Market Profile
The
pharmaceutical market is one of the most dynamic sectors of the Russian
economy. Analysts predict steady growth rates for the pharmaceutical market at
10-12 percent annually for the next several years.
The Russian
pharmaceutical market is dominated by foreign producers, which account for
about two-thirds of the total market value. Russian pharmaceutical
manufacturers admit that their products cannot compete with Western products in
terms of quality. Russia
still specializes in traditional, typically low-end drugs, such as painkillers
and herbal preparations based on the use of conventional technologies. Many
advanced therapeutic treatments are not produced at all and are thus imported. These
include cancer and asthma drugs, as well insulin. The foreign import segment of
the market has recently become less concentrated. In 2001, the top five foreign
producers accounted for 25 percent of the market, while in 2002 their combined
share decreased to 19 percent. The composition of the top foreign producers has
also changed. GlaxoSmithKline, which occupied second
place in 2001, is now in the fourth place, while Novartis,
which was the seventh-largest foreign supplier, is now in the second place. For
several years already, Aventis has been the leading
supplier in the market. Third place belongs to Gedeon
Richter. As for domestic manufacturers, Otechestvennye
Lekarstva is the leader, and ICN Marbiopharm
occupies second place. Third place belongs to Firma Bryntsalov
ZAO.
Distribution
has become more concentrated as well. The top 15 distributors now control 52
percent of the market. The three largest pharmaceutical distributors account
for 35 percent of the total market. As for retail business, pharmacy networks
have been aggressively increasing their market share. In Moscow
and St. Petersburg,
retail pharmacy chains sell up to 20 percent of all drugs.
Food Supplements
The
biologically active food supplements market has been one of the fastest-growing
segments in the last several years. The total market of food additives is
estimated at $1.5 to $2 billion. The biologically active food additives market
is only eight to ten years old. The total value of the market is 10 times less
than the market in the United States,
which has the largest market for food supplements. In Russia,
there are 556 local manufacturers of biologically active food additives. Most
of these are small companies. However, foreign-made products dominate the
market.
Sales Channels
The key channel for pharmaceutical purchases are the tenders,
supported by federal and local government funds. Many Western companies
operating in Russia
participate in such tenders as they open up access to significant, guaranteed
sales. Additional major supply channels are direct sales to hospitals and the
use of distributors. Western drug manufacturers have recently been quite
successful in setting up local legal entities, establishing contacts with major
hospitals and clinics, expanding to regions through regional representatives,
and working with key distributors to take advantage of their vast regional
networks.
Difficulties
Some major
obstacles in developing medical and pharmaceutical markets in Russia
are a lack of transparency in the registration, certification, and licensing
systems, as well as inadequate IPR protection and a large percentage of
counterfeit medicines.
Upcoming Trade Shows in Russia
Apteka 2004
October 23-30, 2004
Organizer: M.S.I., Pharmimex
JSC
Web site: http://msiexpo.ru/apteca
The show will feature a wide range of pharmaceuticals,
food additives and medical products.
Zhravookhranenie 2004
November 29-December 3, 2004
Organizer: JSC Expocentr,
Firm Mezhvyastavka
Web site: www.expocentr.ru
The show will feature medical equipment, devices,
pharmaceuticals, food additives, and medical technologies.
