How Ukrainian pharma copes with COVID-19: interview with UCGA alumnus Dmytro Shymkiv, Chairman of the Board of DARNITSA Group

The pharmaceutical industry is in high demand and is supported in times of the pandemic, but no matter what, there are always pitfalls. What are the main obstacles and difficulties that the Ukrainian pharmaceutical industry and DARNITSA are facing today?

 

The pharmaceutical industry is a strictly regulated field. On one hand, it is reasonable, but on the other, it affects the speed of innovations implementation and slows down the release of new products. The Ukrainian medicine market is generic, and that is to its advantage. We provide the public with drugs that are equivalent to the original patented ones, have the same therapeutic efficacy and safety profile, but are more affordable. So national drug manufacturers ensure the pharmaceutical sovereignty of Ukraine, but unfortunately, they are poorly protected due to inconsistencies in legislation.

We are waiting for the implementation of the so-called “Bolar provision” - it can speed up the process of the introduction of new generic drugs, making it possible within 2-3 years. So far the local pharmaceuticals are losing in this competition and there is no choice but to finance European and Indian companies on their own.

The competitive power of Ukrainian companies in terms of conducting clinical trials is much smaller than that of the other countries. There are significantly more limitations for the launching procedure. However, getting the authorisation for clinical trials takes 4 times longer than in other countries. The Ukrainian legislation needs to be adjusted to the European practice. In that case, Ukraine would have a good chance of becoming an international hub for clinical reach. There are many examples of successful cases demonstrating how it can work, but it requires joint efforts of businesses and the state.

At the end of 2020, the EU is expected to launch a pharmaceutical strategy to strengthen national security. Ukraine has been discussing the need for one for a while now. And we are ready to cooperate with the government because all sides will benefit from a strong pharmaceutical industry in Ukraine.

How negative is the impact of the pandemic on pharmaceuticals? What are the new opportunities for the industry?

The pandemic has definitely made changes in the pharmaceutical landscape. Since the beginning of the year, the domestic market has decreased by 20% and the structure of demand has changed. COVID-19 has increased risks in pharmaceutical chemical supply chains. The US and Europe are already working on changes to ensure domestic drug production and minimize dependence on Asian pharmaceutical manufacturers. This is an important issue for Ukraine as well.

Just as any crisis, the pandemic should be seen as a new opportunity. DARNITSA did not shut down the projects of developing new drugs and launched 6 new products on the market in the Q1. Also, we continue the digital transformation. Gladly, the tools introduced last year allowed the company's Backoffice to telecommute effectively. Quarantine has brought new opportunities in sales channels, as well as digitalized communication with doctors and patients.

In your opinion, what areas of focus will be key for investors in pharmaceutics in the next 2 years? Apart from COVID-19 treatment and vaccine research.

 

COVID-19 has affected the structure of investments to a great degree. Vaccine development funding is an unconditional priority for governments, private foundations, and big pharma today. The European consortium alone sent 7.6 billion euros. This has diverted resources from the development of other drugs for some time. However, this situation is temporary and the search of innovative drugs for the treatment of cancer and immune diseases will be continued.

The pandemic is accompanied by an increase of the uncontrolled use of antibiotics. This is a dangerous trend that can lead to the development of new resistant strains of viruses. Therefore, the development of new antibiotics will require investment in the near future.

Since February, there has been a surge in clinical trials around the world and there has been some growing interest in this area. In terms of the cost structure of drug development, clinical trials take the first place. For example, the average vaccine development costs ($ 1 billion), and most of the money is channeled into the pre- and clinical trials.

What has your board done that you found helpful when operating in times of crisis? Could you agree that when you are in crisis, you need the board even more?

Please, tell us about the role of the Board in crises based on the situations you have experienced. Provide 2-3 examples.

 

In times of crisis, the role of the Board of Directors and Supervisory Boards as the strategic bodies expands. The first thing we did in DARNITSA is - we developed the anti-crisis strategy with management. The priority is to ensure effective operation of the company in the new environment and protect our employees even outside the enterprise. An important step was the analysis of the company’s hidden strengths and weaknesses, that emerged during this crisis. As a result, we have introduced certain changes that will allow us to develop effectively in the “new normal” conditions.

In times of turbulence, Boards become a resource whose vision helps operational management to identify new business opportunities. In particular, we recommended our top management to consider the production of sanitizers. It’s a new niche for DARNITSA where the company can compete, by producing a safe and high-quality product.

Quarantine has opened many online courses and resources. But in fact, it turned out to be difficult to single out helpful and practical information among the general stream. What would you recommend everyone to read/watch/learn? Please, share 3-5 links/articles/books.

 

During the quarantine, a lot of new content was generated, but a large share of it is not worth checking out. The resources I recommend are the following: