On 24 – 27 November 2015, the international exhibition of equipment, materials and technologies for pharmaceutical production was held in Russia. We discussed with participants the current situation in the pharmaceutical market.
The pharmaceutical market volume in 2014 amounted to 919 billion rubles, and in 2015 is expected to be about 1 trillion rubles. The market continues to grow, however, its structure changes.
In the monthly Bulletin “the Socio-economic situation of Russia in January-September 2015”, the Federal state statistics service reports that the import of medicines in January-August of 2015 amounted to 66.7% on imports 2014. Given that the majority (73% in 2013) medicines in Russia – import manufacture, we can talk about the fall of this segment of the market.
According to the same source, there is a significant increase in the commissioning of production facilities – introduced 720 million units to 60 million units in the same period of 2014.
According to Rosstat, in January-October of 2015 production “of medical products, including surgical equipment, orthopedic devices and their component parts” in monetary terms amounted to 115% from the same period of 2014.
Some market participants see the growth, the others not
The Russian division of Merck imports ingredients for the pharmaceutical industry. According to the representative of the company Pavel Savkin, despite the increase in prices as a result of the fall of the ruble, the company’s performance not only feels crisis, but, on the contrary, there is an increase in sales volumes. In particular, it is demand for new types of ingredients, including for treatment of cancer.
According to Mikhail Dmitriev, Head of sales Bosch units pharmaceutical packaging, the company also in rise. Crisis phenomena in the economy are pushing companies ‘ investments in equipment. In addition, Michael highlights how tangible is now the trend of the customer’s choice of high-quality equipment (manufacturers need the quality of world level). Due to the difference of the Ruble-Dollar-Euro company, the company with a global capacity supports the profitability of sales.
Builder of pharmaceutical manufacturing capacity Favea has not observed neither growth nor decline in sales. According to the Director of the company Evgeny Viktorovich Klusov, its market is stable.
The largest pharmaceutical holding Pharmcontract, containing in its structure the scientific-production Association OlpharmPRO and working closely with science, at the moment feels a decline in sales as a result of the decline in purchasing power. However, it sees the possibility of overcoming the crisis.
In the company Bio-Systemy, a Russian manufacturer of laboratory furniture and equipment, the crisis is also felt, even in the segment of public procurement (who make up about 70% of sales). In recent times the prices have risen across Russia and the price is a significant criterion of choice along with functionality.
Kemerovo pharmaceutical factory, manufacturer of Galeno-pharmaceutical products since 1943, notes some of the opportunities that have arisen at the present time. In particular, the manufacturer of organic medicines from Siberia, has its own plants, sees the demand for natural ingredients… among foreign companies.
About the same fact, means a demand among foreign producers for natural ingredients, sees the company “Natural ingredients”. This is the Moscow-based company with manufacturing base in China, developing herbal extracts in collaboration with Universities. I. M. Sechenov, and K. A. Timiryazev Institute of nutrition and other scientific associations.
Whether tangible is state support?
Open sources of information, in particular, the website of the Ministry of Industry and Trade of the Russian Federation, inform us on a lot of investment projects implemented with state support. So, in September 2015 was launched the branch of the Moscow endocrine plant in the Volgograd region, Rostec and pharmaceutical company Genta will build a plant, in St. Petersburg state chemical-pharmaceutical Academy there was held the opening of the centre of preclinical research and experimental-biological examinations.
The strategy of development of pharmaceutical industry as a whole (referred to among market participants Pharma-2020) envisages the development of the industry in two directions: modernisation of production and transition to innovative medicines (the so-called “innovation trend”).
For Bosch and Bio-Systemy companies the state support of investment projects is one of the significant drivers of sales.
According to Eugenia A. Dorina, the head of the press service of Pharmcontract group, currently pharmaceutical companies have all the opportunities for development and there are real opportunities for development. A few misadvantages of the outlook makes biases of the consumer against the Russian equipment and here, in the opinion of Eugenia, it would be nice to see setting the example of leadership support, which itself could have used the Russian units.
Kemerovo pharmaceutical factory in general does not see support in the state system. The company has promising projects and developments that require investment – and the desire of the manufacturer to develop depends in a high percentage for the loan. Another problem is the regulation of retail trade of pharmaceuticals, which is based on a percentage of the value of medicines, not on the number as in Europe. Thus, the pharmaceutical market become more favorable for expensive drugs, and the Russian pharma production receives limited opportunities for growth.
At the moment the market players themselves are developing programs to support sales. So, Pharmcontract makes installment sales to their loyal customers, and Favea through Czech banks offers special benefit programs (the so-called “Export financing”).
Summing up, we can talk about how public policy affects every player in the market, but in different ways. Apparently, government support extends to companies that are in the target direction.
By 2020, 50% of medicines must be carried out in Russia, and in 2018 90% of essential drugs should be of domestic manufacture (now – 67.9%, 40% of them are made from Russian ingredients).
According to Alexander Borisovich Kostiltsev, General Director of the Kemerovo factory, the state needs the security of medical supply. At that, Russian drugs need to become really competitive, good drugs. And at the moment not all the Russian drags are good.
Let’s hope that in addition to the quantified goals, the state will engage in and support the quality of the entire Russian pharmaceuticals, is not only innovative in its direction. As shows our survey, the market is not yet supported by government in desire to develop traditional domestic production, in natural ingredient demand, in high-quality equipment. For such desires, I want to believe, there will be funding.
Sources: Kemerovo Pharmaceutical Factory, Merck, Bosch, Favea, Pharmcontract, Pharmaceutics 2020, Russian Statistics Office, Russian Statistics Office, Russian Ministry of Industry and Trade, Russian Ministry of Industry and Trade, Rossiyskaya Gazeta, Natural Ingredients