The pharmaceutical market is one of the most dynamic sectors within Russia and the CIS economy. The Indian pharma companies are dominating the Russian and CIS market with major presence in all therapeutic areas. Indian companies like J B Chemicals, Themis Medicare, Ranbaxy and host of other pharma companies are spreading their presence in the Russian market. Though the returns are very low as compared to highly regulated market, the Indian companies have captured significant market share in these markets.
With a population of around 143 million, Russia is a potentially vast market. Health spending is generally very low as compared to Western countries, but the size of the market is huge. Over half of the population cannot afford the medication they need and very few people who are entitled to free or discounted medicines actually receive them.
Registration is very strict in the Russia and it almost takes one and half year to get a product registered. The country has a sizeable domestic generic industry, but no large companies. Russian manufacturers are small and under-capitalized and still using, outdated equipment. Many locally produced drugs are also available outside Russia. Foreign manufacturers are starting to enter the market through the acquisition of domestic companies.
JB Chem: In consolidation mode
The Mumbai-based JB Chemicals & Pharmaceuticals Ltd has formalized its business operations in the Russian market by setting up a wholly- owned subsidiary, Unique Pharmaceuticals Laboratories in Moscow.
D B Mody, director of the J B Chemicals said, "We have also established warehouse in Russian market to cater ever increasing demand from our customer's. We have a well-structured marketing chain for Rx product to meet growing demand for generics in Russian market.''
J B Chemicals is in the process of consolidating its position. Currently, CIS is contributing around Rs 250 crore to its export turnover. JB Chemicals entered Russia and CIS countries during 1990, Mody added.
The company had launched Rinza hot strip, an anti-cold therapy in Russia, Ukraine, Uzbekistan, Azerbaijan and Georgia. Its leading 'Doktor Mom' brand in Russia, had won the Reader Digest's 'Europe's most trusted brand' award for the fifth consecutive year. Doktor Mom is the leading cough and cold brand in Russia with sales of over Rs 80 crore. JBCPL's focus will be to out-license Doktor Mom range, which includes cough syrup, lozenges and rub, to strong marketing partners for various regulated markets other than Russia, Ukraine and CIS countries.
Its Metrogyl Denta Gel was recognized and approved by Russian Dental Association as "Gel for gums." The company plans to increase its representative strength in Russia from 130 to 180.
The company expects sales to touch Rs 465 crore in the current financial year, of which about 60 per cent will be from exports. By 2008-'09, it targets Rs 1,000 crore under its vision of 'Panchratna,' which represents its five strengths - research, regulatory affairs, finance, marketing and manufacturing. The company's net profit reached at Rs 70 crore during 2005-06.
Themis eyes on API market
Themis Medicare is a joint venture pharmaceutical company, with Gedeon Richter Ltd, Hungary. The company in the last 36 years has made its presence felt in manufacturing and marketing pharmaceutical products. With around 20 year working experience in the Russian market, Themis is focusing on active pharmaceutical ingredients exports.
To keep pace with the increasing demand for the Themis range of products, the company has 3 state-of-art manufacturing facilities, which are on par with the international standards.
Aseem Verma, international sales manager of the Themis Medicare, said, "Russia has huge consumption capacity and this market is very important for Indian companies. To spread business activities, the companies should undertake own clinical trial activities and focus on launch of new products in the Russian market. The cGMP manufacturing facilities and cost effective product range with high quality standards, Indian companies are well set to grab opportunities in Russian market."
Ranbaxy-Growing stronger
Ranbaxy's Russia operations recorded sales of US $ 33 million, reflecting a growth of 28 per cent over the previous year, outperforming the market, which grew at 23 per cent, MAT basis. Ranbaxy is currently ranked 13th amongst foreign generics companies and 20th amongst generics companies in Russia.
Ranbaxy developed a strong presence in the fluoroquinolones market, with three of products featuring amongst the Top 10 in the Russian market. The company also launched a number of new products, such as Cifran CT (ciprqftoxacin + tinidazole), Eleflox (levofloxacin), Coldact Broncho (anti-cold) and Coldact lozenges.
The Ukraine Belt achieved sales of US $ 32 million for 2005, achieving 60 per cent growth over 2004. The company attained the 24th ranking amongst more than 500 manufacturers in Ukraine. The company's leading brands, such as Cifran (Ciprofloxacin), Zanocin (ofloxacin), Loxof (levofloxacin), Coldact (anti-cold), Simvor (Simvastatin) and Ketanov (Ketorolac Tromethamine) continued to perform well.
New laws transform pharma landscape
In January 2005, new rules governing drug reimbursement came into force. The federal drug supply system involves the distribution of up to 2,500 different drugs, manufactured by over 400 companies. Members of the vulnerable population have to choose between receiving a package of benefits including free medicines or accepting a sum of R450 each month. The government initially allocated US $ 1.7 billion for the programme, but this has fallen by 41 per cent in 2006, due to half of the population opting out in favour of the cash equivalent. The number of participants is expected to rise in the future, as the running of the programme improves, leading to a budget increase.
Pharmaceutical market outlook reports suggest the conditions are turning positive for the companies to explore into the CIS markets. Positive economic growth, stabilizing political structures, growing patient populations and increasing direct foreign investment in the emerging markets of Russia and CIS countries, are creating significant opportunities for pharmaceutical companies to expand into these markets and maximize future revenue potential. Pharmaceutical sales across theses economies grew by 22.3 per cent in 2005, compared to single digit growth in the major markets of the US, Europe and Japan.