«Nobel AFF»: results achieved and new challenges

In recent years, Kazakhstan's drug manufacturers have achieved good results. They have switched to international standards of good manufacturing practice (GMP), have established the release of high-quality, competitive products and now, gradually expanding the range, carry out effective import substitution in the market. But they need to go to new goals for their further development. The CEO of one of the largest Kazakhstani pharmaceutical enterprises, JSC NOBEL Almaty Pharmaceutical Factory, Selcuk Tanryverdi, told us more detail about them.

- Mr. Selcuk, tell us about the situation at the market. What are the results of the industry in 2018?

- The market is going through a difficult period, there is a slight decrease in drug consumption and a slowdown in growth in tenge. Thus, according to the data of the international analytic company IQVIA, in 2018 the volume of the Kazakhstan pharmaceutical market compared to 2017 increased only by 0.1% and amounted to 453 billion tenge. In physical terms, it decreased by 1.6% — from 0.62 billion packages in 2017 to 0.61 billion packages in 2018. This is mainly due to the decrease in the volume of collateral at the stationary level. But we must pay tribute to our state: in 2018 the volume of drug supply at the outpatient level was significantly increased. The indicator of its growth in tenge was 48%, and in packages — 31%. This means that the population has become more and better supplied with drug products at the level of primary health care. Moreover, the Ministry of Health of the Republic of Kazakhstan and SK-Pharmacy LLP began to control, so that patients actually receive drug assistance guaranteed by the state.

The volume of the retail market, i.e. those drugs that people buy in pharmacies at their own expenses, increased in value terms by 8.6% — from 255 to 277 billion tenge — and decreased in the number of packages sold by 0.2% to 0.51 billion

Today, the industry is undergoing large-scale regulatory changes, so the figures for 2018 are very important for all participants in the Kazakhstan pharmaceutical market. They are a kind of reference point, by which we will be able to further monitor the degree of regulatory impact of ongoing initiatives, including, as you remember, the adjustment of prices for all drug products, the introduction of ethical standards for their promotion, as well as the tracking system of pharmaceutical products.

- What were the results of the Nobel AFF company ended in 2018?

- Our company has shown a very good increase in production, sales and exports of drug products. Without exaggeration, I can say that in terms of the growth of these indicators, we have become No. 1 in the Kazakhstan market. According to the results of 2018, this allowed us, for the first time in our history, to take the third position in the manufacturer rating by the share in the pharmaceutical market volume and become the leader among domestic manufacturers in terms of exports. I note that the share of exported products in the volume of production of our company has reached 30%. Already today we supply products to Russia, Kyrgyzstan, Mongolia, Uzbekistan, but in the future we will increase volumes and expand the geography of exports. This year we plan to increase the supply of products to Russia, and in the next three years we want to submit an application for registration of several drug products in Turkey.

We have been working in Kazakhstan since 2002. Thanks to state support and investment in the development of production over the years, the company "Nobel AFF" has achieved great success. In accordance with GMP standards, we have upgraded existing production facilities and rebuilt new workshops (departments). Our main priority is to produce high-quality, efficient and safe products. Guided by this principle and uncompromisingly following the rules of GMP, we systematically expand our product portfolio. Today, there are modern generics of vital drugs that are in demand in the health care of Kazakhstan. We produce a solid range of drug products for the treatment of a wide range of diseases, including socially significant ones. This is a very good result in terms of import substitution.

- How does the company as a domestic manufacturer contribute to the national economy of our country?

- JSC "Nobel AFF" is one of the largest domestic pharmaceutical manufacturers, which, as I said, is well developed and shows a significant increase. We are increasing exports, and this is very important, since at the same time we bring money from another country into our turnover and economy. The company employs 500 professionals. They receive wages from which taxes and social payments are paid to the state budget. The company also pays taxes and is a major taxpayer in the pharmaceutical industry.

- How do you prepare cadres?

- When we first started working in Kazakhstan, there were no specialists in the country who were familiar with the standards of good pharmaceutical practices, in particular GMP. We actively trained our staff, sent for training abroad, invited foreign specialists and consultants to the company. We always raise personnel, and then they will work in our company for a long time. Without exaggeration, I can say that very many Kazakhstan experts in the field of good pharmaceutical practices (GxP), which today have their own consulting enterprises, began their professional path in our company. It was here that they received basic education, which allows them to provide services for training and supporting projects in the field of implementing GxP standards.

- Tell us about the prospects for development?

- State support helped us to gain a foothold in the Kazakhstan market. But it is already close to its saturation. Therefore, for further development, it is necessary to master the production of new products and expand our presence in foreign markets. Of course, to do this on the basis of existing production capacity is quite difficult. Therefore, at present we are considering the issue of building a new plant, and there we are planning to produce not only the available range, but also biological products.

Modern medicine today is at the stage of complete transformation, chemical and pharmaceutical products are replaced by more effective biotechnological products. This trend today can be clearly seen in developed countries. First, we see an unprecedented recovery in terms of acquiring biotech companies. Today, multinational pharmaceutical companies buy them literally for any money. Secondly, more and more original biologics and their biosimilars come into clinical practice. Third, there is a surge in the development and research of breakthrough methods of biological therapy.

In two or three decades, they will be widely used in the treatment of diseases. Therefore, we need to move in the direction of creating a research and development center (R&D), as well as organizing the production of biosimilars. Our parent company in Turkey is already doing all this, so we could transfer this experience to Kazakhstan. But for the implementation of these plans, of course, we need a favorable, stable economic and regulatory environment, and most importantly, calm working conditions.

- What kind of support is needed?

- The capacity of the Kazakhstan pharmaceutical market is small, the population is also small, therefore, in order to develop biotechnology, we need to strengthen ourselves in foreign markets. After all, this is a very expensive production, and in order for it to be profitable and bring profit, we need corresponding sales volumes. Therefore, today Kazakhstani companies need the support of product exports. And this is absolutely normal, because even such economically developed countries as the USA, Germany, China and others provide all-round assistance to their industrial companies when entering foreign markets.

- How can you comment from the point of view of the domestic manufacturer on the planned introduction of a product traceability (tracking) system by marking with identification tools?

- We are very interested in the introduction of a product traceability (tracking) system. Of course, this will require large investments from us, but we are ready for this. The fact is that at the present time there are a lot of smuggled goods at the Kazakhstan market. It comes from Kyrgyzstan and Russia. The traceability system will allow to control the supply chain and will contribute to a decrease in counterfeit sales volume.

That is very good for those manufacturers, distributors and pharmacies that work legally at the market. In addition, the state, the entire health care system and the final consumer are interested in this. After all, the smuggled goods may be falsified, i.e. it may not contain the active substance (API) at all.

Such a system has been operating in Turkey for a long time, and it has proved its effectiveness. The main thing in its implementation is to inform to all participants in the distribution chain that this will be beneficial and that there is no need to be afraid of it.

- Thank you for the interview.