Indian Pharma Industry has earned its rightful place as supplier of world-quality Pharma products at competitive prices in Russian Federation and 14 other CIS republics which comprised the erst-while Soviet Union. Indian Pharma products have been genuinely appreciated for their "value for money" proposition since the late seventies/early eighties. This is one of the reasons why exports of Indian Pharma products has grown even after the "liberalization" and "privatization" of the Russian trade.
Early trade in Soviet times was largely based on supplies against Government tenders against Rupee payments. Today's Russia is a Market Economy. Indian Pharma trade is conducted in Hard Currency payments. The market realities ofcourse force long credit terms. The lack of a strong banking infrastructure, lack of dependable credit information and diffuse nature of the Pharma Distribution network makes it difficult to operate if you are not willing to commit your resources to this market.
Gone are the days when you could ship the goods to your importers, distributors and expected them to sell your products for you.
Name of the Game today is to be a genuine Market Player, ready and able to create demand for your products. Indian companies who read the writing on the wall in 1992-93 when the market started to open up, and committed their resources to create a genuine marketing infrastructure are the ones who have not only survived but are now enjoying relative prosperity in this market.
Today's Russia has evolved into a more or less Western market where consumers are prepared to pay a higher price for quality. Your competitors are not only other Indian manufacturers, and MNCs, but also other suppliers from East Europe and Asia who are able and willing to compete with you for a share of this growing market. You compromise on the product quality, packing and marketing efforts at your own peril.
Russia/CIS is a total market of almost 240 million people, (a progressively ageing population). Total pharma market is estimated to be approx $ 4 to 5 billion p.a. Share of Local production in Russia is approx 28% and in Ukraine it is approx 40%.
Russia particularly is blessed with 100% literacy, 140 million population and overflowing with natural resources. The CIS market is no longer monolithic. Each CIS Republic has its own regulations for product registration, label/pack-text requirements, and different rules of marketing, advertising and distribution.
Countries like Ukraine, want all products and inserts only in Ukrainian language. Some like Latvia want OTC products in Latvian language packs and inserts. Uzhbekistan and Kazakhstan accept Russian language packs, but want inserts also in their local languages. Bar-coding is compulsory in many CIS Republics.
Ukraine and Kazakhistan do not permit appearance of and endorsements by Doctors, genuine or otherwise in OTC pharma product advertisements.
Thus one has to treat each CIS republic as a different country, learn the rules of trade and design your market entry strategies for each country separately.
Product Quality is the ultimate benchmark for success in each of these countries. Led by Russian Federation, almost all the other 14 Republics, lay a very strong emphasis on Product Quality. Testing of all batches of imported medicines, prior to customs clearance and marketing of the products has become mandatory in many Republics.
MNCs are also clamouring for a much stronger recognition of their product and even usage patents much before Russia and other CIS republics actually join WTO.
CIS Republics like Latvia has already joined EU and their inspection of Pharma manufacturing facilities is governed by the EU rules. Product registrations and marketing approvals have also become more difficult.
Difficulties are many. Costs of Market entry are rising day by day. Operational costs are also rising day by day. But, the rewards are also good. Those who have mastered the tricks of the Russia/CIS trade, have taken even the massive 400% devaluation in August 1998 in their strides and continue to prosper.
All that it takes to succeed in Russia/CIS today is genuine commitment to the market, effective planning, hard work and capacitiy to sustain the occasional shocks of the 1998 type that Russia/CIS can still deliver.
- The author is Gen. Manager - Int'l Divn. - CIS States JB Chemicals & Pharmaceuticals Ltd., Mumbai