Make it your homepage |   E-mail: Subscribe Unsubscribe

University of Uppsala partnership grows

Thursday, April 17, 2014
News Making Money

Cheap Indian Generic Drug Producers Testing Ground on the Georgian Market

Written by Madona Gasanova, The FINANCIAL

10/02/2014 00:00 (66 Day 01:08 minutes ago)


The FINANCIAL -- Indian pharmaceutical companies are interested in establishing manufacturing in Georgia. The prospect of low-priced generic drugs promises to reduce healthcare costs. Attracted by the simplicity of doing business in Georgia and transit opportunities, businessmen are unafraid of the existing monopoly in the pharmacy industry which is dominated by four main Georgian companies. PSP, one of the leading pharmacy companies, objects to the entrance of new competitors, claiming that the Government must support the export of local production instead of letting Indian producers import generic drugs.

India’s generic drug industry, the world’s largest maker of low-cost medicines, faced some difficulties in the United States and UK in recent years. In 2013 the FDA banned some Indian-made generic medicines, and in December 2014, at least two Indian pharmaceutical firms which supply British chemists and hospitals had either failed to submit original data from tests on the drugs or actually changed the data on which the regulatory body decides whether they meet the required manufacturing standards and can remain on sale in Britain.

Last week representatives of more than 20 Indian pharmaceutical companies visited Georgia. The potential investors were invited to explore the possibilities of the Georgian market not only by trading but also for joint manufacturing facilities.

“India has created a niche for themselves in generic drugs. They are low price but high quality products,” Abhay Kumar Sinha, Regional Director at Pharmaceuticals Export Promotion Council of India, told The FINANCIAL. “It helps any economy to bring their cost of healthcare down. It is in this way that we are going to compete in Georgia. We feel that the entrance of Indian manufacturers will reduce the prices of medicaments in Georgia. This is what has happened on every other market. Everyone is looking for high quality products at affordable prices,” Abhay Kumar Sinha said.

The opportunities of the Georgian market for foreign investors are tremendous for Sinha. “The other positive aspect is that it is a gateway to other nearby and emerging markets. So what I feel and believe is that Indian manufacturers can opt for collaboration and have good facilities, given the very friendly business environment and the investment climate and policies. That will help in looking for opportunities outside Georgia as well,” he said.

Contrary to Georgian legislation, Indian businessmen are not welcomed by local pharmaceutical entrepreneurs. “There is no need for the entrance of Indian pharmaceutical companies onto the Georgian market. There is nothing that these Indians can teach us. Their products will be of low quality. I have never encountered anything from there that is of both high quality and low price. The level of the competition is already high enough on this market. Their entrance will not reduce prices,” said Kakha Okriashvili, Founder of PSP, one of the leading pharmaceutical companies established in Georgia.

“Every government tries to encourage local producers. Ours is acting in the opposite way. Local production occupies only 10%, while the figure should be 40%. The Government should help us to export our products. No one has ever mentioned that our production is in line with European standards,” said Okriashvili.

Aversi Pharma, the second leading player on the Georgian pharmaceutical market, declined to comment on the issue.

Recent research of Transparency International Georgia described the Georgian pharmaceutical market as an oligopoly and vertical monopoly of two companies that use their strong concentration of market power in the import/distribution, retail and manufacturing sectors to dominate the market.

According to the report, the market dominance of a few companies leads to high markups for medicines which explain the high expenditures of pharmaceuticals. The markup for medicines in Georgia is far above the average markup for medicines in other European countries. A recent study by the Curatio Foundation shows that, while a general price decrease for medicines occurred during the last three years, only 30% of these medicines truly decreased in price. The prescription behaviour of doctors appears to be influenced significantly by financial or other incentives offered by large pharmaceutical companies.

Other reports indicated a conflict of interest with Aversi, one of the main pharmacy companies, and insurance company Alpha, owned by the same group.

In December 2013, the Ministry of Health of Georgia stated that foreign pharmaceutical companies that were going to start working in the country, plan to build factories for the production of drugs. Their representatives have already begun selecting a territory for this purpose.

Health Minister David Sergeenko announced that the new players were large companies from Britain, Germany, Hungary, and Israel.

The then-Prime Minister Bidzina Ivanishvili was the first who planned to attract large pharmaceutical companies to Georgia. In his opinion, it was necessary in order to stimulate competition in this area and provide for a reduction of medicine prices.

“I do not feel any risks in Georgia so far. Maybe the population is not big, but the neighbouring countries can offer a good business here. The registration and regulations are not strict, which is an important issue. We have been provided with a good platform to enter the market from,” said Kostuv Kejriwal, Director of Merit, Manufacturer and Exporter of Pharmaceutical Products.

Due to it being his first visit to Georgia, Kejriwal could not name the exact sum that his company is going to invest in Georgia. “As it is the healthcare segment I do not think that the existing oligopoly will hinder our decision to enter the Georgian market. I do not think that they will have a complete line of products and there will still be a gap,” he believes.

“Signing the Association Agreement and DCFTA will help us to get to more markets freely, to get access to bigger territories, so I consider it an advantage,” said Kejriwal.

“Indian investments, worth over USD 450 million, are already present here even though we do not have an embassy yet. Maybe after this visit we will see an inflow of Indian investments in the pharmaceutical sector. Traditionally Georgia and India have had tight relations regardless of the different governments in power and despite their geographical distance. I am optimistic that the current government will actively promote India on the Georgian market,” said Suresh Babu, Ambassador of India in Armenia and Georgia.

“The pharmaceutical sector is the core sector of the Indian economy. It is the major driver and revenue-generating sector for our economy. Both parts can contribute and add value to the product and to the market here and also outside Georgia. This is basically the major objective of the Indian representatives’ visit. We do not have an embassy in Georgia which might be one of the reasons why only individual meetings have taken place previously. We are trying to correct this. We are working with the Ministry of Foreign Affairs of Georgia in order to open its resident mission in Georgia and we are working on that. We are working with the objective of opening an embassy during 2014,” Babu said.

According to Babu, Georgia and India have signed an intergovernmental agreement constituting a bilateral mechanism of joined commission for trade-economic cooperation. “We signed the agreement but the first session of this commission has not yet taken place. Therefore, we are trying to arrange to hold this first session in a couple of months. Once this joint commission takes place we hope that things will move in the right direction,” Babu told The FINANCIAL.



Make Your Comment

Add NewSearchRSS
Only registered users and facebook social network members can write comments!

This text is replaced by the Flash movie.
This text is replaced by the Flash movie.
Parliament issues strong call for EU lobby transparency register to become mandatory

16/04/2014 16:53 (08:15 minutes ago)

The FINANCIAL -- The report approved by MEPs gives an important signal to the European Commission that a far more ambitious approach is needed to secure genuine lobby transparency in the EU, according to EUbusiness Ltd.

Marriott International Expands its Courtyard Footprint In Eastern China

12/04/2014 11:34 (4 Day 13:34 minutes ago)

The FINANCIAL -- Marriott International continues dynamic growth in China with the opening of the Courtyard by Marriott Hangzhou Qianjiang.


World News
EBRD loans to boost energy efficiency and support competitiveness of Macedonian companies

16/04/2014 16:42 (08:26 minutes ago)

The FINANCIAL -- The EBRD has teamed up with Macedonian bank, NLB Tutunska banka, to increase the competitiveness of the Macedonian private sector and to promote energy efficiency in the country with a €6 million financing package, according to EBRD.      

EBRD helps modernise Baltic freight handling

16/04/2014 16:29 (08:39 minutes ago)

The FINANCIAL -- A €32.5 million loan from the EBRD to Klaipedos Smelte, the company operating the container terminal at Klaipeda port in Lithuania, helped modernise its freight handling capacities and upgrade the whole Baltics region as a transit hub, according to EBRD.

EBRD to provide first loan to Tunisian leasing sector

16/04/2014 16:26 (08:42 minutes ago)

The FINANCIAL -- The European Bank for Reconstruction and Development (EBRD) is providing a €15 million senior unsecured loan to the Compagnie Internationale de Leasing (CIL) for on-lending to local micro, small and medium-sized enterprises (MSMEs) in Tunisia. The loan is the EBRD’s first investment in the country’s leasing sector, according to EBRD.

Successful cities of the future are agile to adapt to global trends

11/04/2014 18:29 (5 Day 06:39 minutes ago)


The FINANCIAL -- Cities worldwide face the challenge of growing economically while balancing the social and environmental side of the city to remain sustainable in the future.


Attack of the Clones: New Kids on the Block Shake Up CEE Consumables Space

12/04/2014 16:44 (4 Day 08:24 minutes ago)

The FINANCIAL -- Thriving sales of cheap new-build compatible products are having a profound impact on the CEE printer and MFP consumables market, according to global market intelligence firm International Data Corporation (IDC).

Philippines: Further reforms to strengthen growth, create more and better jobs

11/04/2014 12:00 (5 Day 13:08 minutes ago)

The FINANCIAL -- The Philippines is likely to remain as one of the fastest growing economies in the East Asia and Pacific region in the next two years.

Chevrolet Cruze Named Diesel Car of the Year

16/04/2014 17:40 (07:28 minutes ago)

The FINANCIAL -- Diesel enthusiasts around the world have determined the 2014 Chevrolet Cruze Diesel is the top diesel car of the year and Chevrolet is the top diesel manufacturer of 2014, according to General Motors.

Attitudes towards life are changing: 60 is the new 50

16/04/2014 17:02 (08:06 minutes ago)

The FINANCIAL -- Money matters: Across the world, people of different generations are worried about their financial wellbeing in retirement.


Developed by Aleksandre Chiabrishvili

Design built by Creo Group