Strategic Management in Pharmaceutics Development under World Economic Globalization Transformations

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 409-417

J. Environ. Treat. Tech.

ISSN: 2309-1185

Journal weblink: http://www.jett.dormaj.com

Strategic Management in Pharmaceutics

Development under World Economic Globalization

Transformations

Natalia S. Klunko , Natalia V. Sirotkina , Olena M. Krasnonosova

Russian New University, Postgraduate and Doctoral Department, Moscow, Russia. E-mail: nataliya.klunko@gmail.com

Voronezh State Technical University, Department of Digital Economy, Voronezh, Russia. E-mail: docsnat@yandex.ru

National Academy of Sciences of Ukraine, Research Center for Industrial, Kiev, Ukraine. E-mail: krasnonosova@gmail.com

Received: 29/05/2019

Accepted: 11/08/2019

Published: 20/08/2019

Abstract

Purpose of the study: to formulate approaches to strategic management of the pharmaceutical industry in Ukraine under globalization

transformations of the world economy. Methodology: the following research methods were used: graphic modeling, analytical and

structural-logical methods for economic justification of the efficiency of the presented economic and statistical calculations, as well as

systematization and generalization of indicators. Results: Tendencies in the global pharmaceutical market are analyzed in the paper,

particularly, the world experience of government pharmaceutical regulation. Changes for 2010-2017 in the dynamics of production of the

main types of pharmaceuticals are analyzed. A tendency of growth in output value is revealed to be stable, operational profitability to be

increased and the number of manufacturers to be decreased due to reducing small businesses. The growth of manufacturing capacity of

pharmaceutical companies is evidenced by an increase in the common currency mainly due to the attracted capital. The role and significance

of the pharmaceutical industry for development of the country are described herein. Tendencies of globalization and their influence on the

pharmaceutics development are analyzed. According to the analysis results, a model to form a strategy for the pharmaceutics development

was proposed that includes two outlines: one outline represents the core of the enterprise strategy, strategic development directions and

principles, and the other is a set of functional strategies subordinated to the global strategy but providing a flexible mechanism to monitor

and adjust changes. The scheme of formation of the strategy for pharmaceutics development in Ukraine is offered to implement the

proposed model. The purpose of the research is to determine the essence of the concept of strategic management and its importance for the

pharmaceutical industry in Ukraine. Applications of this study: contains substantiations on certain negative aspects for the national security

of the country in globalization, predicting the market monopolization and increased competition, but also on certain positive aspects in the

possibility of creating innovative clusters through technology transfer, quality improvement, and so on. However, positive benefits of

globalization can be enjoyed only upon formation of the system of rapid response to challenges and opportunities of the modern market.

Novelty/Originality of this study: Processes, methods and approaches of pharmaceutical development management have been studied in

our country throughout the period of formation and development of Ukraine as an independent state. However, mostly, the studies are

characterized by fragmentary nature and address certain aspects of improving the industry's functioning: increasing its competitiveness,

investment attractiveness, innovations, marketing, logistics, and state government. At the same time, we did not find a comprehensive

study on the strategy for the stable development of pharmacy.

Keywords: Pharmaceutical Industry, Manufacture, Dynamics, Development, Tendencies, Import Substitution.

strategically important sector of the country's economy ensuring

Introduction

health care, therefore the level of the pharmaceutical industry

development determines the national security and health of the

nation. In addition, the pharmaceutical industry is assumed to be

high-tech and science-intensive and to act as one of the

locomotives of the world's economic growth. So, according to

forecasts, in 2017-2021, it will increase by 34% - to $1,485

trillion. Almost a quarter of this increase is expected to be

provided by countries with emerging pharmaceutical markets.

Thus to find a strategy for development of the domestic

pharmaceutical industry seems to be very urgent to create a

super-powerful cluster of economy.

Currently the world economy is under transformation, the

world picture keeps changing, resulting in changed development

directions and leaders in each economy branches. Today,

information and telecommunication technologies, robot-

building, genetic and bioengineering are believed to be the main

world-leading industries (3,4,8,9,15,20,25,30,31,33,34). The

growth of these industries show the world development move

from the primary industries (metallurgy, mining, etc.) to the third

new group, aimed at meeting individual's needs

(

1,5,16,21,24,29,35). The pharmaceutical industry is considered

to be one of the most important and powerful economy segments

in any country. Besides the pharmaceutical industry is a

Corresponding author: Natalia S. Klunko, Russian New University, Postgraduate and Doctoral Department, Moscow, Russia. E-mail:

nataliya.klunko@gmail.com.

409

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 404-417

The pharmaceutical market is currently considered to be one

of the key drivers of global economic growth. The market

structure is constantly changing - there is a tendency to territorial

redistribution of the global pharmaceutical market. For 2012-

Literature Review

Processes, methods and approaches of pharmaceutical

development management have been studied in our country

throughout the period of formation and development of Ukraine

as an independent state. So, the issues of import substitution,

described by E.M. Bilousov (2) and others, seemed to be relevant

enough. The scientists rightly point out the need to apply the

import substitution strategy, because it corresponds to the goal

of the pharmaceutical market development - to meet the

population needs in high-quality medicines of domestic

production. The issues of strategic development of enterprises

are discussed by Dorovsky (6) who considers applicability in our

country of the experience of developed countries leading in the

pharmaceutical industry and offers to gradually apply an export-

oriented development strategy. Also issues on justification and

implementation of the sustainable development concept in the

pharmaceutics management in Ukraine are thoroughly

investigated by Moroz et al. (19). Fundamental researches by

Kotvitska and Kostiuk, Pashkov, Strapchuk should be

distinguished among works by the scientists involved in the

pharmaceutics analysis (13,23,28) . Certain aspects of the

analysis of the pharmaceutical market were highlighted in the

works by Shabelnik (10,27).

2014, the share of Japan and the countries of North America,

Europe decreased from 71.0% to 66.1%, while in Asia and

Africa increased from 17.44% to 20.14% and in Latin America

from 7.4% to 8.8%. According to the data of 2016-2017, the

share of the United States of America was 64.7%, Europe -

7.5%, Japan - 7.3%, of other countries - 9.4%, and IMS Health,

an analytical company, basing on economic indicators has

allocated a group of 21 countries, named "Pharmerging

markets". It was also divided into three categories: the first

included China, the second - Brazil, India and Russia, the third -

7 countries with large population and great prospects for

growth. According to analytical data, IMS analyzes the

Pharmerging markets" group separately because unlike

traditional markets with an average level of 1-4% growth,

Pharmerging markets" show an average growth by 11-15%. In

017, the market of this group reached 405 billion US dollars,

accounting for 33.8% of the world pharmaceutical market.

However, mostly, the studies are characterized by

fragmentary nature and address certain aspects of improving the

industry's functioning: increasing its competitiveness,

investment attractiveness, innovations, marketing, logistics, and

state government (26; 36). At the same time, we did not find a

comprehensive study on the strategy for the stable development

of pharmacy.

The purpose of the article is to formulate approaches to

strategic management of the pharmaceutical industry in Ukraine

under globalization transformations of the world economy.

Figure 1: Dynamics of the world pharmaceutical market development

in 2012-2017, billion USD

Results

An important element of the government management

The growth in demand in the global pharmaceutical market

was due to increased population, primarily in Asia and Africa,

increased life expectancy of the population at birth, population

aging and an increase in its chronic diseases, incomes, as well as

the governments’ policy regarding growth of state budget

expenditures on health care.

system is the pharmaceutical industry management with a

significant role both in the health care system and in the

economy in general. Ukrainian pharmacy was historically a

leader in scientific, educational, and manufacturing spheres, so

it is believed to be a strategically important component of the

macroeconomic complex of the country. Over the years of

Ukraine's independence, approaches to pharmacy and public

authorities have been constantly changing: the search for

effective principles of state government and their relationship -

integrated and sectoral, organizational and structural-functional,

centralization and decentralization - were sometimes complex,

sometimes chaotic (7,18,19).

The Ukrainian pharmaceutical market is also influenced by

global trends and during the last period its growth was almost

20%. (Fig. 2)

Figure 2: Manufacture of basic pharmaceuticals and medicines, million USD (32)

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 404-417

According to researchers in 2017, both retail sales of drugs

and hospital procurements increased. Thus, retail sales in

monetary terms increased by 21% to UAH 61.2 billion; in

natural units - by 7%, up to 1.115 billion packages. Hospital

procurements in money terms increased by 10% to UAH 8.8

billion; in nature - by 15%, up to 109 million packages.

However, according to the research, one Ukrainian spends on

average $ 62 for medications over a year, while a resident of the

UK - $ 383, Sweden - $ 501, Canada - $ 587.

pharmaceutical market was highly affected by the merger of the

following companies:

- Smithkline Beckman + Beecham = Smithkline Beecham (UK);

- American Home Products + American Cyanamid = American

Home Products (USA);

- Glaxo + Welcome = Glaxo Welcome (UK);

- Roche + Syntex = Roche (Fr); 2009 - Ciba + Sandor = Novartis

(Swiss);

- Pharmacia (Sweden) + Upjohn (USA) = Pharmacia & Upjohn

One of the key historical events that determine the world

economy development is globalization. As Pashkov bnoted in

his paper, with globalization tools, 15% of the world's

population, mostly in Europe and the United States, consume

+ Pfizer = Pfizer.

According to Pharma Business News, only 50 world's largest

collaborators remain by 2020. Pricewaterhouse Coopers analysts

argue that mergers will continue until 5-10 pharmaceutical

companies with a strong research base are established. Klunko

states, that the collaboration intensification in the global

pharmaceutical industry can be predicted to result in even larger

pharmaceutical conglomerates appear and to accelerate the total

market oligopolization (11,12).

Pashkov notes that the main reason for mergers of big

corporations into larger structures is to increase their costs for

research and development works (23). The research-based

pharmaceutical industry can play a critical role in restoring

Europe to growth and ensuring future competitiveness in an

advancing global economy. In 2016 it invested an estimated €

35,000 million in R&D in Europe. It directly employs some

745,000 people and generates three to four times more

employment indirectly – upstream and downstream – than it

does directly. However, the sector faces real challenges. Besides

the additional regulatory hurdles and escalating R&D costs, the

sector has been severely hit by the impact of fiscal austerity

measures introduced by governments across much of Europe

since 2010.

Costs for development of new medications and terms for

their implementation are significantly increased. In order to

successfully compete with others, the company needs to produce

annually several new original drugs (brands), but it requires up

to 10 years of researches and hundreds of millions of dollars a

year. Such risky and long-term projects require finances.

Consequently, the common science budgets of large

pharmaceutical companies make annually from one to seven

billion dollars. USA (17). Globalization has vague

consequences: on the one hand, the company within the

multinational company is less responsive to negative

fluctuations of the external environment, and on the other hand,

profits go to the country of a parent enterprise.

Today, pharmaceutical companies in Ukraine face problems

associated with the need to identify further ways of its

development under significant reduction of export potential,

increased competition in the domestic pharmaceutical market

and low purchasing power of the population, on the one hand,

and the need to ensure availability and high quality of medicines

as the main priorities, on the other hand.

5% of all human resources, and 85% of the remaining

population consume 25% of resources (22, 23). We can say that

globalization has become an attribute of the modern economy.

The most active actors and drivers of globalization are

Transnational Corporations (TNCs), which are considered to be

the main driving force of globalization and key element of the

entire modern international economy. Under their influence,

international trade is less consistent with principles of so-called

free trade, since most operations, especially in the

pharmaceutical market, are conducted between subsidiaries of

international business entities.

The modern pharmaceutical industry is a global business

investing in research and development. Consequently, the

pharmaceutical market should be seen as an object affected by

globalization in all its manifestations. The global pharmaceutical

industry has been transforming significantly over the last decade.

Intense globalization, complicated parameters determining the

product competitiveness and characterizing the company's

intense struggle for the global market share, create new

opportunities for enterprises and, at the same time, determine

new obstacles. In addition, the pharmaceutical market has

certain features that distinguish it from other markets:



diverse drug assortment,

long development cycle,

high knowledge intensity,

inelastic demand,

dependence of demand on epidemics, natural

disasters and other extreme events.

Consequently, the pharmaceutical market as a part of the

market for consumer goods and services is characterized by a

tendency towards globalization caused by: the common need for

all humanity in health care and the natural desire to increase the

life expectancy; the similar dynamics and prevalence of main

diseases in different countries; search for the most effective

medicines; the high cost of development and implementation of

new drugs, requiring efforts worldwide; the aspiration of

pharmaceutical companies to widen the business boundaries as

much as possible and to get a larger market share (17).

Characteristics of pharmaceutical TNCs operation can be

determined:

According to the industrial product portfolio classification

(

2014), intended for international comparison, pharmaceutical

strong positions in most strategic global pharmaceutical

products are represented by two groups - manufacture of

pharmaceutical products and medications:

markets; globally integrated, so national characteristics are not

critical;

1) basic pharmaceutical products (manufacture of active

implemented flexible purchasing strategies;

global production structure;

global organization of research and development works;

global marketing organization that supports strong market

substances with pharmacological properties used for the drug

production;

2) pharmaceutical medications and materials.

Sales of pharmaceutical products in Ukraine in 2017

increased by 20% - up to 70 billion UAH. In natural units,

growth is 7% - up to 1,224 billion packages (28).

orientation and strategic customer orientation.

The pharmaceutical market globalization is also

characterized by a growing capital concentration through

companies’ activities and mergers (22). In recent years, the

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 404-417

Table 1: Main indicators of the manufacturers of basic pharmaceutical products and medications in 2011-2016

Indicators

Number of enterprises

Large

2011

315

2012

254

2013

248

2014

233

2015

229

2016*

196

Medium

Small

250

187

1331.6

11505.6

916.4

178

167

164

132

1.3

n/a

891.8

127.5

Number of employees, thousand people

Costs of enterprises, mln. hryvna

Product sales, mln. hryvna

Net profit (loss) of enterprises, thousand

21.1

1043.1

9334.1

619.4

24.2

1614

13677,2

1068

23.5

1820.9

15729.7

501

22.8

2387.3

21500.9

1485.8

hryvna

Cost effectiveness of enterprises’ operational

activity, %

13.2

15.2

14.9

17.2

12.2

Data are provided only for small enterprises according to the data of the State Statistics Committee (2018)

The trend to import dependence is also confirmed by the fact,

according to the World Health Organization (WHO), that

domestic medicinal products (MP) occupies just 30% of the

Ukrainian pharmaceutical market in value terms, and the share

of imported medicines is about 70% (13). Ukrainian

manufacturers are in unequal conditions with foreign

competitors: for the last 10 years, there was a tendency towards

a decrease in the share of domestic medicinal products from 39%

in monetary terms in the pharmaceutical market in 2005 year to

increasing a share of high-tech products that meet international

standards.

Besides a significant share of imported products, the

Ukrainian pharmaceutical market has an appropriate structure:

original medicines make 4% in natural units, or 16% in monetary

terms; generics - 35% in both natural units and monetary terms;

other (traditional, herbal, immunobiological, etc.) drugs make

61% in natural units and 49% in monetary terms. Also, the

Ukrainian pharmaceutical market is characterized by a great

share of generics (their share makes 90% in the Ukrainian

market). According to the State Statistics Service of Ukraine, on

average, the Ukrainian spends on medications 8.1% of income,

ranking the fourth place in the budget (6,32). Obviously, a

further significant increase in consumer spending on medicines

is expected due to population aging and environment

deterioration. Thus requirements for the supply and drug quality

will also increase steadily. Ukraine ranks fourth among the CIS

countries for the drug consumption. And the Ukrainian level of

$ 48 per capita is lower versus to Europe. Thus, in the Czech

Republic, this indicator is 331 dollars, in Slovakia - 254 dollars,

in Poland - 154 dollars. So we can conclude that there is a

significant potential for growth in the Ukrainian pharmaceuticals

market volume. Another important factor in the market growth

in monetary terms is transition of domestic drug manufacturers

to the high price drug production, whereas historically they

specialized in cheap products, unlike foreign companies.

5% in 2010. This situation is explained by several

circumstances, since the ratio of the cost of domestic and foreign

drugs today is 1:5. Drug sales volumes in physical terms (in

packages) are 2:1, that is, 66% of domestic drugs account for

4% of foreign medicines. However sales volumes on the

contrary make 1:3, that is, 25% of domestic versus 75% of

imported. This demonstrates significantly lower prices on

domestic drugs and their affordability.

Besides, a study was conducted on exports and imports of

pharmaceutical products from 2012 to 2018 (Fig. 3).

The analysis shows that 93% of Ukrainian pharmaceuticals

are exported to CIS countries, however pharmaceuticals import

from these countries makes only 4.5%. According to the

studying the Ukrainian pharmaceutical market state, the market

seems to require further development, investment attraction,

restructure and diversification of the export structure by

Figure 3: Volume of export and import of pharmaceuticals in Ukraine, 2012-2018

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 404-417

At the same time, all participants in the pharmaceutical

market of Ukraine, forming its structure, can be divided into

the following main groups:

to increase the quality of the provided medicinal services, and

thus to raise the level of national security.

Thus, strategic management of the pharmaceutical

industry development in Ukraine should be aimed at

maintaining the positive influence of factors-stabilizers and

forecasting and minimizing the negative effects of

destabilizing factors.

In world practice, considerable experience has been gained

in the pharmaceutical regulatory approaches. In many

countries, including the former Soviet Union republics, certain

laws on the legal regulation of the medicines circulation and

pharmaceutical activities, drug quality control, etc. have been

developed.

Domestic manufacturers which meet the European GMP

standards;

Eastern European producers (KRKA, GedeonRichter), long-

term suppliers for the Ukrainian market;

New generic companies (Actavis, Zentiva), characterized by

flexible pricing and fast formation of the product range;

Innovative producers (Novartis, Sanofi-Aventis), developing

new approaches to treatment, have a broad evidence base, but

also higher prices;

Niche companies (MiliHealthcare, Heel) with successful

positions in certain markets.

According to data published in the report by R. Gerster,

transnational companies dominated in the Indian market by

1970 which accounted for 85% of the pharmaceutical market

in monetary terms. Everything changed after the 1970 Patent

Act adoption that dramatically affected the Indian

pharmaceutical market structure. Clause 83 of this Act states

that patents are granted to encourage inventions and to secure

that the inventions are worked in India on a commercial scale,

however they are not granted merely to enable patentees to

enjoy a monopoly for the importation of the patented article.

The main feature of the act was not the denial of patent rights

- the state recognizes them and is ready to pay for them, but to

prevent the monopolization of the activities of large

companies. In the Indian pharmaceutical sector, only

technological features of those productions are currently

patented, which patent protection lasts for 7 years. Besides the

state reserves the right to independently grant licenses for

drugs in case if a patent holder refuses to do so on fair terms.

As a result, over 20 years, the share of multinational

companies in the Indian pharmaceutical market has decreased

by more than twice - up to 40% (12).

Consequently, this heterogeneity of the market structure

and the significant influence of the foreign policy and

economic situation make the national pharmaceutical industry

face general problems of choosing a strategy and strategic

development methods taking into account the globalization

influence.

Tendencies to globalization and concentration of the

global pharmaceutical market through mergers and

acquisitions of large companies are observed. An analysis of

tendencies in the global pharmaceutical market suggests

certain factors, incentive and disincentive for its growth. And

considering the deep interconnection and interdependence of

our country's economy with world tendencies, a development

strategy for the domestic pharmaceutical market should be

based on deep understanding of the mechanism of interaction

of these factors.

Some researchers, in particular E.M. Bilousov et al. (2),

distinguish both positive and negative sides in globalization

regarding each country. Negative ones include, firstly, state

institutions’ service for interests of international corporations,

which in practice weaken the national manufacturers’

interests, moving them out of external markets. Secondly, the

economy power usurpation by the developed countries.

Thirdly, the weakening of the country’s sovereignty by

limiting opportunities for choosing activities in foreign

markets. Fourthly, increased requirements of regulatory

documents of interstate entities in relation to the national

legislation of a particular country. E.M. Bilousov et al. (2)

considers the improved economic state by attracting

investments, bank capital, a single monetary currency, mutual

funds, etc, to be positive aspects of globalization from the

point of view of ensuring the sovereignty of a particular

country. In general, the analysis of modern interstate

cooperation allows to state that the regulatory mechanisms

resulted by such cooperation show different effectiveness

depending on its scope (2).

The main globalization factors influencing development of

the pharmaceutical industry can be divided into two directions:

factors-stabilizers and factors-destabilizers. For example,

technology transfer can be considered as a positive factor-

stabilizer, which increases the product innovation, the

technological level of the pharmaceutical industry, which

should expand markets in the future. The unification of the

treatment standards and the medicines quality will require

additional funding soon, that means additional costs for

equipment, laboratory, training, but in the long term, will

enable to offer the products in a larger number of markets, and

Domestic researchers also consider the possibility of

forming

strategy for the pharmaceutical market

development. For example, the authors (27) consider the

strategy of sustainable development, which consists of

economic, ecological and social and institutional aspects. The

national sustainable development strategy, currently being

actively discussed, has a platform for forming the sustainable

development strategy and goals: availability of medicines,

quality and rational use. By the way, development and

implementation of the National Drug Policy were required by

the World Health Organization for each country, and it should

define the goals set by the government for the pharmaceutical

sector and determine the strategy for their achievement.

Klunko substantiates in her work the need to use an import

substitution strategy aimed at increasing the use of internal

reserves and treatment protocols which involve local generics,

not imported original medicines (11). However, the import

substitution strategy is considered to be part of a common

strategy, and the main direction of the industry development

should be in transition to the use of both strategies - import

substitution and export orientation.

Dorovsky examines the experience of Turkey and the

opportunity to stimulate the production of generics and

original drugs under the pharmaceutical manufacturers’ (6)

licenses and offers the following strategic development areas:

joint ventures, quality standards compliance, concentration in

biotechnology developments.

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 404-417

E.M. Bilousov et al. (2) offers a special mode of

management in the pharmaceutical market under

globalization, namely:

government regulation of relations in the pharmaceutical

activity; creation of conditions for economic competition;

approximation of requirements of the state standards for

pharmaceutical products, production technologies, and

measurement and assessment methods to the relevant

standards, technologies, means and methods applied in the EU;

economic stimulation of the production of drugs and medical

devices in Ukraine; scientifically grounded state regulation of

drug prices and tariffs; compliance with the rules, norms and

standards by all subjects of pharmaceutical activity;

licensing of economic activities on the medicine production,

import and sale as a separate component of pharmaceutical

products; priority of medicine provision not other types of

pharmaceutical activity; guaranteed reimbursement of the

population’ expenses for prescribed drugs; use of high-quality

and proven efficacy of pharmaceutical products; providing

free access to information on the drug quality and efficacy.

The regulation system of the pharmaceutical industry

consists of international, regional and national levels (Fig. 3)

and this confirms that the pharmaceutical market is considered

to be one of the biggest globalized sectors of the world

economy, the impact of each level should be taken into account

when forming a development strategy.

Figure 5: The system of pharmaceutical market regulation in Ukraine

Thus the government policy in the pharmaceutical market

should inherently combine both main principles of the state

innovation policy and general requirements applicable in the

world drug regulation market. However, in the current legal

regulation, the pharmaceutics development strategy is partially

stipulated in the Law of Ukraine (1996) "On Medicines",

which defines the basic principles of medicine quality control

and their production, sales, but some important provisions on

effective means (methods) of the state regulation need to be

developed and implemented in order to provide an integrated

strategy for the pharmaceutical activity in today's

globalization.

Having examined the globalization nature, symptoms and

impact on the pharmaceutical market, we came to the

conclusion that the strategy of the pharmaceutical industry

development should focus upon solving several key modern

problems:

The pharmaceutics development strategy should implement

principles and values of the new health economy;

The pharmaceutics development strategy should take into

account the change in approaches to revealing and meeting the

consumer's needs - orientation at customers and patient’s

personality, communication with patients and health care

institutions to determine the patient's needs (patient first);

The pharmaceutics development strategy should take into

account the change in approaches to formation of the value

chain;

The pharmaceutics development strategy should take into

Figure 4: Pharmaceutical regulation system (compiled by the

authors)

account the change in approaches to cost formation (some

countries refuse to finance treatment of certain groups of

diseases, which makes the production of certain groups of

drugs unnecessary).

Consequently, globalization changes approaches to

business running, as well as accelerates and monopolizes

scientific and technological progress, ongoing researches

result in new treatment methods, and therefore a strategy in

this industry should take into account these features, but yet

provide leadership and competitiveness. Such diverse and

dynamically changing conditions of the pharmaceutical

industry require new approaches to their strategic

development.

WHO, the European Commission and the European

Medicines Agency (EMA) have signed an agreement on

exchange of information on safety, quality and efficacy of

medicines, registered medicinal devices or products within the

EU /WHO.

In Ukraine, the regulatory activity is governed by Order of

the ST-N MOHU 42-1.1:2013 "Medicines. Good regulatory

practice", harmonized with WHO recommendations (Fig. 5).

However, it is necessary to understand that the

pharmaceutics development strategy is only one element of the

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 404-417

country's development strategy and should inherently consist

with the general innovation strategy of the country's

development.

For smooth entry of Ukraine into the world economic

space, an innovation model of the economy should be formed,

the efficiency of the production structure should be increased

by increasing the share of high-tech industries, providing

radical changes in international specialization in the current

dynamic conditions of production internationalization. The

innovative model of economic development, which became

the dominant doctrine of economic growth in economically

and technologically developed countries and countries with

positive dynamics of technological and economic changes, is

considered to be essential basing on large-scale introduction

into economic circulation through innovative processes of

such products of intellectual work as advanced technologies,

scientific and technical developments and other objects of

intellectual property rights of the scientific and technical

sphere, as well as introduction of effective organizational and

managerial decisions to commercialize them or to obtain a

social and economic effect. Although innovation as a

phenomenon of social and economic life is expressed in many

different ways, it is also associated with various factors,

regulatory nuances, economic and non-economic incentives.

The state considers stimulation and activation of innovations,

formation of the information society to be priority national

interests and takes it as a benchmark in shaping the further

social and economic development course, and this means that

the issue of creating conditions, activating and implementing

innovative transformations in the real sector of the economy

and in the social sphere, building of an innovative model of

economic development are believed to be a component of the

chosen strategic course of the social and economic policy of

Ukraine. At the same time, legislative inconsistency on the

state innovation policy as a separate component in the Civil

Code of Ukraine, in particular in Art. 10 and 1 Art. 328,

nullifies the building of an innovative model of economic

development, including in health care. The lack of scientific

and legal support for innovation activity does not allow the

integral state innovation policy to be formed, even at a

conceptual level. Thus public procurement, direct investments,

preferential loans, grants, financial guarantees, fiscal

preferences, non-financial services and other non-financial

support are believed to be the main tools for state stimulation

of innovation in the EU member states and other developed

countries. That is, the European countries use the systemic

principle of the innovation policy implementation, based on

definition of specific legal tools and mechanisms to achieve

the tasks.

Figure 6: Model of strategic management of the pharmaceutical

industry development (the author's development)

The basic principles, goals and objectives that underlie this

core should remain unchanged under any circumstances and

changes in the political and economic situation. That is, the

core of the strategy reflects national interests on the national

security, raising the quality of life. The first level strategy, as

a tool for an integrated management model, forms the behavior

principles, rules and logic.

The second outline should be an extensive system of

strategic directions (functional development strategies in areas

socially and politically important for the country

development), which provide for continuous monitoring and

appropriate correction of each direction of the strategy for

changing the market environment. That is, the very second

core of functional strategies should provide for a flexible

mechanism for appropriate changes/adjustments of the

strategy to respond to increasingly complex economic

conditions. Because, as Khalimon notes in the work, the

leadership is hard to be retained because it is hard to change

the existing strategy. That is, quite often, because of the lack

a flexible mechanism that changes the strategic

development direction radically and quickly and effectively

changes only some functional components of the global

strategy, the country becomes an outsider in world competition

(10).

In our opinion, in creating a mechanism for strategic

pharmaceutics management under globalization, such

synergetic paradigm should be used that offers a scheme for

forming a strategy for the pharmaceutics development, which

considers the globalization influence (Fig. 7). The scheme of

strategy formation allows implementation of the proposed

model of strategic pharmaceutics development. The proposed

scheme contains two proposed outlines of strategy

development. The first outline (the core of the pharmaceutics

strategy) has its practical implications in the National Drug

Policy. The second outline is already connected with the

pharmaceutics subjects - drug manufacturers, wholesalers and

retailers - who have to formulate functional strategies and

bring them in line with the global strategy for pharmaceutics

development.

Thus, considering the dependence of the domestic

pharmaceutical market on the above globalization

manifestations that require a quick and adequate response, we

offer formation of a strategy and strategic management

grouped together in two contours (Figure 6). One should be a

stable unchanging core that determines the global priority of

the pharmaceutical industry, and the other contour represents

more flexible principles, tools and directions for development

in specific areas that allows functional development strategies

to be formed.

The first outline is a solid core strategy, which contains the

basic principles, upon which the whole system of the

pharmaceutical industry is focused.

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 404-417

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