Evgeniy Nikushyn “Who is at the helm of the pharmaceutical market? ”

Feb. 22, 2011 - PRLog -- The question who really leads pharmaceutical market is more often touched upon in media as well in specialized conferences these days. In the interview to the portal Pharma.net.ua a managing director of the pharmaceutical company “Artur-K’ analyzed who has in fact key influence levers. In his opinion the reins of management of flows of goods and sales are in the hands of manufacturers. They have the main market margin. Distributor works under those conditions that are actually offered to him. As a rule, a manufacturer lays down highly challenging conditions for each distributor which leads to a great difference between market leaders and second-rank players.  
As a result, concentration process is witnessed at the pharmaceutical market of Ukraine.  Even now top 3 leading distributors have a share not more than 54% of the market. Besides, a manufacture thrives to “pack” distributor’s warehouses with production which brings to price wars.
Every year an increase of three leaders amounts to 7-8% market share. This resembles a European distribution model which implies 2-3 large-scale “monsters” and all others are viewed as niche specialized distributors.
The example of such a European concentration is the Dutch project of two large distributors in Europe. Summer 2010 viewed how Celesio gave Brocacef Holding, Phoenix daughter company, 62 pharmacies with the total annual income of $209mln. In its turn, Celesio gained 45% of Brocacef shares. Analytics expect that this enterprise will become the second largest in the Netherlands. Thus, not breaching the antimonopoly law of Europe, companies reach the maximal concentration and market management.  
Another example but of the vertical concentration is still the company Phoenix that created its “pocket” manufacturer Ratiopharm and own retail networks. Consequently, the distributor introduced selectively production of his manufacturer to the priority level.
One should take into account even if such a model runs successfully in Europe; mentality plays a vital role in our country. For instance, one should pay to put a medicine on the shelf in a pharmacy. Analogically, this situation will be in manufacturer-distributor relationship in case of concentration. A manufacturer will have to pay for his production to be included in distributor’s price-lists and warehouse.
According to Evgeniy Nikushyn the possibility that 5-6 or even 2 distributors can agree is tiny. And subconsciously conditions can be worked out in such a way that it will be more complicated for a manufacturer to introduce a product to the market.
Although, another scenario is possible with the logistics companies’ participation. If the concentration of distributors who will impose their rigorous conditions happens, nothing will prevent representative offices of foreign companies to agree and hire one general logistics operator. And such a new player can fully compete with second-rank distributors.


“The only thing that can restrain is that the manufactures will not be so pleased to tie up together with numerous distributors. But on the other side, if manufacturers from Top10 enter such logistics alliance, retail networks will have no other way-out than just comply with strict payment discipline; as every pharmacy wants medicines from popular manufacturers to be sold on its shelves”, Evgeniy Nikushyn said.  
In conclusion an expert warned players of the Ukrainian pharmaceutical market: “Yes, now a manufacturer is at the helm but in the nearest future reins of power can be in hands of distributors. If a manufacturer does not start to approach business within partnership terms, he will face a severe dictatorship of two distribution leaders and a fight for his place in their price-lists”.

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Artur-K is one of the leader of Ukrainian Pharmaceutical distributors.
“Artur-K” possesses a 15-years’ experience in the pharmaceutical market of Ukraine.


“Artur-K” is a rapid developing company, which is always keeping up with the time.


“Artur-K” provides a full spectrum of services, from the registration of new pharmaceutical products to the promotion and active distribution of goods in the market.