Market environs are rapidly changing in the CIS countries. New laws and regulations are dramatically transforming the pharmaceutical landscape, making it more conducive for those who look to do business in the region.
CIS countries comprising Russia, Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, Turkmenistan, Azerbaijan, Armenia, Georgia, Ukraine and Belarus, combined and individually, present a wide range of opportunities for Indian drug firms.
Exports of drugs and pharmaceuticals is surely the one bet Indian players can throw their hats on. Apart from the rising demand for Indian products, these markets, currently in the evolutionary stage, look for supports to learn the art of drug making process. Having mastered at various skills in drug production, Indian manufacturers can continue to tap into this window of opportunity in the coming years as well, till these markets get mature and self sufficient.
A recent report showed that more than half of the Western companies supplying medicine to the Russian markets are actively considering to set up manufacturing facilities there. The major suppliers of pharmaceuticals to the Russian market include Western European countries (most notably, Germany), the United States, Canada and Japan. Western companies and multinationals are rapidly increasing their market share, while Indian exporters and distributors continue to remain strong in the market. The top 20 medicines list is also dominated by foreign brands, predominantly of Western companies.
Indian pharma companies too stand to gain enormously if they set up full-scale production bases in Russia, according to industry sources.
At $ 4 billion, the Russian pharmaceuticals market is now one of Europe's fastest-growing. Experts expect it to double in four or five years' time. The pharmaceuticals market grows by an annual 10% to 15%, on the average. Russian-made pharmaceuticals' share in the market's $4billion volume is 30% in monetary terms and 70% in terms of quantity. Imports increased by 23%; domestic production, by 36%; exports, 55%. Antibacterials, anti-rheumatic medicines, cold and cough drugs, multi-mineral/ poly-vitamin medicines lead the retail sales in Russia, reports showed.
One other reason for the ongoing growth of Russia's pharmaceuticals market is that the Russian government follows the example of Western welfare states, increasing spending on public health. It now allocates some $2 billion to meet the medication needs of the least advantaged of the population groups.
Ukraine is the second important CIS market that Indian pharma companies can target. Ukranian government has extended the deadline for pharmaceutical producers to become GMP compliant from 2002 to 2007. Major portion of imports by Ukraine has been from the EU countries. Germany has been the leading exporter to Ukraine.
As per trade statistics, pharmaceuticals have been the largest single item of Indian exports to Uzbekistan. Core Healthcare of Ahmedabad has set up a joint venture in 1997 in the name of Core Pharmasanoat Ltd, Ajanta Pharma entered the country with its joint venture company Surkhan Ajanta Pharma in 1993, Gufic of Mumbai has set up a joint venture Gufic Avicenna Ltd in 1997, and Reddy-Pharmed Ltd is the joint venture between Dr Reddy's Laboratories and Pharmed Ltd set up in 1998 .
The import -dependent Kazakhstan expects the local production to grow up to 35 per cent in 10 years. Overseas companies are being encouraged to establish joint ventures with Kazakhstan companies.
The government offers various incentives for investors. There are over 1800 players in the pharmaceuticals sector of Kyrgystan, of which over 40 are producers. There are over 700 pharmacies. The country mostly depends on pharmaceutical imports. The products usually imported by Kyrgyzstan from India are antibiotics, cardiovascular drugs, and drugs for liver disorders, pain-killers, and multivitamins.
Russia, India, Iran, Poland, Germany are the main exporters of pharma products to Tajikistan. The country gets international funding from UN, ADB and NGOs for procuring drugs and hospital equipments.
The import of pharmaceuticals by Azerbaijan was US $ 60 million in 2002. About 50 countries export pharmaceuticals to Azerbaijan including India.
The Georgian pharma market is estimated at US $ 70 million. Indian companies such as Ajanta Pharma and Maharishi Ayurveda have tied up with Georgian companies to market the products.