The analysis of features of retail pharmaceutical market at the regional level

Aim. To analyze the current state of the retail pharmaceutical market and identify the typical trends in the development of pharmacy networks at the regional level in the Kharkiv region. Materials and methods. For the study the data regarding the number of licensed drug retailers from the Licensure Register for compounding medicines (in pharmacy conditions), wholesale and retail sale of medicines in the Kharkiv region, statistical data, and legislative base of retail sale of medicines were used. The general methods of scientific knowledge, such as analysis and synthesis, analogy and comparison; grouping method, graphical and statistical methods were used in the study. Results and discussion. Based on the data of the Licensure Register for compounding medicines (in pharmacy conditions), wholesale and retail sale of medicines in the Kharkiv region the business entities engaged in the retail sales have been analyzed. The analysis of all licensees of drug retail sale in the region has been conducted, and they have been distributed according to the size of pharmacy networks: single, small, medium, big, large and mega networks. It has been found that about a half of the pharmaceutical retailers registered are represented by a single pharmacy network. By the number of retail points (pharmacy or pharmacy point) in the region small and big pharmacy networks dominate. The pharmacy networks, which sizes have structural features of monopoly, have been determined. The typical tendencies for cities and rural areas of the region have been shown. The changes concerning activity in the field of retail sale of medicines have been analyzed. Conclusions. The analysis of the current trends of the development of pharmacy networks in the Kharkiv region has shown an ambiguous situation. On the one hand, the official data of the Register of places of wholesale and retail sale of medicines has indicated a fairly healthy competition at the retail pharmaceutical market of the region since only one pharmacy network has been registered among pharmacy mega-networks (which have more than 50 points of sales). On the other hand, in the region there are structural features of the monopoly of several pharmacy networks registered as different business entities, and have about 20-25 points of sales, however, in fact, they operate as a pharmacy mega-network with a number of retail points of sales of about 100. This situation is threatening in terms of monopolization and requires a significant legislative regulation.

Ключевые слова: розничный фармацевтический рынок; розничная реализация лекарственных средств; аптечная сеть; торговая точка; аптечное учреждение Introduction. The pharmaceutical market is an important part of the pharmaceutical supply system in the country. In modern conditions, it performs many functions; among them one of the most important functions is social. All changes taking place in the economy of the country and the health sector have a particularly significant impact on the retail segment of the market. The pharmacy as the final link of a complex distribution network plays a key role in the pharmaceutical providing system of the population.
Pharmacy institutions are an element of the pharmaceutical market infrastructure formation, which have different character and directions of activity, organizational and legal forms, and types of property. One of the most important trends inherent to the domestic pharmaceutical market is development of processes of consolidation and concentration of pharmaceutical companies. Consolidation of pharmaceutical retail sales means that network pharmacies are united and absorb each other. Pharmacy networks (PN) are gradually becoming an important "players" at the domestic pharmaceuticals market. Particularly noteworthy is that today the retail pharmaceutical market of Ukraine has features of latent monopolization of PN. A similar situation is threatening from the pharmaceutical safety point of view.
A sufficient number of works is devoted to the analysis of functioning and development of pharmacy networks. In particular, O. V. Posilkina and Zh. V. Mala studied the factors of PN competitiveness in Ukraine, as well as the experience of regulating of the PN activity in Ukraine and abroad [1][2]; modern directions of development of pharmacy networks were the subject of the research of Z. M. Mnushko and G. S. Babicheva [3]; the organizational and economic principles of development of pharmacy network business structures were defined in the work of L. Z. Kit [4].
The analysis of publications has shown that the work devoted to the study of regional peculiarities of the development of the retail pharmaceutical market is practically absent, and the issues of monopolization of PN at the regional level remain unclear.
The aim of the work is to analyze the current state of the retail pharmaceutical market and identify the typical trends in the development of pharmacy networks at the regional level in the Kharkiv region.
Materials and methods. For the study the data regarding the number of licensed drug retailers from the Licensure Register for compounding medicines (in pharmacy conditions), wholesale and retail sale of medicines in the Kharkiv region, statistical data, and legislative base of retail sale of medicines were used.
The general methods of scientific knowledge, such as analysis and synthesis, analogy and comparison; grouping method, graphical and statistical methods were used in the study.
Results and discussion. The Kharkiv region differs from others by concentration of all components of the pharmaceutical industry (education, science, production and sale of medicines). It allows solving the branch tasks in complex way, and is one of the flagships of pharmacy. The Kharkiv region occupies the 4th place by the concentration of pharmacy institutions among the regions of Ukraine. On average, one retail sale point (SP) in Ukraine has about 2 thousand inhabitants. The structure of SP distribution corresponds to the structure of the population by regions in general.
According to the Register of places of wholesale and retail sales of medicines, as of 2019, there are 367 business entities operating in the Kharkiv region representing by 1369 pharmacies. The general characteristics of the retail pharmaceutical market of the Kharkiv region are presented in Tab. 1 During the study PN were divided according to the classification: single, small (2-5 SP), medium (6-10 SP), big (11-25 SP), large (26-50 SP) and mega networks (more than 50 SP).
Data of Tab. 1 indicate that the structure of the retail pharmaceutical segment is presented by both single pharmacy institutions, which number is 188 (49.5 %), and pharmacies combined into PN. At the same time, the share of economic entities, including one SP, accounts for 13.7 % of all SP. These are business entities with private ownership, most of them are private limited liability companies.
The majority of business entities (50.5 %) are combined into PN, while the networks are dominated by small networks (38.9 %), including 401 SP, and it is 29.3 % of the total number of SP. The largest number of business entities in the Kharkiv region is represented by 2 SP -22.5 % (12.3 % of the total number of SP). At the second place among PN there are large networks (10-25 SP), which make up 25.8 % of the total number of pharmacy institutions in the region. At the same time, six of these PN are represented by eleven SP: "Titan" Ltd. ("Zdorovia" network), "Pridneprovsk Pharmaceutical Company" Ltd., Pharmacy No. 308 Ltd., Pharmacy 216 Ltd., Konovalova -physical person, as well as the communal property pharmacy "Lozova Municipal Pharmacy Communal Enterprise".
Comparison of the number of licensees and the number of places of their economic activity shows that each licensee has 3.7 times more places of activity than the number of licenses. This may indicate that most of the licensees have an extensive network of pharmacy institutions, i.e. they work in the pharmacy network format.
Big PN (26-50 SP) in the Kharkiv region, according to the License Registry, are only 7 entities: PF "Gamma-55", PE "Pharmacy 2011", PE "Farmarost 2011", PE "Temp 2011", "The low prices Pharmacy. Kharkiv" Ltd., the State wholesale-retail enterprise "Regional Pharmacy warehouse", and the municipal enterprise "Municipal Pharmacy of Kharkiv". Attention is drawn to the fact that the first four of the above mentioned entities belong to one network "Pharmacy 9-1-1", and therefore, in total, they consist of 150 SP. According to the website of this PN there are 237 pharmacy institutions in the structure in the Kharkiv region. Thus, there are structural signs of monopoly. A similar situation occurs with "Magnolia" Ltd., which is known as PN "The low prices Pharmacy". In the Kharkiv region this PN is represented by several entities: "Magnolia" Ltd. (16 SP), "The low prices Pharmacy. Kharkiv" Ltd. (31 SP), "The low prices Pharmacy. Poltava" Ltd. (10 SP). In total, there are 57 SP; hence, this PN also refers to mega-networks.
"Astarta" Ltd. -a network "Family Pharmacy" belongs to mega-networks with 61 SP in number. Table 1 The general characteristics of the retail pharmaceutical market of the Kharkiv region by types of pharmacy networks Notes: Developed according to [5].
Analyzing the analytical data of the information portal "Apteka" (Pharmacy) and our own data it has been found that experts refer to PN having structural features of the monopoly position in the Kharkiv region (having more than 6 SP) the following PN: • PN "Pharmacy 9-1-1", Kharkiv; • PN "Zdorovia", Merefa; • PN "Dobra pharmacy plus" Ltd., Kharkiv; • PN of the State Wholesale and Retail Enterprise "Regional pharmacy warehouse", Vasischevo; In general, according to expert estimates in the Kharkiv region there are 37 private networks that have 6 or more pharmacy institutions in their structure. This is the third indicator in Ukraine after the Kyiv and Dnipropetrovsk region.
The hidden monopolization of PN is extremely threatening; the creation of unfavorable conditions for individual entrepreneurs that do not meet the conditions of unfair competition, further destruction of communal and state pharmacy networks with their gradual elimination in the countryside will lead to final consolidation of 2-3 end beneficiaries at the retail pharmacy market. Moreover, they will decide the fate of manufacturers of pharmaceutical products and distributors [6].
Our further study was performed in the direction of analyzing the number of pharmacy institutions in the Kharkiv region by the administrative and territorial features ( Fig.).
Apparently, most of the pharmacy institutions (49 %) are located in the cities of the region, 37 % are in urban villages, and only 14 % are active in villages. This ratio generally reflects the division of the urban and rural population in the region. Thus, in 2018 the city population was 2179.5 thousand people, while the rural population was 514.5 thousand people, i.e. the urban population was 4.2 times higher than the rural one.
When analyzing the division of pharmacy institutions by organizational and legal forms (Tab. 2) it has been found that half of the pharmacy institutions in the region operate in the form of Ltd. At the same time, there are significant differences between their ratios in Kharkiv, where such an organizational and legal form prevails and makes up 58.8 %, and in the Kharkiv region where it is only 37.6 %. Almost the same share is occupied by individual entrepreneurs in the region -37.9 %, while in Kharkiv they are only 10.3 %. In Kharkiv, a significant proportion is also occupied by private enterprises -22.6 %. In addition, over the last 3 years there is a tendency towards a gradual decrease in the number of pharmacy institutions founded by private entrepreneurs in cities and their increase in rural areas.
Regarding division of pharmacy institutions of the region by types of ownership it can be argued that municipal and state pharmacies constitute 8 %; in Kharkiv their share is less -6.4 %, while in the region -9.9 %.
In order to provide competitive conditions for the retail sale of medicines, avoidance of monopolies concerning the most regions, it is currently proposed to make radical changes to functioning of business entities in the retail pharmaceutical market. Thus, three relevant draft laws were registered (Tab. 3).
At the same time, the documents submitted contain rather significant contradictions, in particular regarding the non-promotion of competition in the regional markets for the retail sale of medicines, the creation of geographical barriers for the entry of new business entities into the pharmacy market, and others.   Table 3 The analysis of changes in the legislation of Ukraine regarding the implementation of activities in the field of retail sales of medicines

Type of restrictions
The Draft Law "On Amendments to the Law of Ukraine "About Medicines" concerning providing the economic competition and protecting the rights of patients in the retail sale of medicines" (second edition) The Draft Law "On Amendments to some legislative acts of Ukraine concerning the comprehensive cheapening of medicines for citizens and providing development of the domestic pharmaceutical industry" The Draft Law "On amendments to some legislative acts of Ukraine on providing the effective competition and guaranteeing the rights of patients in the sphere of retail sale of medicines" The minimum distance between pharmacies 300 m. The norm does not apply to pharmacies created in towns and villages or will be located in medical and preventive treatment, sanatorium-resort institutions and social protection institutions Taking into account demographic indicators, economic factors, supporting transportation, as well as the density of the network of medical and preventive treatment and pharmacy institutions Limitations on the number of pharmacies Physical person-entrepreneurs, legal entities -no more than 4 pharmacies without restriction of pharmacy points within the administrative-territorial unit of the location of one of the pharmacies. Pharmacies located in the village are not taken into account. It is permitted: 8 pharmacies for business entities conducting activities related to the turnover of controlled substances; 15 pharmacies if the subjects are engaged in extemporaneous drug manufacturing or if it has 5 pharmacies in villages The number of pharmacies in the same network can not be more than 2 % of the total number of the pharmacies registered (their structural subdivisions) within the region

Qualification requirements
Physical person-entrepreneursmust comply with the uniform qualification requirements for persons having the right to engage in the pharmaceutical activities; legal entities -at least one of the participants is a person who meets the uniform qualification requirements for persons having the right to engage in the pharmaceutical activity and should own at least 50% of the share in the authorized capital The notion of the subject of management and the head of the pharmacy institution is differentiated; Any person will be able to open a pharmacy, but the head of the institution must necessarily meet the qualification requirements. Physical person-entrepreneursif the functions of the head of a pharmacy institution is performed directly, then it must also meet the qualification requirements; legal entities -in the executive body must be at least 1 person who has a complete higher education in the field of "Pharmacy", a certificate of a pharmacist-specialist and the certificate of awarding of a qualification category in this specialty Notes: Developed according to [7][8][9].

Conclusions and prospects for further research.
Based on the foregoing, the following conclusions can be drawn: • as of 2019, there are 367 business entities operating in the Kharkiv region, they represent 1369 pharmacies; • by the number of the registered entities engaged in the drug retail trade almost half (49.5 %) are single pharmacies, 50.5 % of licensees, respectively, represent networks differed in sizes; • the largest share among the PN in the region by the number of SP is small networks (up to 5 SP) -29.3 % and big (11-25 SP) -25.9 %. Each licensee has 3.7 times more places of activity than the number of licenses, and it indicates that most of them work in the form of networks; • according to the License Registry in the Kharkiv region only one PN belongs to mega-networks and has 61 pharmacy institutions in its structure. At the same time, there are other mega-networks with over 200 SP (17.3 % of the total number of SP in the region) at the pharmaceutical market of the region. Moreover, this situation is hidden since such licensees are not registered in the License Registry, i.e. the networks are divided into several business entities, which structure consists of only 20-25 SP. This situation is a direct threat to pharmaceutical safety at the market, and it requires state regulation; • currently, significant changes are taking place in Ukraine to conduct activities in the retail pharmaceutical market in order to prevent further monopolization and provide competitive conditions, in particular to determine a minimum distance between pharmacies, limit the number of pharmacies per owner, establish qualification requirements for a pharmacy owner, organizational requirements. Conflict of interests: authors have no conflict of interests to declare.