Executive Summary
Azerbaijan has recently completed its transition to a compulsory health insurance system. On April 1, 2021, the government finalized the full implementation of coverage for its entire population. The insurance scheme consists of coverage for primary, inpatient, emergency, and specialized outpatient care, as well as laboratory services, physiotherapy, and invasive radiology. The compulsory health insurance system is administered by the Ministry of Health. Specifically, the Ministry of Health both regulates as well as provides healthcare services. It is also charged with public education, research, development of medical equipment, and prevention of disease.
Azerbaijan’s transition to mandatory health insurance occurred over several years, putatively starting with the 2007 establishment of the State Agency for Compulsory Medical Insurance by the order of the President of Azerbaijan. But in fact, implementation activities only began with the 2016 signing of Presidential Decree #765. The insurance system was launched in 2016 as a pilot in two regions (Mingachevir and Yevlakh), later expanding to a third region (Agdash) in 2018. The pilot program’s regional expansion continued until April 2021. As of this date, all regions were covered, and all citizens could access participating health care providers.
During the first years of implementation, the Azerbaijani government provided the insurance contributions on behalf of its citizens. It was only starting in January 2021, that employers and employees would be responsible for their own contributions.
It is the Azerbaijani Management Union of Medical Territorial Units, a public legal entity under the State Agency for Compulsory Health Insurance (which manages health care providers participating in the national insurance system) that provides medical services to citizens across all health care providers, both public and private. Public healthcare facilities receive funding based on the number of beds in the hospital, the number of staff employed, and the number of services they are equipped to provide. The government has legally authorized certain public providers to charge for their services but does not restrict fees charged by private providers. This is because it is only under rare circumstances that the government would pay for private health services. Government health expenditures reached $839 million USD in 2021, equaling 5.2% of state budget expenditures and 1.5% of GDP in 2021, which reflects 0.5% increase from 2020.
Covid 19
As of June 6, 2022, there have been 785,424 cases of Covid 19 and 9,537 related deaths reported in Azerbaijan. The first official confirmed infection was reported in March 2020. The number of reported cases represents 7.8% of the country’s total population. The mortality rate is currently 1.2%.
Market Entry
Azerbaijan has traditionally preferred U.S. medical technologies and resources, due to brand recognition and a reputation for quality. However, the comparatively higher cost can be a dissuasive factor. Equipment is procured for the public hospitals and clinics by the Ministry of Health, which supplies all public hospitals and clinics in Azerbaijan. Government subsidies for equipment is non-existent since its focus is on supporting its insurance program.
When imported, medical devices and pharmaceuticals are subject to customs duties and value added tax (VAT) and require a permit from the Ministry of Health. The same rules apply to food supplements, though these are exempt from the VAT.
U.S. companies interested in the Azerbaijani market are recommended to work through regional or, more preferably, local distributors who have the best understanding of import, registration/licensing, and sales/marketing rules and regulations in the country. One successful example is Abbott Laboratories. The company has been present in Azerbaijan for over 20 years through Albatros Ltd, a local company. Abbott uses Albatros as its exclusive distributor to provide laboratory equipment, supplies, and cardiovascular technologies. Albatros is one company, but there are several reputable distributors that supply private clinics, 90% of which are in Baku.
Current Market Trends
The Azerbaijani government has recently increased government expenditures on new hospitals and equipment. Industry leaders believe that equipment purchases are likely to continue, along with increased demand for, hospital management systems, consulting services, and used and refurbished high-end medical equipment.
Market Size
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Healthcare spending (including investment) as percent of GDP
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1.5% (2021)
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Hospitals, Procedures, Healthcare Professionals UN
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Number of hospitals
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1,174 (2020)
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Public
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518 (2020)
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Private
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656 (2020)
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Number of hospital beds (in public hospitals)
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45 /10,000 inhabitants (2020)
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Physicians
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31.9/10,000 population (2020)
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Demographics
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Population
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10,318,230 (2022)
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Male
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49.9%
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Female
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50.1%
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Life expectancy
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73.2 (2021)
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Infant mortality
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Total: 9.81 deaths/1,000 live births (2020)
Boys: 14.3 deaths/1,000 live births
Girls: 5.6 deaths/1,000 live births
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Maternal mortality
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15.1 deaths/100,000 live births (2020)
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Percent of population older than 65
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7.4 % (2021)
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Annual deaths
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7.6 deaths/1,000 population (2020)
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…caused by [highest disease burden]
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Coronary heart disease (2020)
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…caused by [second highest]
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Neoplasm/cancer (2020)
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Prevalence of coronary heart disease
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54.4. %
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Main Competitors
German and Dutch companies are the primary competitors for U.S. exporters of high-quality, higher-priced medical equipment, though lower-priced products from Turkey and China are increasingly making inroads in the market. Chinese equipment is frequently bought because of its low price point and multi-functionality, though it has a reputation for low quality. German, British, Swiss, and Bulgarian companies are the primary European competitors for U.S. pharmaceutical companies. However, due to government controls on the price of pharmaceuticals, there is growing competition from China, Russia, Pakistan, and India in this sector.
Current Demand
Some Azerbaijanis travel to Iran, Georgia, Turkey, and Germany for healthcare, due to the relatively low standard of care available domestically. Skilled healthcare professionals frequently leave Azerbaijan and the Caucasus to work in more developed economies. Price controls on vaccines and pharmaceuticals limit their availability in Azerbaijan. Many private hospitals and clinics are outfitted with modern medical equipment, but staff are often unable to properly use it. Recapturing this market, along with the government’s new mandatory insurance program, could generate significant demand for U.S. medical equipment and services, including training for healthcare personnel, hospital management, and consulting.
Similarly, there is a significant gap in healthcare services between urban and rural areas. In large part due to urban migration, there is approximately a 30% vacancies rate for pediatricians and gynecologists in rural areas. Moreover, most pharmacies are located in large urban centers. There may be commercial opportunities to improve access to healthcare outside of Baku, including using digitalization solutions.
Registration Process
Registration and permitting requirements for healthcare-related activities in Azerbaijan are governed by the Law of the Republic of Azerbaijan on Medicinal Products, which covers pharmaceutical products, medical devices, and other items. To import medical products into Azerbaijani requires the product to be registered with the relevant executive authority.
Reimbursement
Although Azerbaijan’s public health spending has significantly increased over the last 15 years due to the country’s high oil revenues, it is still below public health spending in comparable countries and does not fully meet the population’s needs.
Since the full introduction of the nationwide insurance program in 2021, mandatory health insurance fees in Azerbaijan are as follows:
• The employer and the employee both pay 2% of the employee’s salary up to 8,000 manats ($4709) then both pay 0.5 percent on the employee’s salary over 8,000 manats.
• Individuals registered as taxpayers in accordance with the Tax Code of Azerbaijan pay a health insurance fee of 4% of the current minimum wage.
Barriers
Corruption is a significant hurdle to doing business in both the public and private sectors. Azerbaijan ranked 130 out of 180 countries in Transparency International’s 2021 Corruption Perceptions Index. Intellectual property rights protections are weak. Price controls on pharmaceuticals introduced in 2015 have deterred some western companies from entering the market and created shortages of certain vaccines.
Procurement & Tenders
Selling to public hospitals via the Ministry of Health can be profitable, but limited transparency in government procurement processes present a challenge. Azerbaijan is not a WTO member and has not agreed to abide by the WTO Government Procurement Agreement. Major infrastructure projects typically funded through the World Bank or other multilateral development bank financing are more transparent than those funded directly by the government.
Major source for government tenders: https://etender.gov.az/
Trade Events
Medinex 2022, Azerbaijan’s International Medical Innovations Exposition, is Azerbaijan’s most important event in the field of medicine and healthcare and serves as a meeting place for manufacturers, distributors, and industry professionals: https://medinex.az
Useful Links
These links are provided for reference only; their inclusion does not indicate endorsement by the U.S. government:
U.S. Commercial Service Contact Information
Name: Govhar Mammadova
Position: Commercial Specialist
Email: mammadovag@state.gov
Phone: +994 12 488 3300 extension:3593
