New Pricing. "The Key to the Solution is Dialogue"

In 2025, the pharmaceutical industry in Kazakhstan faced significant changes. New pricing regulations aimed at reducing the cost of prescription medications affected the entire market—from manufacturers to distributors and pharmacies. The consequences of these changes extend far beyond the industry: they impact the investment attractiveness of the country, the stability of tax revenues, and the availability of vital medications for the population.

In our article, experts from pharmaceutical companies share their views on the current situation, describe the problems faced by companies, and highlight the risks arising for patients, businesses, and the economy as a whole. Their comments help to understand the complexity and multifaceted nature of pricing issues, as well as the necessity for transparent rules and open dialogue between the government and the industry.

A decision made without dialogue with the industry carries risks for patients.

Oleg Rechkin, Head of Logistics and Distribution for the CIS countries at the international pharmaceutical company Bosnalijek:

– This year, a new version of Order No. 94 from the Ministry of Health of the Republic of Kazakhstan was published, with revised maximum prices for prescription medications. The approved changes raised many questions among all participants in the pharmaceutical market. The main question is why this particular methodology for calculating maximum prices was chosen?

Distributors and pharmacies were primarily affected by the changes: the maximum wholesale and retail prices for several items were reduced by almost 30-50% compared to the previous version of the order. This is a serious blow to business.

The maximum registered prices for manufacturers in tenge for many prescription medications remained virtually unchanged, despite the fact that the exchange rate of the Kazakh tenge fell by 5% against the US dollar and by 17% against the euro from February 1 to July 31, 2025. Most pharmaceutical substances for the production of medications are purchased in euros or US dollars, which directly affects the cost of the final product. Another issue is the significantly increased logistics costs, which must also be considered when forming maximum prices for medications. We must not forget the constantly rising marketing expenses of manufacturers and the costs of maintaining staff in Kazakhstan. All of this significantly impacts their business profitability in the country.

The greatest problem for market participants is that almost all the burden of reducing maximum wholesale and retail prices has fallen on the shoulders of distributors and pharmacies. Their margins have effectively been severely "cut," which sharply reduces the motivation to work with such medications. Distributors have begun to approach manufacturers, asking them to at least partially compensate for their lost margins. However, not all manufacturers have the ability to find an additional budget for such compensation. The situation is fraught with a reduction in the assortment and decreased availability of prescription medications for consumers.

It is clear that a decision made without proper dialogue with the industry and consideration of the opinions of all participants in the pharmaceutical market carries risks not only for businesses but also for patients. Kazakhstan could repeat the scenario of Azerbaijan, where, after the introduction of maximum wholesale and retail prices for medications, many European and American companies curtailed supplies of a significant portion of their portfolio, and the needs of the pharmaceutical market began to be met with cheaper products from Turkey and India, as well as dietary supplements. For consumers, this means having to choose between quality and availability.

In Kazakhstan, the situation is complicated by the fact that, despite having a local production of a fairly wide range of medications, many patients (and even doctors) traditionally trust Western-made products more. Furthermore, many innovative medications are still not produced in Kazakhstan and can only be supplied by foreign companies.

To avoid such consequences, transparent and clear rules for forming and revising maximum prices are necessary, taking into account the constantly rising costs at all stages of the supply of pharmaceutical products—from manufacturers to pharmacies. It is important that such rules are followed by all parties—both businesses and regulators. The key to the solution is dialogue. Manufacturers' associations and industry unions can serve as a platform for developing joint initiatives, and collective appeals will be heard much louder than attempts by individual companies to influence the situation.

We see risks not only for the industry but also for the economy as a whole.

Arminas Matevicius, Vice President for the Eurasia region at the pharmaceutical company STADA:

– Today, there is a high level of uncertainty in the pharmaceutical market of Kazakhstan. If the new pricing rules remain unchanged, this will lead to a reduction in the assortment of medications: manufacturers will have to reconsider their portfolios, withdraw certain medications from the market, and abandon less profitable projects. This, in turn, could lead to the closure of pharmacies and the bankruptcy of distributors.

The pharmaceutical community has tried to build dialogue—through associations, meetings with representatives of the Ministry of Health, and public comments. We have repeatedly explained that the overwhelming majority of the market is regulated naturally, and the average margin is far from the announced "super-profitable" figures. Nevertheless, the positions of the parties have not yet coincided: the ministry has set the decision quite firmly.

As an example, we can mention the regulator's position on the "minus 30%" rule for determining the price of generics: any generic must be 30% cheaper than the original medication. We agree that the first generic should be cheaper than the original—this is its purpose. European countries actively save budgetary funds by purchasing generics for state needs. However, the emergence of the third, fourth, and subsequent reproduced medications places the original on par with generics, and then the market "regulates" the price through competition.

The situation is complicated by the mechanism of reference pricing: if there is a basket of reference countries for Kazakhstan, then Kazakhstan itself also serves as a price benchmark for several countries. An excessively low registered price in Kazakhstan may negatively affect the company's prices in other markets. As a result, large companies will approach the registration of new medications in the country more cautiously, which will also lead to a reduction in the assortment.

The strict regulation introduced in Azerbaijan about 10 years ago led to a reduction in the number of registered medications by more than a third by 2020. Patients faced a narrower choice, and the freed niche was filled by lower-quality analogs. The Azerbaijani market has only recently recovered to the level of a decade ago.

We see risks not only for the industry but also for the economy as a whole: a decrease in tax revenues both within the pharmaceutical industry and in related sectors, a decline in the investment attractiveness of the economy, and a slowdown in the country's development. For Kazakhstan, it is especially important now to unite the efforts of companies and associations to develop a common balanced position and convey it to the regulator.

There will always be a way to eliminate shortages

Evgeny Zemlyankin, General Director of Amity International:

– Do you believe that reducing maximum prices contributes to increasing the availability of medications for the population of Kazakhstan?

– Not at all. Currently, more than 80% of the turnover of finished pharmaceuticals in Kazakhstan is imports. All domestic manufacturers purchase imported raw materials and work on imported equipment. In 2025, a negative exchange rate difference is observed across all major currencies. The current annual inflation is around 12%. In such conditions, price reductions in this market landscape are only possible at the expense of manufacturers' profits, but if they do not have profits, there will be no production of unprofitable items and their supplies to Kazakhstan.

– What long-term strategic changes do you plan in response to the new regulations?

– We are primarily a logistics company. Accordingly, our markup depends not on the incoming price but on the number of packages processed in warehouses. So far, I do not see a critical reduction in their quantity in the market, so strategically, not much will change for the company—cost control, control of the profitability of processing one item for each SKU.

– How do the new price restrictions affect investments in logistics and digital sales channels?

– Regarding investments, since the market is stagnating both in terms of packages and assortment, distributors have no need to increase warehouse capacities, meaning investments will only be in updating infrastructure, not in development. Investments in digital channels are also on hold—there is significant uncertainty regarding the regulation of these channels and the pharmacies' fears when selling online at new prices.

– Do you see risks of shortages of certain medications due to reduced maximum prices, and how does your company minimize them?

– Distributors cannot influence potential shortages in any way. We buy everything that is available from manufacturers. If they decide not to produce or supply their products to Kazakhstan, we have no market power to change that decision.

– Will price regulation lead to the emergence of a "black market" or speculation on medications?

– The law of economics: "There will always be a way to eliminate shortages."

– How will the reduction of maximum prices affect the availability of vital medications for patients with chronic and orphan diseases?

– Since price regulation currently affects all prescription medications, it does not matter what category the disease falls into—the decision to supply to Kazakhstan will be made by the manufacturer of the medications.

– Does your company plan to limit supplies to minimize losses?

– Absolutely not. We will sell everything we can buy from the manufacturer, provided that we maintain profitability in processing one item for each SKU.

– Is there a concern that reducing maximum prices will impact the quality of logistics and service for the end consumer?

– Definitely not regarding logistics. The question of changing the service level for buyers is up to the pharmacy chains.

– How do changes in pricing policy affect relationships with partner pharmacies?

– Pharmacies are confused by the new-old prices, limiting purchases, but this is a temporary problem. As the stock of goods is depleted, the purchasing potential of pharmacies will recover.

– Is there a risk that some manufacturers will limit supplies to Kazakhstan due to low profitability?

– Yes. Right now, manufacturers are finalizing their income/expense budgets and production plans for the next year—we will soon learn about their decisions.

– What measures do you consider necessary from the government to avoid shortages under price regulation?

– Complete deregulation of prices for all pharmaceuticals in the retail segment, i.e., for all private pharmacies. This is practically an ideal market of perfect competition, where 9,000 pharmacies sell more than 7,000 drug names, many of which have interchangeable analogs. Demand has only three factors—pharmacy accessibility, product availability, and price accessibility. The buyer will make their choice based on price, but only if there are options available.

In the budget segment, the fund manager is, on the contrary, obliged to strictly regulate all prices for goods purchased with state budget funds.

– What actions is your company taking to maintain profitability under the new price restrictions?

– For us, not much is changing—cost control, control of the profitability of processing one item for each SKU. We definitely do not plan to leave the market.