Azerbaijan Pharmaceutical Country Report 2019

Azerbaijan Pharmaceutical Country Report 2019

Brief Summary

The current Report uncovers the 2019 business trends of the pharmaceutical market of the Republic of Azerbaijan, overviews its healthcare system, portrays its epidemiology and demographics. It also depicts pharma regulation features in Azerbaijan including a step-by-step process of the marketing authorization for pharmaceutical products. It provides insight into the country’s socio-political development since independence, describes recent economic trends, and provides the pharmaceutical market forecast for the next three years (2020-2022).

The Report is intended for industry executives, decision-makers, sales & marketing, and market access managers and other stakeholders. "Azerbaijan Pharmaceutical Country Report 2019" will be useful for top-managers, business owners, consultants and other stakeholders of the Life Sciences industry, who are analyzing, planning to enter or invest in the Azerbaijani pharma and/or healthcare market.

The Report covers the 2013-2019 full-year data for the pharmaceutical market and provides a forecast for the period of 2020-2022.

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Series: Pharmaceutical Market Country Reports
Country: Azerbaijan
Data years: 2013-2019
Format: .pdf
Additional files: .xlsx, .pptx
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Political development of Azerbaijan in 2019

In 2019, Azerbaijan pursued a very active foreign policy. President Ilham Aliyev held several meetings with the Russian president to explore further cooperation in trade and investment. The President of Azerbaijan also took part in a range of international forums and meetings. However, no vital steps were taken by Azerbaijan and Armenia to make a breakthrough in solving the Nagorno-Karabakh conflict.

In its internal policy, the government aimed at solving social issues that appeared on the background of economic stagnation. The state increased minimal salaries and pensions and also rose wages for certain categories of public sector employees.

In October, Prime Minister of Azerbaijan Novruz Mammadov unexpectedly resigned, and Ilham Aliyev appointed a technocrat and his close ally Ali Asadov as the country's new head of the government. Shortly after that, the Azerbaijani parliament, which is dominated by Aliyev's New Azerbaijan Party, asked the president to dissolve the legislature and call early elections. According to the officials, an overhaul of parliament's composition was needed to carry out Aliyev's reform program. On December 20, Aliyev satisfied the request of the parliament and scheduled the first-ever early parliamentary elections in Azerbaijan for February 9, 2020.

The serious changes in the structure of the executive vertical in Azerbaijan started in 2019 might continue in 2020 after the parliamentary elections. Aliyev expects that unlike representatives of the old ruling elites, the new members of the parliament will be more dedicated to his reform course and will help the government in solving existing social and economic issues.

Economy of Azerbaijan in 2019

In 2019, Azerbaijan’s GDP grew by 2.2% YoY. The growth rate of the non-oil sector, which was the locomotive of the Azerbaijani economy, amounted to 3.5%, while in the oil and gas sector amounted to only 0.2%. Besides, investments in the non-oil sector increased by 23% in 2019, while in the oil sector - by 1.9%. The growth of industrial production amounted to 1.5% YoY, including non-oil industrial output - 14% YoY. The agricultural sector showed notable growth of 7%.

Inflation slowed to 2.6%, while the growth of nominal cash incomes of the population amounted to 7.4%. Azerbaijan’s foreign exchange reserves grew by USD 6.4 bn and reached a record level of USD 51 bn.

Dashboard. Azerbaijan's Real GDP and GDP growth rates + Azerbaijani manat exhange rates (avg) (Sources: IMF, Central Bank of the Republic of Azerbaijan)

The government of Azerbaijan anticipates that economic growth might accelerate to 3.0% YoY in 2020 on the background of ongoing reforms. In its recent survey, the World Bank forecasts a more modest increase of 2.3% YoY in 2020 and 2.1% YoY in 2021.

Trends of the Azerbaijani pharmaceutical market in 2019

Market structure

The pharmaceutical market of Azerbaijan is divided into retail and hospital segments. The share of the retail segment amounted to 87%, while the hospital segment made 13% of the total market.

Dashboard. Shares of Sales by Segments in the Total Pharma Market, VALUES and VOLUMES Source: UPharma Consulting, IQVIA)

The lack of reimbursement system in the country forces Azerbaijan customers to cover the value of drugs by themselves fully. Only medicines for the treatment of tuberculosis and diabetes can be provided for free, but these preparations are not always available in the preferential pharmacies.


Local pharmaceutical manufacturers

Local pharmaceutical manufacturing in Azerbaijan is underdeveloped. In 2019, the Azerbaijani pharmaceutical industry was represented by only two enterprises – Azersintez and Azerfarm, which are the parts of Farm Sintez Holding (jointly created by Iran, Turkey, and Azerbaijan). At the same time, the companies buy all the necessary substances for the production of drugs in Russia, Turkey, and Europe, while their products satisfy only 1% of the national demand.

The government is looking for ways to improve the local production of pharma goods, notably. In 2016, the government created the Pirallahi Industrial Park in Baku city, which provides tax preferences to pharmaceutical producers. Thereby, some foreign investors reached contracts with local partners on establishing common enterprises to produce pharmaceuticals in Azerbaijan. The first plant constructed in the park was Hayat Pharm, a joint project of the Russian company R-Pharm, the Azerbaijani company Vita-A and Azerbaijani Investment Company. The plant was launched in December 2019 and became the first pharmaceutical complex in the country, which included laboratory, production and logistics units.


Average market prices

Dashboard. Weighted average cost of a pack (WACP) on the pharmaceutical market by segments (Source: UPharma Consulting; IQVIA)

The weighted average cost of a pack (WACP) notably decreased in 2013-2016 – from USD 4.52 in 2012 to USD 1.78 in 2016. In 2019, the average weighted cost of a pack on the pharmaceutical market of AZE increased by 2.9% YoY to USD 2.10.

Considering that almost all drugs in Azerbaijan are foreign, their retail prices are relatively high. Moreover, drugs in Azerbaijan are taxed at the standard value-added tax (VAT) rate of 18%. To make medicines affordable, the government introduced a price regulation mechanism in 2015, which allowed decreasing prices of certain categories of drugs. As at the end of 2019, above 11.5 thousand SKUs in the country had a marginal retail price.


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