The Ukrainian healthcare sector has undergone a decade of dramatic change including a series of high-profile and comprehensive reform initiatives. Despite the unprecedented challenges created by the ongoing Russian invasion, this evolution continues. Outside interest in the Ukrainian medical industry has increased in recent years, but the sector remains a challenging environment for new international arrivals. Archimed CEO Nickolay Romanok spoke to Business Ukraine magazine about the expanding opportunities for international pharma and medtech companies in Ukraine and elaborated on his consulting firm’s efforts to help navigate potential obstacles from market entry to regulatory processes.
During the initial few decades of Ukrainian independence, the country’s medical procurement sphere was often associated with institutional corruption. How has Ukraine’s approach to procurement issues in the healthcare sector developed over the past ten years since the 2014 Revolution of Dignity?
I can say with confidence that Ukraine’s approach to medical procurement has evolved significantly over the past decade. Before 2014, centralized procurement was handled by the Ministry of Health. However, due to rampant corruption within the Ministry, it was decided to transfer procurement processes to a number of international agencies such as UNDP, UNICEF, and Crown Agents.
During this transition period, Ukraine worked to build its own procurement capabilities with an emphasis on transparency and efficiency. In 2018, the Medical Procurement of Ukraine (MPU) state enterprise was established with USAID support to improve transparency in state-funded medical purchases. This enterprise currently operates successfully and continues to develop.
What opportunities does today’s Ukrainian healthcare sector present for international manufacturers of medical products?
In 2024, Ukrainian state budget allocations for medical goods increased to over UAH 12 billion, compared to UAH 9.2 billion in 2023. Meanwhile, the Medical Procurement of Ukraine agency was established based on OECD state enterprises governance practices in accordance with international anti-corruption policy standards. This is a signal that Ukraine is looking to attract global companies and seeks to develop direct cooperation.
Companies not represented in Ukraine have the same opportunities as domestic companies to participate directly in procurement. It is also worth mentioning that Medical Procurement of Ukraine has implemented the SAP Ariba platform. This is an international procurement platform for the publication of information on upcoming procurements. International manufacturers can register on this platform and receive the relevant information about the current requirements of the Ukrainian healthcare system.
Medical Procurement of Ukraine conducts procurements based on consolidated, centralized needs across Ukraine. As a consequence, international manufacturers looking to enter the Ukrainian market do not necessarily require a local distribution system. Instead, they can supply to one place under a single contract.
What are the key challenges and potential obstacles facing any international manufacturers of medical products who are currently looking to enter the Ukrainian market?
While representing significant opportunities for international medical suppliers, local legal and cultural specifics continue to make Ukraine’s market a somewhat sophisticated proposition for global players to navigate directly. Key challenges include regulatory issues, the overregulation of procurement procedures, language barriers, and specific documentation requirements. According to our analytical data, a high percentage of tender bids are rejected for reasons that are directly related to these issues.
For example, companies must submit a document confirming that their CEO has not been involved in any corruption-related offenses. Firstly, not many countries have an appropriate organization that is authorised to issue a suitable document of this kind. Secondly, from a legal standpoint, a corruption offense is either administratively or criminally punishable. While documentation confirming the absence of a criminal record is likely to be obtainable in some form or other in most countries, almost no country distinguishes corruption offenses from other offenses in line with Ukrainian legislation. This is one of many seemingly small but often crucial obstacles.
A range of similar challenges arise as a result of legalizative requirements for documents. Formal procedures like certifying signatures or notarization can be unexpectedly time-consuming, often exceeding the tender application deadline. Surprisingly, even the seemingly straightforward notarization process can require more time to complete in many developed countries than the allotted period for compiling Ukrainian tender documentation. Consequently, it is crucial for companies to initiate preparations well in advance. They need to thoroughly comprehend and anticipate the intricate legalization requirements present in Ukraine in order to avoid potential disqualification due to missed deadlines or incomplete documentation.
How does Archimed plan to support international medical companies seeking to establish a presence in Ukraine?
Archimed offers comprehensive support to international medical companies seeking to operate in the Ukrainian market. We provide services across a number of key areas that manufacturers must navigate to ensure their products comply with market regulations. We act as an authorized representative and assist with managing the process of conformity assessments required for importing and selling medical devices according to Ukraine’s technical regulations. We also guide companies through the registration process for medicines and other medical products.
Archimed offers support to international companies without a local presence in Ukraine. As a representative back office, we provide strategic marketing advice customized to reflect Ukraine’s unique cultural and market factors. We understand the potential roadblocks and darker sides of the tender process, and are able offer our clients comprehensive administrative support during the full range of procedures and assessments. This allows international companies to focus on the commercial side of the tender process while we take care of the rest. Through this comprehensive suite of offerings, Archimed aims to position itself as a partner for global medical companies pursuing Ukrainian market expansion.
Which aspects of Archimed’s experience will be most important as you look to help international companies navigate the Ukrainian healthcare sector?
There are several critical aspects of our corporate experience that I anticipate will prove invaluable in helping international companies navigate through the Ukrainian healthcare sector. Our seven-year track record of executing projects and representing global manufacturers during medical procurements at all levels provides unmatched familiarity with local requirements and nuances. We also assist clients with comprehensive documentation, qualification criteria, risk assessments, and streamlined supply chain processes. This simplifies the launch experience for international manufacturers while ensuring full compliance. Overall, we aim to bridge the gap between the international business community and Ukraine by providing consulting support and representation services to international pharma and medtech companies.
How might the arrival of additional international medical companies shape the future development of the Ukrainian healthcare sector?
The arrival of additional international medical companies could serve as a catalyst for positive transformation within Ukraine’s healthcare sector in several key ways. Firstly, by enabling direct procurement from global manufacturers, it optimizes limited state budget expenditures that have already been placed under considerable strain by the ongoing Russian invasion. Bypassing local distributor costs generates substantial savings.
Secondly, global healthcare corporations facilitate accelerated access to innovative, cutting-edge medical products, technologies, and therapeutic advances that can elevate clinical standards and patient outcomes across Ukraine.
Finally, increased competition is likely to exert downward pricing pressures, making quality healthcare more affordable for both the state and individuals. Through budget optimization, innovative treatments, and competitive pricing, the entry of global medical manufacturers could have a revitalizing effect on Ukraine’s healthcare system.