1. June 2012
A look at the extensive reform taking place within healthcare
K
azakhstan is the ninth largest territory in the world, and
with a population of only 16.5 million, it stands the most
economically liberal country in the former Soviet Union.
Kazakhstan has the eleventh largest proven crude oil reserve,
according to the Organization of Petroleum Exporting Countries, and
attracted roughly US$20 billion worth of foreign investment in energy
and minerals in 2011.
In order to eliminate the dependency on energy industries for growth,
the government developed the “Kazakhstan 2030 Strategy”. The plan
outlines 5-year development programs for these specific niche sectors:
chemicals, pharmaceuticals, electric energy, tourism, agro-industrial
complex, light industry, and transportation infrastructures.The current
program for 2010-2015 is called the State Program of Accelerated
Industrial & Innovative Development (SPAIID).
What are the driving factors of government healthcare policies and
reforms?
Two decades ago, the healthcare system in Kazakhstan was close to
total collapse; the system was unsustainable. Hospital equipment and
devices were outdated, and healthcare personnel were underpaid and
lacking modern professional qualifications.
Since then, the healthcare system has undergone extensive reforms
- building 100 hospital complexes within a 5-year period, sending
healthcare professionals abroad to upgrade their qualifications,
renovating hospitals and clinics, and investing heavily in medical
equipment and devices.
Beginning in 2000, Kazakhstan addressed its other ongoing challenges
by:
●• Increasing the country’s population
●• Maintaining health standards within different social sectors
●• Effectively allocating budget resources to healthcare
●• Creating a sustainable pharmaceutical industry
●• Operating a fully transparent and accountable reimbursement system
D O I N G B U S I N E S S I N
KAZAKHSTAN
Kazakhstan Pharma Market:
Kazakhification?
by Seref Tasdemir
Two decades ago, the healthcare system
in Kazakhstan was close to total collapse;
the system was unsustainable.
MULTI-INDUSTRY

2. NPT | The Community of Big Thinkers
The next decade will
see Kazakhstan become
a success story in the
pharmaceutical industry.
The National Welfare Fund, which controls all state critical
assets, established SK Pharmaceuticals LLP in 2008 as the
sole national distributor of medicine and medical devices.
They establish long-term agreements with a 7-year purchase
guarantee, direct purchase agreements with foreign producers,
support the industry by searching potential local and foreign
investors, and monitor Chimpharm JSC - the biggest local drug
manufacturer within SPAIID.
The government purchases and then provides medicinal drugs,
devices, equipment and services to citizens free of charge within
the framework of Guaranteed Volume of Free Medical Aid
(GVFMA). This support is given in the following areas: HIV,
respiratory illnesses, newborn and maternal health, prevention
and treatment of hepatitis B and C, oncology, tuberculosis,
cardiology and gastroenterology.
How is the reimbursement system organized?
The state reimbursement system is based on Guaranteed
Volume of Free Medical Aid (GVFMA). The structure of the
tenders is shown in the following table.
The total state budget for tenders in 2012 is estimated at
US$960 million. Of this, 60% is allocated to SK Tender, 30%
to Regional Outpatient Tender, 7% to Hospital Tender, and
Commercial Offer is allocated the remaining 3% of the budget.
How does the tender process work?
The Ministry of Health (MoH) annually publishes the
State Formulary Drug List. SK sends a request, based on
the International Nonproprietary Names (INN), to each
state’s healthcare administration to collect the drug list for
the upcoming year, including the quantity, form, and dosage
requirements for state hospitals. SK announces the drug list for
tender with INNs, price, and quantities between June and July.
The final tender list with dosage, form, quantity, and maximum
price in lots is officially published by SK between August and
September. The successful bidder is announced in November.
Organizer Level Designation Decision-Maker Budget Allocation
SK Pharmaceuticals LLP Central SK Tender SK Pharmaceuticals LLP Federal
MoH Kz Regional Regional City and state (oblast) Republican
Outpatient Tender healthcare department
State Hospital City Hospital Tender Chief doctor and/or distributor States (oblast)
State Hospital Individual Tender by Chief doctor and/or distributor Hospital
Hospital Commercial Offer
Kazakhstan Pharma Market: Kazakhification? - multi-industry

3. June 2012
multi-industry - Kazakhstan Pharma Market: Kazakhification?
How to prepare for SK Tender
• Review the official tender list to ensure
your products match dosage and form
definitions
• Ensure the maximum ceiling prices are
suitable for your company
• Know your competitors and consider
their minimum bidding price
• Research local manufacturers for your
products
• If you have the only representative
office, consult with your distributor
• Confirm that your distributor will
attach the tender to your product
• Confirm final delivery price, terms and
time
• Ensure you can provide the delivery on
time, as required by SK
• Ensure you have a person/department
dedicated to the SK Tender
• Follow SK announcements and press
releases
How is the Regional OutpatientTender
made?
The SK Tender closes by September
each year, and by mid-November the
MoH announces the regional Outpatient
Tender within the framework of
GVFMA to supply medicinal drugs to
regions and cities. The drug list with
maximum ceiling prices, product, dosages
and forms is published with the following
specifications:
• The collection of orders with INN
from hospitals by the Oblast and city
healthcare departments around mid-
September
• The announcement of the tender list by
MoH with product ceiling prices
• Determination of drugs listed with
quantities, dosages, and forms by
regional authorities
• Bidding by the suppliers is completed
from December - February
• Declaration of the winners by each
regional authority, individually and
independently.
Note: You will be dealing with each regional
healthcare authority separately and your
distributor may not win the tender in each
region.
What are the opportunities of Kazakh
reimbursement for drug makers?
The opportunities are clear for foreign
producers of reference (“original”) and/
or bioequivalent (“generic”) drugs in
Kazakhstan’s reimbursement system.
Tens of millions of dollars can be made
every year submitting tender with one
or two products in a market with an
estimated projected size of USD$2.5
billion in 2015.
How to avoid complications and
create a sustainable business
model for Kazakhstan
Product Portfolio Management:
• Assess your company’s strengths
• Analyze the market with the
government’s reimbursement programs
• Determine profitable therapeutic areas
and plan your 5- or 10-year forecast,
analysis of competitors, market
dynamics, branding, positioning, and
pricing
• Make sure that you have at least 3 or 5
products in each therapeutic area
• Consult with product experts, discuss
the viability of the product with your
distributor
* Important Note: avoid copy--paste style
product portfolio management from your
global HQ. Customize for Kazakhstan.
Regulatory affairs and registration:
Due to the Eurasian Custom Union
between Russian, Belarus, and
Kazakhstan and the adaptation of
European American pharmacopeia
in Kazakhstan, the ever-changing rules
of product registration creates synergy
between regulatory departments in ex-
Soviet Union countries.
• Review existing rules, regulations, and
registration procedures
• Check your dossiers against all
registration rules
• Beware of patent protection and
trademark issues
• Be careful about the full description,
dosage and form of your product in MA
issued by the MoH
• Pay attention to the fact that MAs are
issued for 5 years, and once expired
you can’t import into Kazakhstan - re-
registration takes 12 to 18 months
• FAMM: register a product that is only
sold in the SK Tender from a local
supplier
Conclusion
Without considerable efforts, resources
and commitment, success in the
Kazakhstan’s pharmaceutical market is
a challenge. Kazakhstan is positioned
for growth and the healthcare industry
has seen significant change over
recent years. The next decade will see
Kazakhstan become a success story in the
pharmaceutical industry. The market is
destined to grow, so don’t miss out!
Mr. Seref Tasdemir is the chief pharma consultant at Ironstone Castle Ltd in Kazakhstan. They provide a range of services including: registration, market access,
portfolio management, acquisition merger, market analysis, toll manufacturing at GMP sites, product forecasting, business development licensing for local
and international pharmaceutical companies. seref.tasdemir@gmail.com
What is the volume of state procurement
vs. total market in million US$ terms?