IDEAS home Printed from https://ideas.repec.org/a/eip/journl/y2020i4p7-35.html
   My bibliography  Save this article

Ukraine'S Pharmaceuticals: From Dependence To Endogenous Development

Author

Listed:
  • O. SALIKHOVA
  • D. HONCHARENKO

Abstract

The article substantiates various theoretical and applied principles of developing high-tech pharmaceutical industries (HTPI). It is established that the key problem of developing countries in this area is the dependence on resources and markets of developed countries, while the involvement of advanced foreign technologies can be a catalyst for increasing the technological potential of host countries (subject to the availability of proper knowledge and human capital, changes in the institutional environment, and improved the framework conditions for innovation). In the context of the development of HTPI, the author shows the importance of the network nature of the acquisition by pharmaceutical companies of sustainable competitive advantages based on resources that are difficult to simulate or replace. It is substantiated that networks built with local research institutions, higher education institutions, and research units of other companies, give pharmaceutical manufacturers the opportunity to access complementary assets and become their specific resource, which provides unique competitive advantages. The author reveals various methodological and statistical features of the categorization of industries by the level of technology in the conditions of globalization. It is substantiated that the current low value of the ratio of research and development (R&D) to value-added generated by pharmaceuticals of individual countries is not a sign of the industry’s low technological level, as the current revenues are the result of long-term R&D and harmonization procedures for launching new drugs with lags of 10-15 years. A new tool for the study of international trade in high-tech pharmaceuticals is proposed, whose peculiar feature consists in the categorization of nomenclature items by end use; the List of high-tech medical and pharmaceutical intermediate goods is formulated (in accordance with SITC Rev.4 and UKT FEA); the following indicators are proposed: the coefficient of import dependence of pharmaceutical production, the coefficient of "purified" exports of pharmaceutical products and the coefficient of imports coverage with HTPI output, and the formulas for their calculation are provided. The author's approach is the first to create the opportunity to assess the scale of costs and the dependence of the pharmaceutical industry on imported components that embody advanced technologies and are the industrial supplies for HTPI. It was found that in Ukraine the share of foreign intermediate high-tech goods in the consumption of the industry reaches 82.2%; the industry, working on imported substances, produces mainly products for the domestic market, without earning foreign currency, even to cover the cost of purchasing the necessary ingredients; manufacturers do not rely on synthesized chemical products of domestic production, primarily due to the fact that the products of the chemical industry for the needs of pharmaceuticals in Ukraine are virtually non-existent; and the increase in output depends on foreign technologies and intermediate goods. It is substantiated that Ukraine’s pharmaceutical industry is critically dependent on imported supplies to ensure the smooth operation of enterprises and the healthcare industry. Key endogenous barriers that hinder the development of HTPI have been identified, including problems in the training of specialists and a lack of scientists whose competencies would contribute to solving the problems of endogenous development of the industry; lack of state aid to business entities for research, and technological and innovative activities; lack of own funds to increase expenditures on R&D and implementation of large-scale investment and innovation projects; and lack of cheap loans, due to which Ukrainian pharmaceutical manufacturers find themselves in unequal conditions compared to foreign competitors. Conceptual bases of HTPI development in Ukraine are proposed; justified the expediency of legal changes, definition of strategic priorities and introduction of measures of development of HTPI in Ukraine based on the comprehensive approach, which will cover creation and development of pharmaceutical ingredients for medicines (chemical and biotechnological goods), medical products, fillers, packing materials, machinery and equipment for pharmaceuticals to help reduce the dependence on foreign technologies, and to increase the level of production localization, employment and revenues to the budgets of all levels.

Suggested Citation

  • O. Salikhova & D. Honcharenko, 2020. "Ukraine'S Pharmaceuticals: From Dependence To Endogenous Development," Economy and Forecasting, Valeriy Heyets, issue 4, pages 7-35.
  • Handle: RePEc:eip:journl:y:2020:i:4:p:7-35
    as

    Download full text from publisher

    File URL: http://eip.org.ua/docs/EP_20_3_07_uk.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kym Anderson & Maros Ivanic & William J. Martin, 2014. "Food Price Spikes, Price Insulation, and Poverty," NBER Chapters, in: The Economics of Food Price Volatility, pages 311-339, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christiane Baumeister & Lutz Kilian, 2014. "Do oil price increases cause higher food prices? [Biofuels, binding constraints, and agricultural commodity price volatility]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 29(80), pages 691-747.
    2. Susanne Fricke & Lodovico Muratori, 2017. "Spatial price transmission and trade policies: new evidence for agricultural products from selected sub-Saharan African countries with high frequency data," Working Papers 5/17, Sapienza University of Rome, DISS.
    3. Brockhaus, Jan & Kalkuhl, Matthias & Kozicka, Marta, 2016. "What Drives India’s Rice Stocks? Empirical Evidence," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235659, Agricultural and Applied Economics Association.
    4. T. Ostashko & I. Kobuta, 2020. "Changes in world trade and trade policy in the time of the COVID-19 pandemic: challenges and opportunities for Ukraine," Economy and Forecasting, Valeriy Heyets, issue 3, pages 7-24.
    5. Ahmed, S. Amer & Vargas Da Cruz,Marcio Jose & Quillin,Bryce Ramsey & Schellekens,Philip, 2016. "Demographic change and development : a global typology," Policy Research Working Paper Series 7893, The World Bank.
    6. Hans G. Jensen & Kym Anderson, 2017. "Grain Price Spikes and Beggar-thy-Neighbor Policy Responses: A Global Economywide Analysis," The World Bank Economic Review, World Bank, vol. 31(1), pages 158-175.
    7. Shon M Ferguson & Johan Gars, 2020. "Measuring the impact of agricultural production shocks on international trade flows," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(3), pages 1094-1132.
    8. Kozicka, Marta & Kalkuhl, Matthias & Saini, Shweta & Brockhaus, Jan, 2014. "Modeling Indian Wheat and Rice Sector Policies," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169808, Agricultural and Applied Economics Association.
    9. Anderson, Kym & Strutt, Anna, 2014. "Food security policy options for China: Lessons from other countries," Food Policy, Elsevier, vol. 49(P1), pages 50-58.
    10. McBride, Linden, 2014. "Exploring food commodity price risk preferences among Tanzanian households," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 172437, Agricultural and Applied Economics Association.
    11. Derek Headey & Marie Ruel, 2023. "Food inflation and child undernutrition in low and middle income countries," Nature Communications, Nature, vol. 14(1), pages 1-10, December.
    12. Bekkers, Eddy & Brockmeier, Martina & Francois, Joseph & Yang, Fan, 2017. "Local Food Prices and International Price Transmission," World Development, Elsevier, vol. 96(C), pages 216-230.
    13. Grundy, Michael J. & Bryan, Brett A. & Nolan, Martin & Battaglia, Michael & Hatfield-Dodds, Steve & Connor, Jeffery D. & Keating, Brian A., 2016. "Scenarios for Australian agricultural production and land use to 2050," Agricultural Systems, Elsevier, vol. 142(C), pages 70-83.
    14. Stephan Dietrich & Valerio Giuffrida & Bruno Martorano & Georg Schmerzeck, 2022. "COVID‐19 policy responses, mobility, and food prices," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(2), pages 569-588, March.
    15. Aragie, Emerta & Pauw, Karl & Pernechele, Valentina, 2018. "Achieving food security and industrial development in Malawi: Are export restrictions the solution?," World Development, Elsevier, vol. 108(C), pages 1-15.
    16. Ivanic, Maros & Martin, Will, 2014. "Poverty impacts of the volume-based special safeguard mechanism," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(4), October.
    17. Cali,Massimiliano & Hollweg,Claire Honore & Ruppert Bulmer,Elizabeth N., 2015. "Seeking shared prosperity through trade," Policy Research Working Paper Series 7314, The World Bank.
    18. Yamauchi, Futoshi & Larson, Donald F., 2019. "Long-term impacts of an unanticipated spike in food prices on child growth in Indonesia," World Development, Elsevier, vol. 113(C), pages 330-343.
    19. Donald MacLaren, 2014. "The Special Safeguard Mechanism (SSM) and Tariffs: Price Behaviour with Imperfectly Competitive Market Intermediaries," CESifo Working Paper Series 4585, CESifo.
    20. Huw Lloyd-Ellis & Ardyn Nordstrom, 2021. "Trade, poverty and food security: A survey of recent research and its implications for East Africa," Working Paper 1460, Economics Department, Queen's University.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eip:journl:y:2020:i:4:p:7-35. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Iryna Bazhal (email available below). General contact details of provider: http://eip.org.ua/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.