In the last three years the Russian medical equipment and devices market has shown substantial and steady growth with annual rates exceeding 10 per cent. The total volume of the market is estimated at approximately $ 1 billion.For comparison the US medical equipment and supplies market in 2000 was 75 times larger and amounted to 75 billion dollars, of which 10 billion dollars was reinvested in R&D.
The 1998 economic crisis served as a spur for a number of Russian medical equipment and device manufacturers which, having taken advantage of the sharp rise in price of imported medical equipment, managed to increase their share of the total market.
However, in general, imported medical equipment and supplies still play a predominant role and currently supply 71 per cent of the total market. Despite the fact that the quality of some of the medical devices and supplies produced in Russia is highly improved, it is in many cases not up to comparable foreign products.Foreign-made high-end medical equipment, sophisticated medical devices and many medical products and supplies in the majority of cases do not have Russian analogs.
The United States is the second leading supplier of medical equipment to the Russian market after Germany.Other important suppliers include Japan, Italy and France.
Russia still does not have a developed legislative basis for the medical device and equipment market. The Law on Medical Equipment and Devices has over several years been discussed in the Duma, the lower chamber of the Russian Parliament, but has not yet been adopted.There are a number of regulatory documents, including orders and instructions issued by the Ministry of Health of the Russian Federation, regulating different aspects of the licensing, registration and certification processes.However, the state registration, licensing and certification processes need to be reformed to become less lengthy and expensive and more transparent.
This report focuses on the following major product lines: electro-medical equipment; surgical and diagnostic instruments and apparatus; infusion and transfusion equipment; clinical laboratory equipment and supplies; ophthalmology equipment and instruments; endoscopes and laser instruments; orthopedic equipment; wheelchairs and rehabilitation equipment.End summary.
Market Profile
According to the medical industry analysts' estimate, the total volume of the Russian medical equipment market in 2001 was about 1 billion dollars. The total market growth rates for the last three years have exceeded 10 percent annual growth.Medical industry analysts predict steady growth of the market for the next five years.
In the last three years due to a sharp increase in price for imported goods as a result of the 1998 economic crisis local manufacturers were able to increase their share in a number of market segments, including electrocardiographs, patient monitors, X-ray devices, anesthesia and pulmonary equipment, ultrasound scanners, devices and instruments for endoscopy and laparoscopy as well as electrosurgical instruments.Stronger positions were also achieved in home healthcare products, orthopedic devices, ophthalmic products, test kits, polymeric and glass medical products, disposable syringes and other disposables.
Generally, Russia has a strong manufacturing basis in the areas of traditional and mass medical equipment and devices, including such groups as traditional diagnostic X-Ray equipment, MRI tomographs, anesthesia and pulmonary equipment, electrocardiographs, blood pressure meters, eye pressure meters, endoscopes, electrosurgical and surgical instruments, artificial blood circulation devices, physiotherapy devices, altitude chambers, clinical laboratory instruments, and sterilizers.
However in medical equipment industry subsectors which have a large R & D component, and which use innovative, sophisticated technologies and automation, Russia is behind the majority of developed countries.Such industry subsectors include high-end ultrasound equipment, computer and X-Ray tomographs, angiography systems, devices for array therapy, resuscitation equipment, fuctional diagnostic equipment, implants and prostheses, robotics clinical laboratory systems for express microanalysis, telemedicine complexes, hospital equipment and supplies, operation room equipment, many types of home healthcare equipment and supplies, infusion and transfusion sets, and IV solutions.
Domestic production supplies only 29 percent of the market.Imports account for about 71 percent.In 2001 domestic production was growing slower (at 6.4 percent) than imports (15 percent).
The medical equipment used in Russian hospitals and clinics is very old.Eighty percent of the medical equipment is worn-out and has surpassed the established term of safe and efficient functioning and needs replacement.The major obstacle towards renovation of the existing medical equipment resource is lack of financing on federal and regional levels.Servicing of medical equipment forms a significant market, the demand for quality maintenance and repair services is high.The main organization in the area of servicing medical equipment is the Russian Association of Enterprises Specializing in Sales and Repair of Medical Equipment (RAPMED).
Classification systems used in Russia contribute to the fact that the whole regulatory system is less adapted to the general trend towards harmonization of global approaches to regulating the medical device industry and make it more difficult for the Russian medical equipment industry to be more involved in international trade.
Domestic Production
In Russia medical equipment and devices are manufactured at 1,275 enterprises, including 32 specialized medical device enterprises controlling 60 percent of the total output, 300 defence plants and 900 small and medium enterprises having federal licenses for production of medical equipment and devices.A significant portion of high-tech medical equipment is still developed and produced at defence enterprises, which have traditionally had access to advanced technologies. According to medical industry expert estimates, local production supplies only 29 per cent of the total medical equipment market.
Domestic production of medical equipment and supplies has been growing steadily over the last several years.In 2001, for example, it grew by 14 percent. The most dynamic subsectors included devices for endoscopy, laparoscopy, electrosurgical instruments, polymeric and glass medical products, disposable syringes and other disposable products.
In the last two to three years, because of the change in demand from imported to locally produced medical devices and supplies as well as some types of equipment, a significant number of Russian enterprises managed to strengthen their positions and increase their share in the market.
Russia started to develop and launch into production new types of advanced medical equipment and instruments used in diagnostics and treatment of serious diseases like artificial kidney devices with non-kidney blood clean-up; medical monitors; electrocardiographs; endoscopic and laparoscopic equipment, MRI Tomographs, Digital X-Ray Equipment for Fluorographical Tests and TB Diagnostics;Ultrasound Medical Scanner, and others.
The above mentioned recently developed medical equipment and devices are successfully competing with their Western equivalents within the country due to high technical standards and relatively low price.
Generally only 25-30 percent of medical equipment produced in Russia can compete internationally. Locally made medical equipment and devices are from three to five times less expensive than similar Western equipment, although they are sometimes inferior to Western medical equipment in terms of design, efficiency and after-sale services.
Russia has been recently developing important technological equipment and lines used in production of medical equipment.Such technological lines include automatic equipment to produce needles for disposable syringes (TZMOI, Tyumen), technology to sharpen cutting instruments and forceps made of titanium, technology to put biologically inertial coating on medical instruments, new technology in glass lenses, including protective lenses for work with computers, glasses for drivers who drive in conditions of limited vision and light, etc.
Russia still does not produce many important technological lines which are in demand by local manufacturers.This includes automatic lines to produce disposable syringes, IV solutions, transfusion and infusion sets, and test kits.
Russia has proclaimed a gradual upgrade of the medical industry to Good Manufacturing Practice (GMP) standards by 2005.However, lack of financing as well as insufficient experience and education on GMP can delay the transition of the industry to GMP standards beyond the proclaimed goals.
Third-Country Imports
In 2000 imports were 470 million dollars while in 1998 they were 952 million dollars.The 2001 figure of 750 million dollars is still less then the level achieved before the crisis.
Inadequate protection of intellectual property rights (IPR) is a critical deterrent to foreign investment in Russia and has been a burning issue for foreign, including U.S., businesses operating in Russia in the last few years.
On the highest level, Russia has signaled its commitment to protecting IPR.Russia is a signatory to several international agreements that require compliance to international standards of IPR law and enforcement.Russia has also made significant progress in introducing laws to ensure IPR compliance.
However, IPR law enforcement is still rather poor.Especially low is the ability of Rospatent, the Russian Patent Office, to annul illegal registrations of trademarks and to implement court and Anti-Monopoly Ministry decisions.
Foreign companies are recommended to register their trademarks in Russia.Otherwise, in case of counterfeiting they are most likely to lose court cases because the Russian courts would be very protective of the trademarks registered in Russia, even though they may belong to foreign manufacturers and be registered illegally in the name of Russian agents or distributors.
- Source: US Embassy Moscow