Insights from the CEOs: how the pandemic has affected the economy and business in Ukraine
Yesterday, September 22, the European Business Association held the Global Outlook: Future Driven, our traditional gathering that marks the beginning of a new business season. During the event, business leaders from various industries shared their forecasts and expectations for the economic situation for next year, as well as how their companies have adapted to the challenges of the pandemic.
Watch a broadcast of the meeting
We have collected key theses and the most interesting insights from the CEOs of Ukrainian and international companies across different sectors of the economy. Briefly on what the directors have talked about during the event:
Tomas Fiala, СЕО Dragon Capital
Both Ukrainian and international economic thought leaders are being more optimistic about their forecasts on the GDP decline this year and the further GDP growth in 2021. Thus, the OECD recently lowered its forecast for the global economic downturn from 6% to 4.5%. International banks are also improving their forecasts and set the growth for next year at 5% or even 7% according to the most optimistic scenario. This means that the world economy will be able to return to pre-crisis levels by the end of 2019 much faster, namely in the 3-4 quarters of 2020.
Dragon Capital has also improved its forecast for the current year with a decline in GDP of 5.5% instead of 7.2% earlier. According to Mr. Fiala, the economy is currently experiencing a V-shaped recovery, which is facilitated by a positive external background, easing of monetary policies by global central banks, recovery of world prices for the metal, ore, grain, and rapid resumption of domestic demand and consumer confidence. The main risks that could stop or slow down this recovery are the second wave of COVID-19. Thus, if the incidence rate is too high, forcing the state to resort to a strict lockdown. The domestic political environment also includes a few risk factors which prevent the growth of the business and markets– namely, unreformed courts, inconsistent HR policy, the rollback of reforms.
Denys Holubchykov, Country Manager «Johnson & Johnson Ukraine»
Mr. Holubchykov is cautiously optimistic about the current macroeconomic situation in Ukraine and notes that the situation will become clearer after the local elections. Besides, the second wave of COVID-19, especially during the exacerbation of respiratory diseases in the fall, adds uncertainty to the plans and forecasts of companies until the end of the year.
Over its 100-year history, Johnson & Johnson has faced a number of crises and challenges, therefore the company always has action plans in a variety of force majeure circumstances. Besides, the changes that the company has made in recent years enabled it to meet this crisis with technological and mental readiness for new challenges.
Also, Johnson & Johnson Ukraine made a comparison between the two main sectors in which it operates, namely the pharmaceutical and FMCG. Thus, those two sectors behaved differently during the crisis. During March there was a sharp rise in the pharmaceutical market due to the increased consumer demand, there was a dramatic decline in April and May, after which the market is slowly recovering. The decline in the FMCG market occurred in early summer, but not so noticeable. As a result of the pandemic, a separate product category was established which demonstrates the constant growth, namely the disinfectants and detergents, personal care products. Another featured trend in the consumer market is that people are shopping less often but in larger quantities.
“Nine months of 2020 have already passed, of which seven months was a new, so-called ‘normal’ for us. At the same time, I cannot say that for us as a company, the priorities have changed radically. On the contrary, we have not had to regroup our activities significantly precisely because employee safety and unconditional product quality have always been our top priorities. Also, the staff has finally been able to grasp the full significance and meaning of what were previously considered excessive and mandatory,” said Adrian-Valentin Pascu, CEO Danone Ukraine.
The above priorities, as well as concern for the availability of products for consumers, have allowed Danone Ukraine not only to quickly adapt to the new realities of doing business in quarantine but also to implement new opportunities for development. The company is actively launching innovations to present Ukrainians with a positive experience with its products during the quarantine by creating new formats, new categories, new tastes.
Adrian-Valentin Pascu also presented the 3 most common trends in the food industry. The first is an increasing trend towards cooking at home. The second is the deeper understanding of the role of health as the new health concept has gained more weight in society. For us, it means that the consumer demands the functionality and added value of products. Thus, the manufacturers should be willing to respond with their innovative solutions. For example, offering foods fortified with vitamins, probiotics, or foods without added sugar. And finally, you cannot ignore the particularly strong trend towards naturalness. In the age of innovation and various technologies, people are returning to the origins of nature and the crisis has only stimulated this process. “So, we continue to offer our consumers high-quality natural products that are produced through natural fermentation processes. And the success of the Danone brand, which we launched at the end of last year, is proof of this powerful trend,” said Pascu.
Ivan Primachenko, СЕО Prometheus
Without exaggeration, online education has experienced a real boom this year. Schools, universities, business schools – all went online. The number of active users of online platforms such as Prometheus at the start of quarantine increased by 3-7 times. Quantitatively, online learning has made a high jumped, while qualitative change remains even more important. In the minds of consumers, online learning has become the norm as previously online learning was perceived as exotic. Now it is not only widespread, it is trendy.
Due to the shift in consciousness, the supply and market conditions have changed. Many teachers and tutors have gone online and are unlikely to return to teaching offline. Western universities have switched to online education while issuing traditional diplomas, so it is likely that this practice will continue and develop, opening more opportunities for both students and teachers. Consequently, the education industry will change significantly.
Tiberiu Dima, СЕО BASF Україна
For BASF Ukraine, even during the pandemic, the main tasks were not only business results, but also maintaining the health and well-being of employees, customers, and partners, as well as continuing business activities against the background of uncertainty. Although we cannot predict further morbidity and the situation in the world, this is not a reason for pessimism. This is a reason for the change, adaptation, reorganization of processes. Due to the pandemic, we have slightly changed our approach to organizing the work of our employees. Most of them now work remotely, but this in no way affected the productivity of their work and the results of our company. The main megatrends in the world remain the same – urbanization, energy efficiency, and digitalization. In addition, companies must take a balanced approach to sustainable development and the efficient operation of the business environment.
Evgeniy Gaidukov, Country Manager, Ukraine & Eurasia cluster at AstraZeneca
According to Mr. Gaidukov, the key challenge was to change consumer behavior and significantly reduce the number of patients in clinics during April-June. The pharmaceutical market was generally unprepared for these developments given that telemedicine and other forms of doctor-patient remote communication are not nationally widespread. If earlier, according to experts, the growth forecast for this year was at 14%, now it has dropped to 5-6% in UAH. Accordingly, the forecast for next year was adjusted to an increase of 10-11%. Despite the crisis, the company continues to grow beyond the market level and brings new innovative products to the Ukrainian market.
Every day, AstraZeneca invests $ 16.6 million in research and development to create prescription drugs that qualitatively change and prolong patients’ lives. In Ukraine, the company works in the fields of cardiology, pulmonology, endocrinology, and oncology. Currently, AstraZeneca conducted 25 clinical trials in more than 100 cities in Ukraine.
At the same time, the development of both the company and the pharmaceutical business, in general, will depend on further reform of the health care system, which has slowed down somewhat this year due to objective changes in the state’s priorities in connection with COVID-19. The company sees the potential to improve and expand the Affordable Medicines Program, to expand and update the National List of Essential Medicines, and looks forward to greater opportunities to innovate in Ukraine, particularly, to provide cancer and orphan patients with the necessary effective drugs.
AstraZeneca, in collaboration with Oxford University, is also developing a coronavirus vaccine. Currently, the vaccine has undergone 1-2 phases of clinical trials and is in phase 3 of trials, the results of which should be obtained by the end of the year. According to the results of 1-2 phases, the vaccine showed stable immunogenicity. So far, the company has signed many partnerships and licensing agreements to ensure timely, wide, and equal access to the vaccine. AstraZeneca has committed to producing and supplying the vaccine during the pandemic on a non-profit basis, at cost.
We thank our friends and partners of the event – Danone Ukraine, Kernel, Fondy, Ader Haber, Grawe Ukraine – as well as all speakers and participants. We hope that in the future we will have even more opportunities to meet offline for a meaningful discussion and exchange of ideas!
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