At first sight it seems that the pharmaceutical industry in the Commonwealth of Independent States (CIS) especially Russia is lagging far behind its counterparts of the West and even less developed Asian countries.
Foreign medicines make up over two thirds of the Russia, the largest, and Ukraine, the second largest, markets in the CIS. The remaining 30 per cent of medicines are not of local origin either as they are produced of imported ingredients. One can hardly believe today that the USSR was the world's second best in antibiotic production in the 1980s. However, the market analysts say that the region still has vast resources for a breakthrough in the industry.
Nevertheless, the pharmaceutical markets in these countries too are slowly but steadily growing to the expectation of the exporting community worldwide. The market experts estimate that CIS is an international market that is emerging as promising as the Europe, US and the Africa in the near future.
Looking at the general economic scenario in the region, one can see that the twelve years of independent economic development of post-Soviet countries have shown that the dynamics of economic processes in different countries significantly differs and as a result of varied economic policies. However, Russia has become the leader of liberal reforms as some countries have adhered to the previous economic models.
Similar is the case with the living standard of the people, where healthcare is vital. The 12 independent countries in CIS, which includes Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgystan, Moldvia, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan, have been almost fully import dependent on drugs and pharmaceuticals as the local industry capability is yet to make a headway.
Russia, the largest market
The desire of transnational corporations to get settled in Russia is quite understandable because the volume of Russia's pharmaceutical market makes up $2.5-3 billion. Analysts say that the growth rate is 10-20 per cent a year at that. The state of the Russian population's health is constantly growing worse, the share of ill-aged people is increasing.
Foreign governments do not allow pharma companies send prices up to keep the governmental social spending reasonable. That is why importers are so eager to work in Russia where the authority is more market-oriented than in France or Germany. It is an open secret that importers bribe Russian officials to have the green light for foreign medicines; all attempts made in Russia to get rid of medicinal dependency are ignored at that. It is unlikely that domestic pharma industry may develop quickly and properly under the present-day economic line.
Development of one medicine and its introduction into the market costs hundreds of millions of dollars in progressive countries. This is in fact comparable with the annual turnover of all domestic medicines that amounts to $700-800 million. Neither the RF Government nor Russian producers can allow such large-scale investment into the national pharmaceutical industry.
Fortunately, there are still enough brilliant enthusiasts in this country. Experts of the state-run Research Institute of pure biologicals and the Defense Ministry's Research Center for Medico-biological protection have developed a medicine for treatment of radiation sickness and chemical injuries on the basis of interleukin-1-beta. The Farmsintez enterprise produces Segidrin, a unique medicine that is found effective even for serious cancers. The state-run Research Virology and Biotechnology Center Vektor practices a different approach in production of artificial immunogenes to fight against the HIV infection; it also has technologies for production of components for antineoplastic and immune simulative medicines based on genetic engineering technologies.
Similarly, the Defense Ministry's Microbiology Research Institute has developed recombinant vaccines against hepatitis B, encephalitis and other bugs. Researchers have partially used the genetic construction of the virus for development of the vaccines. These vaccines are safer as compared with the traditional vaccination with weaker virus cultures.
The St Petersburg State Chemical and Pharmaceutical Academy and the St Petersburg Vaccine and Serum Research Institute have developed Aubazipor, the sponge for healing wounds, and the Katacel antiseptic medicine. The Zheleznogorsk Mining and Chemical enterprise produces Algipor and Kollahite, preparations for healing wounds. There are lots of other enterprises and research institutes developing and producing unique medicines and preparations in Russia.
About a year ago the RF Chamber of Industry and Commerce and the Ministry for Industrial Science announced a plan for creation of a national complete cycle pharmaceutical corporation to develop new medicines and introduce them into production. It was suggested that the corporation must be a state-run holding with the controlling interest held by the Ministry for Industrial Science and the Ministry for Economic Development. The corporation was to be based on the Moscow enterprise Moskhimfarmpreparaty, Khimprom (Volgograd) and about ten well-known research institutes.
The St.Petersburg company Farmsintez is another organization planning to make a breakthrough in the national pharmaceutical production. Unlike other successful domestic medicine producers making medicines identical to foreign analogues, Farmsintez sticks to the principle of producing original Russian medicines.
The idea sounds really proud, but the enterprise's portfolio so far includes just few original preparations little known to the population. But the sound ambitiousness of businessmen following this hard path for realization of their long-term strategy deserves respect.
The company plans to earn money for realization of the project by executing orders of foreign partners. If this plan turns out to be a success, it is not ruled out that other Russian enterprises may follow the company's example.
A year ago, the Association of Russian Pharmacists was created in Russia to join Akrihin, Verofarm, Nizhfarm, Otechestvennye Lekarstva (Domestic Medicines), JSC Ufa Vitamin Enterprise and Farmsintez. The association pursues less ambitious objectives: members of the organization want to resist the inrush of imported medicines to Russia.
Pharma retail in Russia
In July 2001 there were 1877 pharmaceutical establishments in Moscow: 592 drugstores (31.54% of the total number), 690 pharmaceutical shops (36.76%), and 595 pharmaceutical stalls (31.7%). In 2001 total volume of their sales came to USD 293.1 million. In 2000 it came to USD 306 million. In 1999 it came to USD 221 million. In 2002, 616 drugstores including 315 (51.14%) drugstores of municipal and governmental property functioned in Moscow.
Indian exports
Sharing the market along with US and European drug industry, India has been doing a striking business with these countries. Top five among the Indian pharma export markets in the CIS countries during 2002-03 are Russia (Rs 4971.7 million), Ukraine (Rs 1452 million), Kazakhstan (Rs 553.1 million), Belarus (Rs 177.4 million) and Moldvia (Rs 105.9 million). Though Russia is the largest among the 12 independent countries in the region in terms of geographical area and market, the Indian exports to all these countries are surging since 2000. Besides, the Indian companies have also made manufacturing as well as top brand establishments in the region by now.
- (Source: Pravda Russia)