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Pharmaceutical Market Insight from Experto Consulting

Short overview of the current situation, main players and the opportunities of the Georgian Pharmaceutical Sector

Georgian pharmaceutical sector is a dynamic, rapidly growing market benefiting from an easy business environment. Since 2010, the pharmaceutical product registration procedures have been greatly simplified with Seven-day recognition registration procedure in case when product is registered in the European Union, Switzerland, USA, Canada, New Zealand, Australia, Japan, South Korea or Israel. Parallel import is permitted for products previously registered in Georgia, if they are registered and sold in countries mentioned above. There is no state price regulation and customs clearance is 0% (12% for Food Supplements). VAT is 0% (18% for Food Supplements).

The pharmaceutical market in Georgia is quite profitable and concentrated. 70% of the market share is divided among 4 leading retail pharmaceutical companies.

More than 85% of medicines are imported.  The remaining 15% is manufactured by 2 local companies. Medicines are mostly imported from Turkey, Germany, France, Hungary and Switzerland.

In the Georgian medical industry, many companies are vertically integrated. For example, retail pharmaceutical companies own hospitals, drug manufacturer companies. Some of them own insurance companies too.

As Experto Consulting found out, there is a wholesale and distribution margin on average of 15-25% on the market. There are more than 1,600 pharmacies throughout the country – around 850 are branches of the pharmaceutical chains and 750 of them are independent pharmacies. Market also includes 93 distributor companies, 3 laboratories and 24 local manufacturers.

On average, chain pharmacy branch has about 3 times more income than independent one.

As per Georgian legislation, pharmaceutical products must be registered at the Departmental Registry at the Agency of State Regulation of Medical Activities at the Ministry of Labor, Health and Social Protection of Georgia. Admission of pharmaceutical products into the Georgian market may be granted by way of state registration through a recognition regime and national regime.

As mentioned before, the market is divided between Independent and chain pharmacies, such as PSP, Aversi, Neopharm+, Impex, Pharm House, etc. The 3 main players are:

PSP –on the Georgian pharmaceutical market since 1994. At first, they started its activity by importing medicine from Europe. In 2000, PSP’s pharmaceutical enterprise GMP started producing drugs and exports it in 11 countries. Now PSP has its own health insurance company and Approximately 210 PSP pharmacies located almost in every region of Georgia.

GEPHA – the part of GHG (Georgian Healthcare Group) is a merge of 2 pharmaceutical chains – GPC and Pharmadepot. Both chains have been on the market more than 20 years and GHG united them in 2016. For the moment, GEPHA manages around 250 pharmacies with more than 3000 employees

Aversi – founded in 1994. It is presented by 103 pharmacies in Tbilisi and 125 pharmacies in regions. In 2002 was founded Aversi-Rational, which is a big pharmaceutical factory. Since 2006, the company has been exporting its products to a number of post-Soviet states and the countries of near East. From 2007, Aversi has opened several multifunctional clinics. The company also owns a health insurance company Alpha.

Georgian Pharmaceutical Market is open for interested companies and provides different opportunities as for international as well as for local players. Simplified pharmaceutical regulation, attractive and efficient tax system, and low cost but well qualified labor force, create opportunities to invest in the pharmaceutical industry in Georgia. Many International brands and modern technologies are still not present on the Georgian market while there could be need for them. The development of pharmaceutical sector increases the demand for high quality industrial equipment. Especially now, when the Government is going to move to selective contracting mechanism. This implies a selection of the facility, which will provide better quality and qualified services. Consequently, only these facilities will remain in universal health program. Local legislation allows parallel imports of pharmaceuticals and there is no pricing regulation related to pharmaceuticals. There are a high number of drug stores per capita with extensive geographic coverage, which shows positive trend of pharmaceutical business in Georgia.