation of company was laid in November 2016. The total investment in the project $74 million. The planted was put in operation in December 2019. The enterprise will annually produce around 250 million tablets and capsules. At the initial stage, the plant will produce 89 types of pharmaceuticals. The products are considered to be exported to Georgia, Iran, Turkey, Germany, Switzerland, Ukraine, and Central Asian countries. The second joint pharmaceutical plant is Caspian Pharmed between Iranian company Tamin Pharmaceutical Investment Company and Azerbaijan's Azersun Holding. The foundation of the plant was held in January 2017. The project cost is more than $20 million. Another pharmaceutical plant which is being built in Sumgayit city by one of the biggest local business groups-Gilan Holding using the expertise of one of the India's biggest pharmaceutical companies- Sun Pharmaceutical Industries Ltd. (Sun Pharma). The plant will produce medicines/ solid drugs for cardiology, nephrology, gastroenterology and diabetes, as well as other necessary medicines for the Azerbaijani market, according to European GMP (Good Manufacturing Practice) standards.In recent years, toreign companies started considering Azerbayan not only as a market but also as a prospective place for deployment of production facilities and a hub for accessing the pharmaceutical markets of neighboring republics, including Iran. Regulatory bodi Ministry of Health- formulates state policy in the field and ensures its implementation Ministry of Economy- issues licenses, permits, certificates and other documents for various entrepreneurial activities Tariff Council - in compliance with relevant legislation regulates prices of pharmaceuticals Registration of drugs: Pharmaceutical activities in Azerbaijan are licensed by the Analytical Expertise Center under the Health Ministry. The Center's activities include quality control of drugs, conducting Expertise with regard to state registration of drugs, providing Ministry of Economy with feedback when issuing permits and licenses for private medical enterprises (hospitals) and pharmacies, inspection of private medical enterprises and pharmacies, granting permit for import of drugs Pharmacopoeia Azerbaijan has no National pharmacopoeia and refers to other countries’ national Pharmacopoeia. Instruction on the packaging on the drugs is allowed to be in 4 languages (Russian, English, Turkish, and Azerbaijani) which create opportunity to sell drugs intended for Russian and European market in Azerbaijan Price regulation In December 2014, by introducing amendments to the Law "On Medicinal Products", the prices of medicines made to the state registration were subject to state regulation. And in March 2015, by the decree of the head of state, the Tariff Council under the Ministry of Economy of the Republic of Azerbaijan were entrusted with regulating and controlling the prices of medicines. In order to determine the reference prices, the Tariff Council of the Republic of Azerbaijan choose at least 5 reference countries from among different countries and refer to the prices in those countries when setting up prices for drugs. Reference countries include Turkey, France, Italy, Spain, Portugal, Greece, Poland, Hungary, Bulgaria and Slovenia. Tariff Council has identified three group categories of countries and regulate the prices according to the country of origin. First country group include Germany, Austria, United Kingdom of Great Britain and Northern Ireland, Belgium and Switzerland, countries Where drugs are really expensive and Tariff Council usually refer to the lowest prices in European Customs Union member countries. The Council usually set up the highest price for drugs produced in these countries.Second group include European Union member countries, United States, Canada, Japan, Australia, Israel, Norway and Turkey and again Tariff Council refer to the lowest price in countries of reference where the drugs are sold. Third category group include other countries including Korea and India. According to the Council, the fact that South Korea and India in third group, does not mean that pricing of the drugs produced in these countries would be the same, Third group do not mean third category and said that Tariff Council has more individual approach when setting prices for drugs produced in the third group. Also, wholesaler and retailer margin are up to 20 % whereas in other countries it is 5- 9%. Tariff Council usually approve the price declared by the Producer, however thy can sell it here even for lower price. According to Tariff Council, when setting up the prices, in 90-95% of the cases the Council approves the declared price offered by producers, and only 5-10% of the cases price offered by Producer is not approved. Tariff Council usually checks prices in open public resources and compare with prices in India. The Council also add up to 20% import and retail mark-up State procurement In the framework of various State Programmes, the Ministry of Health insures different types of free medicines for certain illnesses. Annual public procurement of medicines in the framework of various state programmes reaches 150-200 min USD. About 150-200 types of medicine offered in the hospitals and 100 types of medicine distributed to various privileged groups of population are provided at the cost of the Ministry of Health. Compulsory Medical Insurance The State Agency on Compulsory Health Insurance under the Cabinet of Ministers of the Republic of Azerbaijan was established on 27 December 2007 (the Order of the President of the Republic of Azerbaijan No. 2592). it started functioning on 15 February 2016 and became a public legal entity named the State Agency on Mandatory Health Insurance (hereinafter the Agency) on 24 November 2016 (the Decrees of the President of the Republic of Azerbaijan No. 765 and 1125 respectively). The Agency implements mandatory health insurance through accumulating revenues to finance medical services within benefit package and acting as purchaser of these services, In drugs Azerbaijan has re-started registration Indian drugs since 2016. As of the end of 2020, Azerbaijan registered 197 Indian drugs. India pharmaceutical companies such has Agio Pharmaceuticals Limited, Otsuka Pharmaceuticals India Private Limited, Serum Institute of India PVT LTD, Sun Pharmaceuticals Industries, Brawn Laboratories Limited, Bharat Parenterals Ltd, Rivpra Formulation Pvt Ltd, Celogen Generics Pvt. Ltd, Unique Pharmaceutical Laboratories (A division of J.B. Chemicals and Pharmaceutical Ltd.), Saga Lifesciences Limited etc. registered their drugs in Azerbaijan.