Russia - PharmaceuticalsRussia - Pharmaceuticals
OverviewThe Russian pharmaceutical market has tremendous promise and warrants consideration by U.S. exporters. In 2017, per capita spending on medicines was $142 per person, placing Russia 17th out of 32 central and eastern European (CEE) economies. In terms of sales, $20.7 billion of pharmaceuticals were sold in Russia in 2017, equal to 1.3 % of GDP and 20.3% of the nation’s health spending.
The Russian pharmaceutical market can be divided by prescription drugs and over the country (OTC) medicines. Prescription drug sales have traditionally dominated the market, and this trend continued in 2017: prescription medications represented 61.3% of sales. However, sales of generics constituted 65.3% of Russian prescription sales in 2017, compared to 39.7% of global pharmaceutical sales in 2017. Pharmaceutical sales grew 25% in dollar terms from 2016-2017 and forecasts project 9% growth in 2018.
|Prescription drugs sales||10,138||10,101||12,660||14,066|
|OTC drugs sales||6,460||6,439||8,078||8,503|
|Generic drugs sales||6,466||6,519||8,267||9,508|
Units: $ millions
Source: Business Monitor International
For many years, the Russian government accounted for approximately half of health care expenditures. However, industry anticipates a significant shift towards private healthcare spending.
The Russian healthcare system is funded by the federal government, social spending and the Federal Mandatory Insurance Fund (FOMS). The FOMS’s budget consists of two revenue streams: companies paying for their employees and the federal government paying for the umemployed. The FOMS operated at a deficit in 2017 that will likely continue through 2018, but experts project a 2019 surplus due to the scheduled increase in the contribution rate from 5.1% to 5.9% of the income of each person.
Drug manufacturers prefer not to work with retail pharmacy chains or pharmacies directly, relying instead on distributors to promote their products to retail outlets. Distributors operate vast networks of contacts and work to direct retail distribution channels. Protek Katren, Pulse, Pharmkomplekt, and CIA are the four major distributors in the Russian market.
The number of pharmacy chains has been growing and currently it exceeds 50,000. Major sales are coming from the following chains: Apteka 36.6, A5, Samson Pharma, Rigla, and Neopharm.
U.S. pharmaceutical exporters face a complex regulatory landscape in the Russian market. Russia’s new Good Manufacturing Practices regime can lead to delays in foreign pharmaceutical products receiving market access. and there is weak protection of intellectual property rights. IPR issues include erosions in regulatory data protection and patent rights, and the specter of compulsory licensing.
Cardiovascular diseases, cancer and HIV are the most prevalent diseases in Russia and drive demand for associated pharmaceutical products. High rates of smoking and alcohol consumption also contribute significantly to illnesses. Per a 2015 WHO report, 39.1% of the Russian population smokes compared to a rate of 22.7% globally and 27.3% in Europe. In addition, per capita alcohol consumption of 15.1 liters of pure alcohol per year between 2008 and 2010 far exceeded a global average of 6.04 and 10.9 in European countries.
Demographic factors will continue to drive pharmaceutical market growth as the population ages. However, the Russian government’s desire to curb imports may constrain opportunities for U.S. exporters.
The Russian government is focused on creating its own pharmaceutical industry as outlined in its “Pharma 2020 Strategy,” which aims to reduce the reliance of the Russian economy on imported pharmaceuticals. In July 2016, Prime Ministry Medvedev said that he expects domestic production to increase from 28.5% to 75% by 2020. Despite the challenges that U.S. companies face as the result of this strategy, profitable opportunities persist, including licensing agreements/technology transfers, done by the U.S. manufacturers of pharmaceutical products and supply of equipment done by the U.S. manufacturers of pharmaceutical equipment.
The Ministry of Industry is developing the “Pharma 2030 Strategy,” which will be a continuation of the existing “Pharma 2020 Strategy.”
In the short- to medium-term, the market for generic drugs will continue its growth due to incentives from the Russian government, as well as population’s preference for cheaper drugs.
Pharmtech & Ingredients, International Exhibition of equipment, raw materials and ingredients for pharmaceutical production
November 20-23, 2018
Zdravookhraneniye, International Exhibition for Health Care, Medical Engineering and Pharmaceuticals
December 3-7, 2018
- Ministry of Health Care
- Business Monitor International
- DSM Group - Russian pharmaceutical marketing agency
- Association of International Pharmaceutical Manufacturers (AIPM)
- Association of Pharmaceutical Companies «Innovative Pharma» (InPharma)
- Pharmaceutical Herald
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