The pharmaceutical market of Azerbaijan

Membre Joined: Jan 26, 2006 Posts: 18 Location: France

Pharmaceutical sector in Azerbaijan has been increasingly changed since the last 10 years of
activities. It shows a lot of changes starting from the independence of Azerbaijan till now
days. The strategy of import and distribution of medicine in the country has been modified for
the last 10 years. Strong investment strategy and Azerbaijan development allows to establish
strong relations in trade.
Pharmaceutical history of Azerbaijan has a along way from independence till today. A lot of
changes have been done but still market needs to be more modernized. The former market
was full of different quality medicine, the number of which was raised extremely high after
collapse of Soviet Union. The mentality of people was adopted to the most of post Soviet
medicine names and brands. This effected to the increase of fake pharmaceutical products.
Low price for the post Soviet countries was the main interest since people were not adopted to
the market economy, later quality products started filling the market, but still even today a lot
of fake product exist in the market. Today the market of Azerbaijan is full of different sort of
products. One of the main problems that newly established companies face with new brands,
people are not fully aware of the product. Thus new distributor’s companies come with the
strategy of establishing marketing groups and then promoting and selling the product.
Because of good trade location of the country it is easy to import all variety of pharmaceutical
products. That is why distributors are selecting different strategies. Individuals or local
companies import medicines to the market, which are already widely promoted by
distributors. This affects the selling strategy of the big companies, which are importing
specific medicines. That is why some distributors are changing names and brand titles of the
products adopting it to the local market.
Azerbaijan experienced a big deficit of specific drugs specific diseases. This disease range
mostly amongst those, that is incurable worldwide. First of all the country’s experience with
the big shortage of HIV curing medicines, which was not imported. People usually bring such
medicines with the aid of relatives traveling.
Second, there was a shortage of medicines for the tuberculoses. Third, there is a big shortage
for insulin. Government takes care to control import of these crucial medicines but the amount
of imports is still not satisfying, shortage for the mentioned medicines still exist.

While every effort has been made to verify the information contained in this document, ITC cannot accept any responsibility for any errors that it may contain.

» Registration procedure of medicinal products and documents in Azerbaijan.
» The terms and conditions of registration service in Azerbaijan.

Membre Joined: Jan 26, 2006 Posts: 18 Location: France

The pharmaceutical market of Azerbaijan consists of distributors and local companies. In
some cases local companies are dealing as partners of international pharmaceutical companies
abroad and representing them in Azerbaijan.
For the past 10 years of pharmaceutical business in Azerbaijan many positive changes took
place. The number of pharmacies has been increased. The quantity and quality of
pharmaceutical products at the pharmacies has also increased. Ten years ago a pharmacy with
a number of 100-110 items was considered as a big pharmacy; today the normal pharmacies
are usually having a range of 280-3000. This is a positive fact but needs to be controlled
adequately.
Market capacity of Azerbaijan pharmaceutical sphere is estimated average US$ 200 million;
today’s market size is US$ 120-150 million. It can also grow by potential investors in the
future. Many companies are willing to invest and the good trade infrastructure of the country
is attractive for companies. Despite the Karabakh conflict, between a cross boarding country
and Azerbaijan, which may affect the market, for the past 11 years of ceasefire Azerbaijan
gained a lot of investment. Azerbaijan’s oil resources also make investment more secure than
to the neighboring countries.
There are 1300 pharmacy stores in Azerbaijan, 800 of them stores are located in the capital of
Azerbaijan, Baku. A hundred companies are currently working in Azerbaijan. This includes
small local companies and distributors/representatives of known brands.
A Central Control Laboratory controls the market of pharmaceuticals. This laboratory has
been controlling the pharmaceutical products for the last 10 years, but unfortunately, the
Central Control Laboratory first started a computerized system, which is recording data on the
flow of all products, April 2004. Because of this reason no statistical data for the past 10 years
was collected.
Each month 3,000 pharmaceutical products are being analyzed in Azerbaijan, basing on the
documentation provided they get registered through the MOH. The Central Control
Laboratory has a hotline to reach at anytime of the day and check the medicine purchased.
This system allows to control if the medicine was registered and its quality was controlled by
the laboratory. Each medicine gets a hologram on the pack, which certifies that the medicine
was tested by the laboratory. If the medicine pack does not have a hologram, the selling
pharmacy might be accused. Holograms are being ordered from a specific institution
(international based certified companies) and include three protection levels (specific inks,
digital code and chemical structure), which do not allow faking them in the country itself.

MOH also controls issuance of License for distribution, sells and registration of the
pharmaceutical products. To register a pharmaceutical product full package of information
about product and its tests has to be submitted. Each registration is being given for the 5 years
and should be re-registered in 5 years period. This registration allows importing and using the
medicine in the country. The license for the distribution is for the juridical entity, which is
going to distribute medicines to the pharmacy, which are in the own order needs to have their
own license registration for the sell of the products. Each license allows performing specific
activities in the market, e.g. importing, distributing, and selling.
Export of pharmaceuticals from Azerbaijan are marginal, there are two companies, which are
currently producing, and exporting medicines. There are approximately 110 items, in the form
of tablets, ampoules and injections. The factory also produces the packages for the medicines
imported. Some of injections are being exported to Turkmenistan. Future import projects are
aiming on Cyprus.
Market analysis allows us to show that the capacity of market can be enlarged by bringing
more regional companies to the country. This allows European companies to open regional
focal points for further distribution.

Membre Joined: Jan 26, 2006 Posts: 18 Location: France

Azerbaijan’s pharmaceutical economy is based on the import rather than production. The collapse of the centralized economy system of post URSS stopped the production
means in the country. The reason for that situation was a shortage of raw materials. Currently
it is changing more to production rather than import, but those are still initial steps. The
country imports a lot of products of different varieties. Due to the given situation the import
policy of Azerbaijan is quite convenient and flexible for most of the importers.
Importing duties for the pharmaceutical products are being divided to the classification of first
necessity, products that have food supplements and general necessity needs. Specific codes of
customs exist for the import duties on different products for pharmaceutical products are
generally 5% of duty. If medicine is in the list of first aid is not obliged any duty.
To import a pharmaceutical product to Azerbaijan MOH issues permission. Basing on the
license and/or registration of the pharmaceutical product MOH identifies the necessity and
possibility of the medicine product to enter the Republic.
Tax payment for the trading company is 4 percent of the company’s turnover. In case of
turnover exceeding 60 mln AzM (approximately US$ 12,000), the company has to pay 18%.
There are several steps the company has to pass for importing pharmaceutical products. First
of all juridical entity must be registered in the Ministry of Justice in Azerbaijan republic. If
the company itself distributes or sells products, then an adequate license for the company
should be issued from MOH. The product going to be distributed should be registered through
the MOH and also obtain a license.
On the first stages of import, the company applies to Ministry of Justice on the basis of the contract made with the supplying company abroad.

After signing the contract MOH gives permission, invoice for the amount of product, and issues certificates, and licenses.
The next stage is importing medicine to the country, which is basically controlled by the Customs. They check, based on the documents from MOH and the company. If the quantity
and the product is correspondent to the documents, it passes through the customs goes to thewarehouses of the company.
On the final stage Central Control Laboratory representative picks five items of randomly selected medicine for analyzes and tests. This procedure takes several days and it certifies that
the medicine is in accordance with the license and the chemical structure. As a last stage
Central Control Laboratory provides certificate and holograms according to the numbers of
the product.

Membre Joined: Feb 13, 2007 Posts: 5

The problem of counterfeited medicines worries all people all over the world. However, in contrast to developed countries, where the safety of medicines was always a priority matter, in our country (as on the whole post-Soviet territory), the consumers have to take care of themselves, without giving credence to state controlling bodies. Azerbaijan pharmaceutical market existed as very primitive one, without any regulating mechanisms. Today, after the replacement of persons authorized for the registration of medicines, the situation begins to change. The efforts aimed at the withdrawal of the national pharmaceutical market from the sector of shadow economy are realized in order to direct this market to the course of civilized development. This matter was the subject of our conversation with Mr. Vakhid Nagiev, Director of the Center of Innovations and Supplies.

- Today, Azerbaijan pharmaceutical market faces again with quite ailing economy in it. How do you intend to improve this situation, what did you do to begin with?
- Today, the situation with medicines market, indeed, is dissimilar to the best one. It is well known that, in the past, this segment of the public health was one of hotbeds of the corruption; the latter became one of causes of the market filling with counterfeited medical products, and this process, finally, adversely affected the health of citizens. Our task was the elimination of all faults revealed during inspections.
We realized very well, how enormous will be the work, which we shall to do in order to eliminate all these breaches, and the most complicated task was - to restore the confidence of consumers and participants of the pharmaceutical market. For the first time in the history of Ministry of Health of the Republic of Azerbaijan, the minister - O. Shiraliev - initiated the collegial session of the Ministry of Health dedicated to all pharmaceutical issues. This fact witnesses that this sphere is the priority one for the public health of our country.
Therefore, from the very outset, we faced with a global problem concerning the creation of a certain system for the regulating of the whole pharmaceutical market. Have met a tight schedule, our employees prepared the necessary set of normative documents for the regulation of pharmaceutical activity in Azerbaijan; after its examination during the session of the Ministry of Health, this documents set was approved. Today, these norms permit us to re-organize the pharmaceutical market in accordance with civilized methods of work - the necessity of such methods dictated by the time itself. We invited representatives of the participants of the pharmaceutical market, familiarized them with new rules, with the procedure of medical products registration, informed them about new requirements for these participants. We were pleased by the fact that the participants of this meeting perceived all innovations with a great enthusiasm. Now, the reception of documents necessary for the registration of medicines is organized; such procedure allows us to differentiate entirely the market of medicinal products.

- What is the procedure of medicines registration and what are its differences from the previous one?
- The difference is that, hitherto, the certificate of registration had a formal status, and the procedure of issuance was minimized and it had a primitive character. The actual procedure of registration is worked out by the specialists of our Center in accordance with the requirements of World Health Organization with direct participation of its representatives. Today, we can say with certainty that our procedure of registration complies fully with all international requirements. The registration procedure anticipates the appropriate term for the issuance of the certificate of registration, which will be issued after the respective expert examination realized within the term up to 7 months. For comparison: in the past, such term was equal to a couple of weeks without any expert examination. Such procedure had entirely formal character. Now, the registration procedure is realized by several stages. We established the Pharmacological Board and Pharmacopoeial Board under the Ministry of Health of the Republic of Azerbaijan in order to settle various disputes; the leading experts specializing in various medical sciences were included in these bodies.
This board existed before, but its character was also entirely nominal - it was a figure-body. So, when any disputes arise, the Board will be convoked and the specialists will be able to give their opinion concerning such disputes. In short, formerly, if the company-applicant, which has shared its technological secrets and has paid the determined official fee to the Ministry of Health, did not receive any legal rights, then this situation is reformed now. Today, in accordance with the international legal requirements, the manufacturing company, intending to work in Azerbaijan pharmaceutical market, after the sharing its technological secrets and full information about pre-clinical and clinical studies in respect of its preparations, has the right (after the obtaining of the certificate of registration) to determine its proper distributor authorized for the importation of such manufacturer’s products to the territory of Azerbaijan.

Membre Joined: Feb 13, 2007 Posts: 5

- What is the difference between the system proposed by you and the former system?
- The fundamental difference is in the fact that, formerly, the procedure of registration and import of medicines included two absolutely different directions (it was incorrect), now the companies-applicants (manufacturers) will indicate their distributors after the submission of respective letter to the Center of Innovations. The pharmaceutical companies non-indicated by manufacturers will not have the right to import this preparation in the country. What do we have as our aim? The fact is that the problem connected with the importation of low-quality counterfeited products arises in such cases, when the supplier is not the manufacturer or its authorized distributor. Therefore, we would like to approximate (as much as possible) the pharmaceutical market to the following chain: Manufacturer - Distributor - Pharmacy.
When intermediary firms are excluded from this chain, the risk of the penetration into a pharmacy chain of counterfeited medicines is minimized at the most, because the practical experience shows that the supplies of intermediary firms includes 90% of all counterfeited pharmaceutical products intended for the pharmacy chain. Therefore, today, we constitute the following rule: the manufacturers of medicines shall determine themselves their distributors, through which all supplies will enter our market. In this case, both manufacturer and distributor will be responsible for the quality of their products, and we may assert a claim at their address in case of the revelation of any low-quality medicines series. Such opportunity is excluded with respect to intermediary suppliers.

- Is it possible that then the fantastic number of pharmaceutical suppliers will reduce? ...
- You are right. A paradoxical situation arose. For comparison: in France, the country with population equal to 58 million persons, there are only four wholesale suppliers of medicinal products; in Germany, with its population equal to 78 million persons there are eight such suppliers, but in Azerbaijan (with 8 million persons), this figure is 103.

Membre Joined: Mar 06, 2007 Posts: 1 Location: UK

Hi, This post is very informative, however I would like some specific information. If someone can help me then please send me a private message. Best Regards,

Membre Joined: May 09, 2007 Posts: 1

Hello,

Can you direct me to a list of Pharmaceuticals importers in Azerbaijan. Im specially interested in the contact details of LeaderPharm.

Thanks,

Soomro

Membre Joined: Jan 26, 2006 Posts: 18 Location: France

Hello,

We can provide you with full list of pharmaceuticals companies-importers in Azerbaijan, including LeaderPharm.

Also we propose you direct marketing service: distribution and negotiation your commercial proposition by contacting directly to these companies.
Please contact us : http://russia-agency.eligne.com

Best regards,
Sophie

Membre Joined: Jul 03, 2007 Posts: 1

Hello

I amalso interested to contact Pharmaceutical importer based at Azerbaijan. we have wide range of products.

Can you help? please contact me at Ketanmehta@hotmail.com