Positive economic growth, stabilizing political structures, growing patient population and increasing foreign direct investments in the emerging markets of Commonwealth of Independent States (CIS) are creating significant opportunities for pharmaceutical companies to expand into these markets and maximise future revenue potential. Consisting of countries like Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine, CIS offers a variety of choices for foreign and multinational pharma companies to jumpstart their operations in the region.

Russia
In 2006, Russia was one of the most dynamic pharmaceutical markets in the world. However, the government's decision to cut the number of higher priced, imported medicines covered by the DLO reimbursement scheme is expected to hit market numbers in 2007. Notwithstanding the expected repercussions of the government's decision, market growth is expected to be steady at 10 per cent per annum between 2008 and 2010.

Apart, Russia is almost set to liberalise the insurance market as part of its deal for securing US support for World Trade Organisation accession. The new policy will allow foreign insurers to operate independently in the Russian market for the first time. This will drive growth in the Russian market for private insurance and greater consumption of imported medicines, casting a spell on Indian and other foreign exporters of drugs.

The country's pharma industry also saw major mergers and acquisitions in 2006 and the trend is expected to continue in 2007. One of the biggest deals in 2006 was the EURO 47 million (US $61 million) acquisition of a 51 per cent stake in local producer Zdrovje by Icelandic generics maker Actavis.

Ukraine
Ukraine's pharmaceutical market is witnessing a rapid growth in terms of value. Russian market research agency RMBC indicate that Ukraine's packaged pharmaceutical market has grown 18 per cent year-on-year over the first nine months of 2006. The Ukraine pharma market is expected to reach a total retail value of US $2.49 billion by 2010. The compound annual growth rate for the market is forecasted at 9.4 per cent for the period 2005 to 2010.

Though Ukraine had failed to attract large scale foreign investments, it succeeded in bagging small investments by companies such as Bioton of Poland in insulin maker Indar and a packaging plant built by Gedeon Richter of Hungary. However, strong market players like Darnista, Arterium and Borshchagovsky are leading the consolidation process in the domestic market.

Armenia
The Armenian pharmaceuticals industry, which was mainly represented by one entity in Soviet times - the Yerevan Chemical Pharmaceutical Enterprise - has in the past decade transformed into an independent industry with newly emerged domestic producers like Liavor, Pharma Tech, Arpimed and Esculap. Also, international scientific organisations like ISTC and CRDF are funding different scientific projects in fine chemicals and biotechnologies in an attempt to boost these industries in Armenia. Apart, the Armenian pharmaceutical research institutes have new active pharmaceutical ingredients developed and patented, waiting for licensing.

The pharmaceutical industry in Armenia has been developed and is continuing its development with a more rapid stride than biotechnologies and fine chemicals do, according to experts. One of the most promising development directions, which may provide competitive advantages both in local and foreign markets, is phyto-pharmaceuticals.

This direction will be mainly based on local inputs of herbs that are cultivated and collected from different regions of Armenia. To date, 112 herbal medicinal products have been registered. Of all the nonprescription drugs in the Armenian pharmaceutical market, 23 per cent consist of herbal medicinal products which represent $100,000-$120,000 in annual sales volume, the experts added.

Kazakhstan
The volume of the pharmaceutical market in Kazakhstan is estimated at $400 million per year with availability of 6 thousand items of preparations. Out of it, 600 preparations are produced in Kazakhstan. The government holds 80 per cent of medical establishments in the country and plays an important role in medicine issues. There are over 200 wholesale medical equipment and pharmaceutical companies in Kazakhstan. Also, there are over 100 foreign pharmaceutical companies operating in the country. The largest suppliers of pharmaceutical preparations in Kazakhstan are France, Germany, Russia and the USA.

Uzbekistan
Uzbekistan has one of the most developed biopharmaceutical industry with its capital Tashkent housing more than 30 institutes and production plants, representing the biggest concentration of such facilities in the region. The country also possess a human vaccine production facility and a virology institute. Uzbekistan's pharmaceutical production plants are currently in the process of being upgraded to meet GMP standards.

The country has a minor but expanding capacity for the production of monoclonal antibiotics and is presently producing a wide range of diagnostic test kits. Uzbekistan is also active in the area of development of new applications for plant and animal toxins and the genetics and selection of cotton.

The pharma industry in other parts of the CIS - Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan and Turkmenistan - are also gradually evolving, attracting foreign direct investments. As the pharmaceutical industry in CIS is still at developing stage, most of the countries in this region depend on imports to meet a lion's share of their medicinal needs. Hence, a couple of Indian pharmaceutical companies, including Ranbaxy, Biocon, Bal Pharma, Ipca Laboratories Ltd and Intas Biopharmaceutical Ltd, have successfully marketed their products in the region and is looking to expand their activities in CIS.