VAT IS THE KEY DETERRENT TO DEVELOPMENT OF PHARMACY INDUSTRY IN ARMENIA

ArmInfo
2010-05-25 20:45:00

ArmInfo. Over Q1 2010 the output of medicaments in Armenia made up 500
mln AMD, having increased by 14% as compared with the same period of
2009. In 2009 Armenian pharmaceutical companies produced medicaments
worth 2.5 bln AMD, about 40% of the medicaments was exported to CIS
countries, said Head of Industry Department of Armenia Hayk Mirzoyan
at the event organized within the frames of “Healthy nation, healthy
economy”.

He pointed out that the Armenian Economy Ministry jointly with
the Association of producers and importers of medicaments, ad
the USAID/CAPS are working at introduction of GMP international
certification system in Armenia. He is convinced that the establishment
of this institute in the country will allow activating expansion to
international markets and raise the quality of local medicaments. The
head of the Association of producers and importers of medicaments,
Samvel Zakaryan, shares this opinion. He thinks that this is the
main problem of pharmaceutical companies, and there no other specific
problems in this sphere.

Unlike the state officials, local producers are not so optimistic.

Pharmacy faces a great number of unresolved problems, and the main
problem is connected with introduction of VAT for medicaments in 2001.

As a result of these tax toughening, the medicaments imported from
Georgia were by 20-30% cheaper than Armenian ones,- said Armen
Haroutyunyan, Director for Development of Esculap pharmacy company.

The list of urgent problems includes the high level of counterfeit
products in the market of medicaments. The availability of low-level
and counterfeit products was conditioned by the ineffective work of
customs bodies. Haroutyunyan said that settlement of this problem
needs either raising of transparency of the structures controlling
import of commodities to the country, which is very hard to do, or
cancellation of VAT, which caused disproportion of the pharmaceutical
market of Armenia.

Staring 2002 all the large players of the market of medicaments
provided the country’s leadership with calculations proving the
falsehood of VAT introduction, but the local producers’ efforts
turned out to be not enough convincing. “Not only local producers
and importers, but also public organizations engaged in protection
of consumers’ rights should join their efforts. Many decisions at
the legislative level are taken as a result of lobbying of all the
persons concerned”,- said Haroutyunyan.

Continuing to enumerate the problems of local pharmaceutical companies,
the experts pointed out the low level of solvency of Armenian
population, which has to look for the cheapest medicaments in the
market. This maintains the demand for illegally imported products,
making the local products uncompetitive.

Speaking about the export of Armenian medicaments, experts point out
the high transport costs making Armenian products uncompetitive in
the international markets. The Central Asian market is perspective for
Armenian producers. According to the experts, the Central Asian market
also has its problems. For instance, Uzbekistan artificially maintains
the high foreign exchange rate, which makes the export to that country
unprofitable. Georgia causes big interest among local producers of
medicaments and among representatives of other economy spheres.

To note, the organizers of the campaign “Healthy nation, healthy
economy” are USAID and the Association of importers and producers
of medicaments. The event aims to raise the public awareness of
the peculiarities of local medicaments, the quality of which meets
international standards, and their prices are much more reasonable.

From: A. Papazian