Commonwealth of Independent States (CIS), one of the fastest growing
markets in the world for pharmaceuticals, is now being increasingly
viewed as a market of the future for Indian pharma companies. The
changes in the regulation of pharmaceutical products carried out in
mid-April this year in the region has given a fillip to trade ,
according to industry observers.

Since the opportunities for
growth are more defined, there is business for every segment of the
industry to grow which makes CIS one of the best markets to do
business, they point out.

In order to give a further thrust to
the trade with CIS, the region which is represented by 12 countries of
Russia, Ukraine, Kazakhstan, Belarus, Azerbaijan, Uzbekistan,
Turkmenistan, Georgia, Armenia, Tajikistan, Kyrgyzstan and Moldova, the 
Union government is also chalking out a  bilateral business
arrangement.

According to an industry analyst, “the new
regulations allows companies in CIS to upgrade  and be on par with the
EMEA guidelines. The quality of submissions will improve. However it
will lead to an increase in the cost of drug development and
registration making it viable only for large companies to be present in
the region. Therefore, we could see large pharma companies from India
consolidating their presence in the region. In the case of small and
medium companies, the trading in the region is viewed as difficult going
by the focus on branded generics. However, there is opportunity for
contract manufacture and co-development and supply  for such
enterprises. Going by the emergence of formulation companies here,
Indian active pharma ingredients companies can make a mark here” .

The
markets of Russia and Ukraine alone contribute about 70 per cent of the
total business. The large companies have strategic business initiatives
in the region which is now facing intense competition from the local
Russian companies including those from the East European region who are
present here. These companies are Krka Pharma, Zentiva, Geodeon
Richester, Pol Pharma and Teva, he added .

The smaller markets of
Kazakhstan, Belarus, Azerbaijan, Uzbekistan Moldova and Georgia are
largely driven by price  bargain and not mature markets. Moreover, the
sales of pharmaceuticals here  are carried out by local distributors
with no global distributors. Therefore the market size still indicates
that large, medium and small companies from India could still look for a
slice of business from here, he opined.

Companies from India
which have a substantial presence in the region are Dr. Reddy’s
,Ranbaxy, Dishman, JB Chemcials, Shreya, Lupin, Biocon, The Himalaya
Drug Company to name  a few.

The new regulations in the CIS,
according to Rakesh Bamzai, president, marketing , Biocon Ltd, has
opened up a new world of opportunities. From the levy of $10,200 or
Roubles 3,00,000 for the single fee to be paid for new drug regulation
to the 210 days of clearance period for registration process and the
mandatory clinical trials , all indicate the transparency in the trade.
This is a big boon for large companies. “We also welcome the change for
‘orphan’ drugs  prescribed to cure rare diseases. This will allow the
patients to get drugs at a faster pace if there is a separate category
for medicines used in serious conditions”, he said.

Since Indian
pharma is known to adhere to stringent guidelines in the regulated
markets, following the needs of CIS markets would not be a problem and
the new regulations would have a positive impact on the biotech and
pharma sector, added Bamzai.

Biocon has been in the region for
the last five years in Russia and Ukraine which are viewed as promising
trading hubs for its future. However at present the company's CIS foot
print is small and product registrations are under progress, said
Bamzai.

According to Archana Mitra Dubey, associate vice
president, Exports, Bal Pharma Ltd, the new regulations imposed by CIS
favour only the large pharma and restrict the growth of mid-sized
players. Moreover with quality of standards of drugs being monitored
through clinical trials and dossier submissions, cost of registration
are also on the rise. The companies in the small and medium segment
will now need to identify the drugs to be marketed in the region from
the revenue maximization angle.

Dr Reddy's has also made efforts
to strengthen its presence in the CIS through in-licensing deals.
During October- end , it had entered into an agreement with Cipla for
exclusive marketing rights of a portfolio of OTC and prescription
products in the Russian and Ukraine markets. As per the agreement, Dr
Reddy's has initiated the sales and promotion of the portfolio of
products from Q2 FY11 in select therapy areas in Russia. Launch in
Ukraine will take place in the next calendar year.

The company
has also entered into an agreement with UK - based Vitabiotics Ltd for a
range of nutraceutical products for Russia and select CIS countries.
The agreement provides Dr Reddy's exclusive marketing rights to two of
Vitabiotics leading products- Jointace and Dietrim. Vitabiotics will
supply these products on a long-term basis from its facilities in
Europe.

"The agreements give us access to a good number of Rx
products and OTC brands with existing sales that will immediately add to
our revenues from the Russian and CIS market. We see long - term
synergies as Dr Reddy's has strong sales and marketing network and our
partners have a basket of products already registered and distributed
in these markets. With strong brands, increasing growth in the Rx, OTC
and hospital segments and our association with top tier distribution
partners, the agreements will add to our growth ambitions in the Russia
and CIS markets,” said Satish Reddy, managing director and COO, Dr
Reddy's.

Pharmabiz had reported in mid August that following a
slew of incentives from CIS to encourage local production from 2015,
India was looking at Russian drug manufacturers to explore opportunities
for joint production initiatives.

In order to encourage local
production, Russia’s industry and trade minister, ViktorKhristenko, had
also announced €3.1 billion assistance to local and foreign drug
companies until 2012, which is two thirds of the total cost.

The
Russian Association of International Pharmaceutical Manufacturers
estimates that global pharma firms are prepared to spend a combined €795
million for establishing production facilities in Russia.

On
July 12, Russia released an approved list of 57 drugs that would be
locally manufactured. These include oncology, cardiovascular diseases,
hepatitis B and C, Gaucher’s disease, multiple sclerosis, antibiotics,
anti-tumour, anti-inflammatory and anaesthetics.

According to
data available, India ranks fifth in supply of formulations and sixth in
bulk drugs to Russia with exports earnings valued at US$ 2 billion.

Russian
government has decided to start the process of becoming
self-sufficient by initiating local manufacturing of key formulations
although it will affect Indian exports to a great extent. The Indian
manufacturers need to redefine their long - term export strategies and
aggressively look for other international untapped markets. It is not
very clear whether the facilities will also be put up for APIs which
follows formulations. Indian companies will have good prospects to
export more APIs for formulations. Those with registered products in
Russia will have a head start in co-partnering. This move will create
opportunities for Indian machine manufacturers and project consultants
as several new projects will be in pipeline in Russia.

The
institutes imparting pharmacy courses will have one more area to look
i.e.or development of professionals as project consultants for Russia,
said Kaushik Desai, chairman, Industrial Pharmacy Division, Indian
Pharmaceutical Association.

According to Jatish N Seth,
secretary, Karnataka Pharmaceutical and Manufacturers Association and
director, Srushti Pharmaceuticals, it is high time Indian pharma adopts a
business model to maximize opportunities arising out global changes.