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Eugene Zaika: Ukraine has an important role to play in advancing Acino’s global strategy

Wednesday 15th July 2020

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Eugene Zaika General Director of Acino in Ukraine and Regional Head of Acino in CIS, told pharma.net.ua that while the company’s ambitious plans have not yet been fully realized, they are still very relevant, especially at the moment.

When Acino Pharma AG acquired the pharmaceutical plant Pharma Start in 2015, it announced its ambitious plans: to triple the company’s turnover within five years from EUR 300 million to EUR 1 billion. Have these plans come true?

Acino Pharma AG in 2015 and Acino Pharma AG in 2020 are two completely different companies, so much can be planned, of course, but history always takes its own course. Last year Acino group achieved sales of around 400 million euros, of course, it is not a billion. However, Acino Pharma AG is actively working to develop its global portfolio: firstly, through organic growth of products the company already has or acquired, and secondly, through new products as a result of acquisitions.

A closer look at Acino Pharma AG Group companies worldwide, particularly in the CIS, reveals our team in this region has achieved the objectives set. In October 2015, when Pharma Start was acquired by Acino, its turnover in the CIS countries was a little over EUR 30 million. Since then we have grown by almost 4.5 times by developing our own portfolio, acquiring a part of Takeda’s therapeutic portfolio, and licensing new products. Thus, the CIS region is now second in terms of sales in the Acino Group after the Middle East, Turkey, and Africa (META).

There was a plan to to increase Pharma Start’s portfolio from 50 to 90 products and launch our own R&D products. Isn’t it too risky a step for crisis times in a market with low consumer purchasing power?

Our assortment has increased from about 40 products manufactured by Pharma Start to more than 70. We have optimized the existing portfolio, launched new self-developed products and licensed quite a few molecules. When I say developed our own portfolio, I mean both licensing quite interesting products, which are new molecules for the Ukrainian pharmaceutical market, as well as expanding the line of existing products by adding more modern dosage forms, and developing new products in our R&D center, which includes not only drugs, but also food supplements. In the middle of 2018, the company was certified for ISO 22000:2005 (Food Safety Management System, combining the requirements of ISO 9001 and HACCP) and entered the food market.

Last year we received GMP EU certification for the entire manufacturing plant, i.e. not for individual production facility or lines. For us, this is not only a huge accomplishment the company has been striving for in recent years, but also a proof of compliance to the high-quality standards and regulatory requirements of the European Union, and markets our company plans to actively develop.

When it was acquired by Acino Pharma AG, Pharma Start was ranked the 23rd among domestic pharmaceutical manufacturers. Almost 5 years have passed since then, so what is your ranking spot now?

Yes, at the time of purchase we were the 23rd in the Ukrainian market, and today, according to Proxima Research ratings data, we are the 6th in the TOP 10. Our goal is to be in the TOP 5. Acino is one step away from this, but this last step is the most difficult. What separates us from the previous company is their higher sales volume. We believe we can continue to close the gap through strategic acquisitions. In other words, through alliances, or the purchase of portfolios or companies.

Prescription drugs account for the largest share of the company’s product portfolio. When COVID-19 struck and a quarantine was imposed, access to doctors was limited, so getting a prescription became problematic. How did this affect the sales for Q1 2020?

Yes, prescription drugs make up 75% of our portfolio. Considering the local pharmaceutical market dropped by 20% in April and its indicators were even lower than in April 2018, the conclusion is obvious: no company in the market is resistant to such negative effects. Our sales figures were lower than planned, however if we look at the evolution index, which shows whether a company is developing more slowly or faster than other market players and to what degree, we can see that over the last eight weeks this indicator for Acino in Ukraine has been highly positive. Why? Most of our consumers are chronic patients, and they do not need to go to a clinic to continue taking their medication.

How seriously has the quarantine affected ACINO? Have there been any staff cuts, production stoppages or investment freezes?

We have not downsized and have no plans to do so. On the contrary, we used this time to develop and train our employees. Our plant operated on a 24/5 basis throughout the quarantine, which means we did not stop for a single day. We have strengthened safety and security measures for our employees to ensure the continuous supplies of essential medicines to our markets. First, this involved additional sanitization of production site and office premises, as well as the segregation of the workforce.

Our company not only looked after its own employees, we support the healthcare professionals in all regions with sanitizers, masks and moisturizing creams for the amount of over UAH 4.3 million. We also took part in the Ukrainian campaign called “Drive the Doctor”. We believe we did the right thing by committing our resources to help the medical community in these difficult times.

The slogan — Swiss Quality Standards — under which the company operates in Ukraine, implies that the quality of drugs you provide is higher than Ukrainian ones. But these drugs are made in Ukraine, at the Ukrainian plant and by Ukrainian workers. What is the secret: has Acino significantly modernized the production facilities it purchased or improved the professional level of its employees?

I can’t say we have completely changed our production site or replaced the equipment, because the plant was already fitted with the state-of-the-art equipment and the same production equipment is also used at our three plants in Switzerland.

What we have changed entirely is the mindset of our employees: the quality of our products has become the main criterion for them. Over the past five years, we have introduced advanced quality standards: digitalization and optimization of production and quality control processes, innovative software and the SAP enterprise management system installation. We conduct internal audits and our Swiss colleagues regularly inspect the plant to make sure it meets all the norms and requirements of Acino Group for its production processes.

Our successful experience of introducing high quality standards in all business processes allowed us to pass the European audit with minimal non-compliance issues and to acquire GMP EU certification. All the processes and procedures implemented at our Ukrainian production facilities are fully consistent with those of the Swiss sites. Over the past three years, our plant has successfully undergone a number of other audits and received positive conclusions on the compliance of its medical production conditions with the requirements of good manufacturing practice established by the regulatory bodies of Ukraine, Azerbaijan, Kazakhstan, Georgia and Belarus. Which is why we are confident about the high quality of products manufactured by the Ukrainian Acino plant.

Likewise, we are continuously investing in the improvement of our pharmaceutical plant and the expansion of its production capacities. Between 2015 and 2019 we made substantial investments in the development of our production site.

In addition, within the scope of our cooperation with the EBRD based on a loan agreement of EUR 3 million signed in December 2016, we received financing, including for our energy efficiency program. This includes the installation of energy management and heat recovery systems, heat pumps and uninterruptible power supplies, as well as thermo-modernization of the premises. Thanks to this program, we managed to reduce energy consumption from 7,650 to 4,200 MWh per year, and in 2019 CO2 emissions were reduced from 4.5 to 2.5 tons. Accordingly, we expect that in a year and a half we will practically double the plant’s production capacities and will be able to supply our products to both CIS and non-CIS countries.

As for the staff, Acino in Ukraine currently numbers 845 qualified employees, of which 94 % have higher education, 2.8 % and 2 % have MBA and academic degrees, respectively. In the CIS region, our team has over 160 employees. Today, our team in Ukraine and the CIS countries represents 42 % of all Acino employees worldwide.

Additionally, in the period between 2017 and 2020, the company relocated several support functions from Switzerland to Ukraine. Now teams supporting functions such as IT, regulation, medical affairs and pharmacovigilance, indirect procurement, legal support, quality control of incoming active pharmaceutical ingredients, stability studies for Swiss plants, etc. in Kyiv, provide high-quality services for the headquarters in Zurich and other companies of Acino Group worldwide. This means the global management trusts us and recognizes the professionalism of our Ukrainian experts. For the Ukrainian pharmaceutical industry, such experience is unique. As far as I know, we are the only company where support functions to reinforce our global operations are provided in Ukraine.

What new drugs have been developed or modified for the five years on the basis of the Ukrainian research laboratory?

Pharma Start’s product portfolio covers the following therapeutic areas: neurology, psychiatry, cardiology, endocrinology, pediatrics and therapy.

Over the last five years, we have developed and launched the following products to the Ukrainian pharmaceutical market:

  • Ariprazol® (INN Aripiprazole), 10 mg and 15 mg (psychoneurology, Rx)
  • Escitam® Acino (INN Escitalopram), 10 mg and 20 mg (psychoneurology, Rx)
  • Bioson (INN Extr. Passionflower, Doxylamine hydrogene succinate), a line of sleeping aids and sedatives (OTC)
  • Sedistress (INN Extr. Passionflower, Ethyl aster a-bromisovaleric acid), a line of sleeping aids and sedatives (OTC)

As well as a number of dietary supplements, such as Veratrol, Moringa-Ioruba, Tanikor®, Vinoxin® Forte, Koramag® and Corvaltab Meteo®.

Acino products are sold in more than 80 countries worldwide. Kyiv is a regional office for doing business in the CIS region and a launch pad for the company’s products to Azerbaijan, Kazakhstan, Uzbekistan, Belarus, Armenia, Moldova and Georgia. The expansion to CIS markets started after the purchase of the company in Ukraine in 2015, right?

Pharma Start was already present in the CIS markets when it was acquired, so we knew there were active sales. For example, in the Kazakhstan market through out-licensing, where the rights to our products under another brand were given to a leading German generic company. We promoted our products in Uzbekistan ourselves; we have a strategic partner in Georgia, who promotes our products under its brand.

However, a key motivation for developing our business in CIS countries was signing a strategic partnership agreement in 2017 with one of the world’s leading research and technology companies Merck KGaA, Germany, for the exclusive right to sell and promote their products in CIS countries (except Russia) and in Mongolia. This is Merck KGaA’s generic portfolio, which includes Concor®, Glucophage®, Glucovance®, Euthyrox®, Thyrozol® and others. To successfully fulfill the terms of this agreement, we registered representative offices in several CIS countries and consolidated our company in Kazakhstan. Opening representative offices gave us an opportunity to also promote Acino’s product portfolio in these markets.

Which of these markets was the hardest to conquer?

We were not always welcomed everywhere with open arms. For example, Belarus and Kazakhstan have their own highly developed local industries, and give priority to domestic manufacturers.

What markets have prospects, and will the situation change in view of COVID‑19?

If we talk about exports from Ukraine, the prospects are primarily offered by extending our existing portfolio in the markets of Africa and the Middle East. We are already getting ready to promote our products in these markets and have applied for registration for a number of products.

Many pharmaceutical companies are looking to develop products to help treat the coronavirus. However, if a company wants to develop a new generic product and do it “lege artis”, it will take around  2–2.5 years.

Have any new approaches and/or trends in doing business in the Ukrainian pharmaceutical market emerged for the time of this pandemic?

Of course, the first two months of the quarantine completely changed how we go to market. All forms of remote communication are on the rise. We are now placing a greater focus on creating digital platforms where companies would be able to communicate with doctors both via social media and through webinars and other remote meetings. If the medical community is attracted to digital platforms that would enable virtual visits with detailing, this is likely to become a marketing strategy of the future. It is and will be very relevant in the next two years until there is collective immunity, or everyone is vaccinated against the coronavirus.

Since the acquisition of the Pharma Start pharmaceutical plant by the Swiss Acino Group, Acino in Ukraine has created almost 300 new jobs and implemented several European standards and innovative processes to ensure high quality standards.

Link to original article by Elena Zhoga, specifically for Pharma.net.ua: http://pharma.net.ua/publications/articles/23586-evgenij-zaika-podavljajuschee-bolshinstvo-centralnyh-funkcij-dlja-filialov-acino-vo-vsem-mire-obespechivaetsja-v-ukraine