Kyrgyzstan plans to open 100 “El Aman” state pharmacies
The Kyrgyz Republic is poised to shake up domestic pharmaceutical sales and access by establishing a network of government-run pharmacies aimed at making medicines more affordable. The state retail pharmacy outlets are supplied by a newly formed state-owned company buying medicines directly from Russian factories at low manufacturer prices.
State Pharmacies Selling Cheaper Medicines
In September 2023, Kyrgyzstan’s Minister of Health Alymkadyr Beishenaliev announced plans to open state-owned pharmacies across the country. The goal is to improve access to medicines for Kyrgyz citizens by offering significantly lower prices compared to private retailers.
Beishenaliev noted that pilot low-cost “social pharmacies” had already been opened in 2021 in the Osh and Jalal-Abad regions. However, the project was discontinued after he resigned. Now back in office, the minister has relaunched efforts to provide affordable pharmaceuticals via government outlets.
Dual Supply Chain Established
The state pharmacies are stocked with medicines from two supply sources:
- Private pharmaceutical companies
- Newly launched state-owned enterprise Kyrgyz Pharmacy
Kyrgyz Pharmacy buys medicines directly from manufacturing plants, enabling purchase prices closer to production costs. The state outlets then add just 5% markup for operating expenses while still drastically undercutting standard pharmacy margins of 25-50%.
Significant Pharmacy Retail Expansion Planned in Kyrgyzstan for 2024
In his September announcement, Minister Beishenaliev targeted rapid growth for the state pharmacy network, which is named El Aman. By February 2024, there were already 65 outlets established across Kyrgyzstan – up from none just months earlier.
The government now plans to expand to over 100 locations by the end of the year. The fast pace demonstrates firm commitment to providing an alternative for accessing essential medicines. Many of these pharmacies are planned to be located in hospitals and clinics.
Kyrgyzstan has a total of 3,000 pharmacies, so the government retail chain, El Aman, will be numerically small for now. But may have an outsize effect on market pricing. The largest private pharmacy chain in Kyrgsyztan is Nemen who has nearly 300 pharmacies.
Kyrgyzstan Plans Direct Purchasing from Pharmaceutical Companies
A key enabler of the low-price strategy is sourcing pharmaceuticals directly from neighboring Russia’s extensive pharmaceutical industry.
In February, Kyrgyz officials traveled to Novosibirsk and Moscow to meet with Russian pharmaceutical manufacturers about purchasing medicines straight from factories. Buying direct allows bypassing third-party Kyrgyz distributors that have long dominated the domestic market.
Beishenaliev justified the move as an effort to curb decades of “price gouging” by private distributors that charged excessive markups on state-funded hospital procurement. He singled out companies deliberately limiting imports of affordable generics in order to push sales of premium brands.
Kyrgyzstan Targets Pharmaceutical Cost Savings of 25-30%
Through combined tactics of buying direct from pharmaceutical producers and minimizing retail markups, Kyrgyz authorities estimate the state pharmacy program can reduce true medicine costs by 25-30%. Significant savings could be achieved for both government healthcare facilities as well as ordinary citizens.
The push into pharmaceutical distribution and retail poses major disruption for international pharmaceutical companies dependent on existing private-sector Kyrgyz sales channels. The rise of a large new low-cost player will require pricing and market share adjustments.
Furthermore, success by Kyrgyzstan in improving domestic access could compel other regional countries to implement similar state pharmacy models. The program’s impact on Central Asia’s pharmaceutical landscape is just beginning.
Delta Medical is Closely Observing the Kyrgyzstan State Pharmacy Chain
Pharmaceutical firms are keeping an eye on the budding El Aman pharmacy network. Just over the past 6 months, the chain has broadened its reach. Delta Medical’s CIS Commercial Director Sergey Piont remarked that Delta Medical Bishkek office is closely tracking El Aman’s expansion and will likely negotiate directly with them later this year. Although El Aman currently stocks a limited 2,000 products, Piont anticipates Delta Medical’s offerings being available there as El Aman gradually expands its product selection.
