How Georgian pharmaceuticals are seeking entry to foreign markets

Until now, Georgian pharmaceuticals have been limited in export to the markets of the states of the former Soviet Union. The introduction of Good Manufacturing Practices in the country may allow the country’s pharmaceutical producers to begin targeting new export markets, while the public will benefit from more supervision of pharmaceutical manufacturing at home.

Georgia has a surprisingly long history of excellence in medicine, which is well-reflected by the fact Georgian pharmaceuticals made for an approximate 5% ($142 million) share of total exports in January-September 2019, GeoStat data show.

Considering the medication export market has been traditionally limited in its reach to post-Soviet countries, that’s not bad for a country like Georgia, for whom doors to the EU medication market have been closed because of the absence of a state-backed Good Manufacturing Practices (GMP) standard in the country.

The issue of introducing GMP standards has long been on the agenda, and was being discussed at least as early as 2014. Now, however, the deadline for pharmaceutical companies to abide by the standard has been set for 2022. This may offer Georgian producers the chance to grow further afield, while the public will stand to benefit from quality-controlled medicines produced and consumed in the country.

Like many vitamins, these obligations will not be easy to swallow for all producers and may cause a degree of discomfort in the industry; a number of companies are asking for an extension of the deadline to comply with the standards.

What is GMP?

Good Manufacturing Practices (GMP) “describes the minimum standard that a medicines manufacturer must meet in their production processes”, the European Medicines Agency notes. Any manufacturer of medicines intended for the EU market, no matter where in the world it is located, “must comply with GMP, which requires that medicines: are of consistent high quality, are appropriate for their intended use and meet the requirements of the marketing authorisation or clinical trial authorisation.”

The guiding principle behind GMP is that it is impossible to monitor the quality of pharmaceutical products without violating their integrity, thus making them unsuitable for medical use. Thus, GMP focuses on a quality assurance mechanism.

Only the State Inspectorate, established in June 2019, can issue a GMP certificate in the country, and acts as the guarantor that a local manufacturer has been inspected and issued a certificate to verify the quality and reliability of its product. In former years, Georgian pharmaceutical companies have had to invite private companies from the West to issue certifications, but health experts say this is not the right approach, and that GMP certification should be administered by the state.

The market now

The latest data show that 80 companies produce pharmaceuticals in Georgia. 90% of the main share of production is divided between two companies: Aversi and GM Pharmaceuticals (PSP). These two companies occupy first place in both imports and exports, of which their combined share is 48%.

Both companies hold certificates that comply with European proper manufacturing practices and are issued by reputable European private consulting firms, although to date, neither company has received a GMP certificate issued by the Georgian state.

Currently, just one company, Aversi, has submitted an application for a GMP quality certificate. Aversi Quality Director Natela Karukhlishvili told Investor.ge that the company has already submitted a large amount of documentation to the National Inspectorate to obtain the certificate and has passed the first stage.

“First of all, obtaining a state GMP quality certificate will further increase the credibility of our company on the export market. When we register for export to another country, we are always asked – how is the state inspection done in Georgia? Or we are asked to provide the latest inspection results. At this point we explain that we have not yet implemented this practice, and we have certificates issued by other countries…but we still meet with distrust that we are not constantly inspected and monitored by the state.”

This was the first motivation to submit the application to be certified against GMP, Karukhlishvili says. Aversi is still waiting for inspections to begin. The company voluntarily applied for GMP certification ahead of time, but this process will soon be mandatory.

The market down the line

Currently, the state has set a deadline of January 1, 2022 for companies in the country to meet GMP standards.

This has been followed by discontent from several companies; a number of experts and industry representatives say that in Georgia, only about ten companies have the real capacity to switch to the GMP, European standard. Meanwhile, other players on the market may be forced to drop out of the industry due to the sizable investments and technical know-how required to meet the standard.

One particular challenge faced by manufacturers is that GMP standards define the requirements they must meet, but exactly how they are to go about fulfilling the demands is not discussed. In many cases, these are technical requirements that have been gained by companies based off their many years of experience.

Moreover, those who have already purchased the required equipment still need tria time to perfect its use.

Several companies have asked the Georgian Ministry of Health to extend the deadline of the introduction of the standard. President of the Pharmacists’ Association Levan Gogiberidze is directly involved in negotiations with these businesses. Gogiberidze says many will meet the standards, but not by the deadlines, and they are thus requesting a deferral not to a specific date but in accordance with company development plans they have submitted to the government for examination.

Since at this stage only two enterprises are ready to meet the standard (Aversi and PSP), many of the other enterprises will have to stop their activities, as a result of which as many as 1,500 people could be left without jobs, Gogiberidze says.

“This is unacceptable for either the business or the country. Because the equivalent of about $60-70 million a year comes from exports made by these manufacturers.”

Executive Director of the Association of Representatives of Pharmaceutical Companies in Georgia, Irakli Margvelashvili, also supports the postponement request, and notes the state could get involved to help the process along. One alternative to the number of relatively small enterprises on the market, he notes, “could be a merger, in which case the state could invest and help bring them closer to the GMP standard.” Margvelashvili does say, however, that state aid will only be justifiable if the commercial potential of the enterprises is properly understood.

“It would not be right for the state to invest money if the goal is only to maintain these enterprises. It is important that the investment be justified. Therefore, I think the state should study and analyze the enterprises that have further commercial potential and determine what the maintenance of these enterprises will give us in the short and long term,” he said.

Along with the GMP standard, the introduction of the GDP (Good Distribution Practice) standard is also crucial, which governs the storage and transportation of medicines.

“Medicines may work well but spoil due to violation of storage standards. Introducing the GDP standard requires less costs. If a company claims it can’t meet the GDP standards, it should be banned from the market, because we run the risk that we will lose quality medicine during transportation,” Margvelashvili says.

The introduction of these two standards in tandem, he says, will ensure high quality, safety, and efficiency of pharmaceutical products in circulation in the country, as well as increase the export of medicines produced in Georgia. Moreover, the coronavirus pandemic and closed global borders have clearly shown how important it is for the state to remain strong in isolation, and this includes the capacity for local pharmaceutical production. Moreover, with the introduction of GMP / GDP, Georgia will advance its obligations under the Association Agreement with the European Union in the field of healthcare.

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