Prior to Russia's economic crisis, pharmaceuticals, was one of the fastest growing and most lucrative markets in Russia. The pharmaceutical market in Russia today continues to present great potential, but the obstacles to foreign investment cannot be underestimated.

The major obstacles in developing the pharmaceutical market in Russia are lack of transparency in the registration and certification systems, as well as inadequate IPR protection and a large percentage of counterfeit medicines.

According to various analysts, counterfeit drugs currently represent up to 12 percent of the pharmaceutical market. Russia has a developed pharmaceutical market with major Western drug manufacturers represented in the country.

Despite the fact that total value is still lower than in 1997, the pharmaceutical market has been growing rapidly over the past three years. By 2004-2005, the market is expected to fully recover. In 1997 the Russian pharmaceutical market reached its highest pre-crisis level of $3.1 billion. The market was reduced by the economic crisis to $1.7 billion in 1999.

The total value of the pharmaceutical market in 2002 was estimated at $2.9 billion. It is forecast that in 2003 the market will reach the precrisis level. The Russian pharmaceutical market appears to present good opportunities to Western drug manufacturers, especially in the high-end quality product segment. Best prospects for US pharmaceutical exports to Russia include cardiovascular, cancer, asthma, neurological and hormonal drugs, as well as insulin, antibiotics, analgesics, vitamins, vaccines, and psychotropic drugs.

According to the State Customs Committee, Russia's pharmaceutical imports totaled $2.24 billion in 2003. Total imports from the United States in 2003 totaled $156 million.

Working hand in hand, the pharmaceuticals and medical device industries are providing training for Russian officials on topics that affect the Russian healthcare industry, including global harmonization, the role of standards in regulation, risk management for medical devices, and incorporation of U.S. and EU medical device regulatory systems.

A formal framework for training culminated in June 2003 in Russia, where a host of U.S. officials and industry professionals guided approximately 200 participants through sessions that touched on key issues for the industry. The training sessions were divided between pharmaceuticals and medical devices.

The goals of the training program were to:
- Reduce review times for regulatory approvals in Russia for medical devices and pharmaceutical products; o Ensure better enforcement in limiting the use of counterfeit drugs on the Russian market;
- Encourage participation of Russian medical device regulators in international fora, in particular, the Global Harmonization Task Force; and
- Reduce costs for U.S. medical product manufacturers for regu-latory compliance.

Russia uses a unique process for defining "medical devices" and "medical equipment," both of which are open to interpretation. Essentially medical devices are classified as products that have relatively short life spans under five years, and medical equipment has life spans greater than five years. (Export America)