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Events > IFA Ukraine > Pharma Sector in Focus of IFA Ukraine Membership

Pharma Sector in Focus of IFA Ukraine Membership

21 may, 2015, Kyiv, Ukraine

In the current economic environment pharma businesses assume same risks as other industry sectors of Ukraine, i.e. currency devaluation, inflation, purchasing-power risks, market decline and increased import duty rates. The way pharma business will deal with the issue of financial viability depends largely on its tax and legal framework.

In this context IFA Ukraine experts and representatives from pharma business will discuss the issues of tax losses treatment, intercompany financing, legal forms for carrying on business activities in Ukraine, antimonopoly risks, as well as latest changes in anti-corruption legislation.

The speakers' panel was joined by Oleg Boichuk, Egorov Puginsky Afanasiev & Partners; Dmytro Donets, DLA Piper; Roman Goptsii, PwC Ukraine; Vitaliy Savchuk, Legal Alliance; Viktoriia Fomenko, Dentons; Olga Kotsyubalska, Adviser to the MoH; Yuliya Nogovitsyna, KPMG; Igor Svitlyk, Arzinger; Viktoriya Podvorchanska, Egorov Puginsky Afanasiev & Partners.

Viktoriia Fomenko briefed the attendees on major issues and recent court practice with regard to Permanent Establishment. Viktoriia listed examples of Permanent Establishment, including latest innovations such as server, as well as touched upon the issue of OECD TEST, defining whether representative office conducts main activity or "preparatory or auxiliary" activity.

Roman Goptsii focused on advantages and disadvantages of legal forms of carrying on pharma business in Ukraine for international groups, i.e. non-commercial representative office (the RO) vs commercial representative office (the PE), trading LLC and service LLC.

Yuliya Nogovitsyna focused on possible instruments of intragroup financing and/or compensation of losses incurred by pharma companies. Yuliya discussed in details the following possible options: supply discounts, bonuses in monetary form, debt write-off, non-refundable financial aid, partial cost relocation to non-commercial representative office etc. Special attention was paid to currency exchange losses, as well as to possibility of setting contract currency in UAH, while payments - in exchange currency.

Dmytro Donets in his presentation discussed possible TP strategies for pharma companies based on their most typical set-ups in Ukraine. Dmytro outlined pro's and con's of each of the possible further TP strategies, e.g. i) stay as it is and justify company's losses, ii) perform tax adjustment, or iii) perform contractual adjustments.

Vitaliy Savchuk presented the topic "Trademark and patent risks of the pharmaceutical companies". Vitaliy outlined the issue of appropriation of the producer's IP by a third person as one of the major IP related risks in pharma business in Ukraine. With no "bad faith applicant" term in the Law of Ukraine "On Protection of Rights to Trademarks for Goods and Services", Vitaliy considers IP protection to be quite limited on this basis, and suggests developing the legal position based on more general legal provisions of Civil Code of Ukraine, competition legislation, etc.

Oleg Boichuk examined the areas of interest in pharma sector for Antimonopoly Committee of Ukraine. In this perspective Oleg outlined problematics with regard to distribution contracts and marketing contracts with pharmacy chains, pointing out to major risks and possible solutions.

Viktoriia Podvorchanska's presenatation was titled "Pharma pricing regulation - where is it going?" and dedicated to both immediate challenges and larger picture issues. In particular, Viktoriia suggested her outlook for the development of pricing regulations in short term (modification of price declaration system to unblock public procurement; small-scale changes to address some of the other immediate issues), and for the mid term (NEML (National Essential Medicines Lists) as the cornerstone for pricing and procurement policy).

Olga Kotsyubalska presented comprehensive and detailed presentation on purchase of pharmaceuticals via international organizations, as well as updated seminar attendees on latest developments and discussions in the Ministry of Health of Ukraine with regard to practical implementation of the Law provisions.

Igor Svitlyk updated seminar attendees on latest novelties in anti-corruption legislation, as well as explained how pharma companies should prepare themselves for the upcoming changes.

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