Medicine Production & Delivery
Medicine Production & Delivery
Business Model Description
Build and operate production plants and laboratories for medicines for non-communicable diseases (cardiovascular diseases, cancer, chronic respiratory diseases, diabetes, obesity, etc.), vitamins, and supplements. Develop complementary delivering mechanisms directly to customers, using various methods such as online ordering, mobile apps or delivery services. Needed inputs include research and development, production facilities, and a broad knowledge base of researchers and labor. In addition, companies often rely on patents and other forms of intellectual property and must comply with strict regulatory requirements governing their products' development, testing, and marketing. In Serbia, public health insurance is mandatory and is provided by the National Health Insurance Fund. The fund covers the cost of medical services, including doctor visits, hospitalization, diagnostic tests, and medication. Private health insurance is also available in Serbia, but it is not mandatory, and the coverage varies depending on the policy. Some medications may not be covered by public health insurance in Serbia, particularly newer or more expensive drugs. In such cases, patients may need to pay for the medication out of pocket or seek alternative treatments. However, the government is working to expand the list of drugs covered by public health insurance to ensure that everyone has access to essential medication.
Expected Impact
Increase accessibility of medicines and improve healthcare situations, especially for marginalised communities.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Serbia: Belgrade Region
- Serbia: Vojvodina Autonomous Province
- Serbia: Southern and Eastern Serbia
Sector Classification
Health Care
Development need
The average age of the population of Serbia is 43.5 years. The largest share of the population is the population aged 65 to 69 (7.8%) (1). An increased representation of old, chronically ill and functionally dependent persons is expected in the future. In Serbia, there is a lack of focus on disease prevention and promotion of a healthy life.
Policy priority
The Republic of Serbia adopted the Public Health Strategy 2018–2026. The Strategy's mission is to develop and implement a system of knowledge, skills and activities aimed at improving health, preventing and suppressing diseases, prolonging and improving the quality of life through organized measures of society (6).
Gender inequalities and marginalization issues
Women in Serbia face challenges in accessing healthcare services due to various factors such as geographical location, socioeconomic status, and cultural beliefs. Rural women, women living in poverty, and women from marginalized communities are more likely to experience barriers to healthcare access (5).
Investment opportunities introduction
Total budget expenditure on healthcare during COVID in 2021 was 0.78 billion USD, which is 2.2 times more than in 2019 (12). Planned budget for 2023 is 0.84 billion USD, which shows significant growth but is not enough for further development (17). Policies are focused to the development of health prevention and control, including early detection (6).
Critical bottlenecks introduction
Providing required funding for the healthcare system is a very challenging issue. In 2019, 37.04% of total spending in Healthcare was an out-of-pocket expenditure (11). The sector's overall expenditure in 2021 does not exceed 4.69% of GDP and its general budget barely reaches 4.32% of the state budget, whereby WHO recommends 10% (12, 13, 14).
Biotechnology and Pharmaceuticals
Development need
Serbia ranked first in Europe in mortality from lung cancer (2), while diseases of the heart and blood vessels with a share of 47.3%, in all causes of death, are the leading cause of death in Serbia (15). A potential solution to these diseases can be found in biotechnology (16).
Policy priority
One of the policy priorities is to focus on the development of new and innovative therapies that can effectively treat various diseases, such as cancer, genetic disorders, and infectious diseases. This entails supporting research and development efforts to explore new treatment options and improve existing therapies (6).
Gender inequalities and marginalization issues
About 400,000 farmers in Serbia do not have a health card due to debts to the Pension Fund, which reached 2 billion USD in 2022 (7).
Investment opportunities introduction
The local pharmaceutical industry generated revenue of USD 0.7 billion in 2021, with the total current market being close to USD 1.4 billion. There is potential for further investment in numerous directions, such as drug development, gene therapy, and medical devices (9, 21).
Key bottlenecks introduction
Pharmaceutical companies aim to sell drugs on the market, but researching new drugs is a costly and time-consuming process. Investors seek quick returns on their investments, so any delay in releasing medicines to the Serbian market can be problematic (7).
Biotechnology and Pharmaceuticals
Pipeline Opportunity
Medicine Production & Delivery
Build and operate production plants and laboratories for medicines for non-communicable diseases (cardiovascular diseases, cancer, chronic respiratory diseases, diabetes, obesity, etc.), vitamins, and supplements. Develop complementary delivering mechanisms directly to customers, using various methods such as online ordering, mobile apps or delivery services. Needed inputs include research and development, production facilities, and a broad knowledge base of researchers and labor. In addition, companies often rely on patents and other forms of intellectual property and must comply with strict regulatory requirements governing their products' development, testing, and marketing. In Serbia, public health insurance is mandatory and is provided by the National Health Insurance Fund. The fund covers the cost of medical services, including doctor visits, hospitalization, diagnostic tests, and medication. Private health insurance is also available in Serbia, but it is not mandatory, and the coverage varies depending on the policy. Some medications may not be covered by public health insurance in Serbia, particularly newer or more expensive drugs. In such cases, patients may need to pay for the medication out of pocket or seek alternative treatments. However, the government is working to expand the list of drugs covered by public health insurance to ensure that everyone has access to essential medication.
Business Case
Market Size and Environment
> USD 1 billion
10% - 15%
Serbia's pharmaceutical market reached USD 1.4 billion in sales in 2021, with three years approximated CAGR of 11% (21).
In 2021, Serbia imported 975,760 medicines intended for sale and exported 244,982 medicines (44).
Indicative Return
ROA: > 20%
The median return on assets (ROA) for Serbia's 13 biggest pharmaceutical companies in 2019 was 3.42%, with some reaching ROA over 20%. The return is highly dependent on various factors and can vary to a great extent (22).
Investment Timeframe
Long Term (10+ years)
On average, pharmaceutical production takes 12-15 years and requires a significant amount of initial investments and prolonged periods for clinical trials and licensing, which aligns with the given approximated return on investment (23).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Market - High Level of Competition
Impact Case
Sustainable Development Need
Serbia's healthcare system has a focus on curative instead of preventive medicine, which could increase the general level of health and reduce healthcare costs in the medium and long term (2).
Lung cancer is the leading cause of death from all malignancies in Serbia. Early detection of lung cancer is one of the most important prerequisites for successful treatment. A big problem is that in Serbia, in more than 70% of patients, the disease is discovered in the last stage (2).
Procedures for registration and fees for new innovative drugs on the market are too complexed (34). Although the legal deadlines for issuing a medication license are 210 days or 150 under the accelerated procedure, in practice, they take longer, usually, several years, which is why Serbian citizens get access to medications much later than patients in the European Union (EU) (32).
Gender & Marginalisation
There exists a significant imbalance in the number of vaccinated Roma, considering total numbers in Serbia. This signals that not all minorities have equal access to medicines (33).
Expected Development Outcome
Local production and availability of medicines for the entire population, which contributes to access to high quality, safe and effective drugs and medical devices on the Serbian market and facilitates the availability of medicines and medical supplies in their safe and rational use (42).
With an advantageous location and access to over 1.1 billion consumers, Serbia offers the potential for foreign direct investment to explore new markets and benefit from reduced transportation costs. Investing in production and delivery of medicines could boost employment of skilled labor, while the country's labor cost savings exceed the EU-28 average at 84% (26).
Medicine production and delivery improves drug quality control and leads to a more timely process of technical assessment of medical devices (42).
Medicine production and delivery supports active participation in the harmonization of legislation in the Republic of Serbia with EU regulations in the field of drugs and medical devices and standards by the World Health Organization (WHO) (42).
Gender & Marginalisation
Local production and availability of medicines helps meet the growing demand for medicines among the aging population of Serbia. It also leads to improved health of Roma men and women with equal access to quality healthcare (43,44).
Medicine production and delivery, which takes into account gender differences and health needs (e.g., women's reproductive health, circulatory diseases, etc.), benefit women and men equally. As the majority of employees in the health sector, women can benefit from new employment opportunities. Better disease treatment reduces the burden on the healthcare system and on women who, due to gender roles, are primarily responsible for caring for sick family members at home.
Primary SDGs addressed
1.a.2 Proportion of total government spending on essential services (education, health and social protection)
The share of total government expenditures for health in the Republic of Serbia as a share of GDP was 5.32% in 2019. Comparing this value with the same indicator in 2010, the absolute change is -0.57 pp (28).
N/A
3.b.2 Total net official development assistance to medical research and basic health sectors
3.b.3 Proportion of health facilities that have a core set of relevant essential medicines available and affordable on a sustainable basis
In the Republic of Serbia, the total net official development assistance to medical research and the basic health sector was valued at USD 11 million in 2020. Comparing it with 2010, it showed a relative change of +322% (29).
Data for proportion of health facilities that have a core set of relevant essential medicines available and affordable on a sustainable basis is not available. Share of children fully vaccinated against measles in 2021 is 84% (29).
N/A
N/A
9.5.1 Research and development expenditure as a proportion of GDP
Business sector 45%, state sector 26%, higher education 28%, nonprofit sector 0% in 2021 (44).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
The production of medicines can pose risks to workers if proper safety measures are not in place. For example, workers in pharmaceutical manufacturing facilities may be exposed to harmful chemicals or other hazards that can cause long-term health problems (46).
Medicine production often involves the use of chemicals and other substances that can be harmful to the environment if they are not properly disposed (46).
If medicines are not produced in a sustainable or cost-effective manner, this can result in higher healthcare costs for patients and healthcare providers (46).
Concentration of medicine production in a few companies or unequal burden of production costs on certain groups can cause economic inequality (38).
Impact Risks
Domestic medicine production may have limited impact if the drugs are not available to the entire population, which is especially for people without health insurance (46).
Impact Classification
What
Production and delivery of medicine enable the availability of products to all relevant stakeholders, especially older adults, and other marginalized groups.
Who
Healthcare providers, including doctors and pharmacists, by providing a range of medicines that can be prescribed and dispensed to patients, and patients themselves who need access to medication.
Risk
Domestic medicine production may not be as effective as expected if drugs are not accessible to the entire population.
Impact Thesis
Increase accessibility of medicines and improve healthcare situations, especially for marginalised communities.
Enabling Environment
Policy Environment
The Medicines and Medical Devices Agency of Serbia (ALIMS) Work Program for 2022 defines as goal the improvement of drug quality control and technical assessment services for medical devices (42).
ALIMS Development Plan 2019-2023 defines as goals the active participation in the harmonization of legislation in the Republic of Serbia with EU regulations in the field of drugs and medical devices and standards by the World Health Organization (WHO) (42).
ALIMS Strategic Plan 2019-2028 contains directives for learning and continuous capacity building and system sustainability (42).
National Assembly, 2022, Program of the Government of the Republic of Serbia candidate for Prime Minister Ana Brnabić, document indicates significant future investments to invest even more in science, research and development, biotechnology, clinical trials, and innovative medicines (39).
Financial Environment
Financial incentives: To offset initial capital investments, the Government of Serbia offers financial support for Greenfield and Brownfield projects in manufacturing, and the services sector which may be subject to international trade, including medicines (26).
Financial incentives: Numerous grants are available for R&D projects. The Serbia Innovation Fund has invested over 63.8 million USD in innovative activities in the past 11 years, including for medicine production (24).
Fiscal incentives: Financial benefits of investing in pharmaceutical production in Serbia benefit from corporate income tax relief and payroll tax incentives, as much as double taxation avoidance in place with most European countries, many countries in Asia, and Africa (26).
Other incentives: The Republic of Serbia has 15 free trade zones. By doing business in free zones, special benefits and privileged tax regimes are provided to the free zone users. Import and export of the goods in/from the zone are unlimited (26, 27).
Other incentives: Serbia offers available exemptions for R&D companies from the obligation to pay 70% of the income tax of persons who are directly engaged in research and development activities as well as recognition of research and development costs in a double amount in the tax balance (40).
Regulatory Environment
The Law on Medicines prohibits the sale of any pharmaceuticals, including OTC, outside of pharmacies. Customs-free access to markets such as Russia, former Yugoslav countries, and the European Union (EU) provides many opportunities for both medicines and medical devices(3).
The Rulebook on Guidelines of medical devices, applicable from the 1st of June 2019, defines obligations of distributors to be in line with EU regulations (41).
The Law on Waste Management regulates pharmaceutical waste (hazardous and non-hazardous), disposal of pharmaceutical waste from citizens, and regulates the costs of pharmaceutical waste management. (30)
The Law on Fees for use of public goods regulates the provisions which are related to fee for the protection and improvement of the environment and also includes the fee for pharmaceutical waste collected from citizens at the pharmacy level (30).
National legislation against falsified medicines contains a by-Law on the content and method of labelling of the outer and inner packaging of the medicinal product, the additional labelling, and the contents of the package leaflet (30).
Marketplace Participants
Private Sector
Hemofarm AD, Galenika AD, Zdravlje AD Leskovac, Phoenix pharma d.o.o. Beograd, Pharmas, Pharmanova, Alkaloid, Medicon, Galenpharmamedica, Nepedica, Slaviamed, Zorka Pharma Hemija.
Government
Ministry of Health, The Medicines and Medical Devices Agency of Serbia (ALIMS), Ministry of Science, Public healthcare providers, National Health Care Fund.
Multilaterals
World Health Organization (WHO), United Nations Children's Fund (UNICEF), World Bank, International Federation of Pharmaceutical Manufacturers & Associations, United Nations Development Programme (UNDP), World Summit Award, National Alliance for Local Economic Development (in Serbia).
Non-Profit
Medicines Optimisation Working Group, Doctors Without Borders, National Institutes of Health, United States Agency for International Development (USAID).
Target Locations
Serbia: Belgrade Region
Serbia: Vojvodina Autonomous Province
Serbia: Southern and Eastern Serbia
References
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