pharmexpert 2010 eng
TRANSCRIPT
the russian
pharmaceutical
market
2010 results
The Russian
pharmaceutical
market
2010
results
2 <3 сontents
I.5 Summing up: Pharmexpert main
achievements, 2010
II.9 Macroeconomics: Russia and Federal
subjects
III. 15 “Weather forecast” for Russia’s pharma
Results of Russia’s pharma market development in 2010 and forecast for 2011
IV.25 Summary of most important events in
Russia’s pharma market
V.29 Imports reached pre-crisis level in value
termsDrug import to Russia
VI.37 Industrialization in a separate industry
Pharmaceutical industry development in Russia
VII.45 Time of unrealized apprehensions
and realized predictionsCumulative rating of Russian pharmaceutical distributors
VIII.59 Artificial “natural selection”
Rating of Russian drugstore chains
IX.71 Out-of-pocket pharma market has
grown. ReallyReport on out-of-pocket sector of Russia’s pharma market
X.81 Hospital market has recovered after
crisis Report on Russia’s hospital drug purchase market
XI.91 Local companies strengthen positions
in high-cost segmentReport on beneficiary drug coverage market in Russia
XII.101 Ex-USSR pharma sector overcomes
crisisCIS and Georgia pharma market report
XIII.119 Market opinion as it is
Rating of most influential subjects of Russian pharma market
XIV.143 Rating of investment attractiveness
of Russian Federal subjects by specific sectors of regional pharma markets
XV.149 Paradox of movement
Price dynamics in the Russian pharmaceutical market
XVI.157 Natural selection
Month’s Best companies and trademarks — Pharmexpert Selected
The Russian
pharmaceutical
market
2010
results
4 <5
summing up
I.
The Russian
pharmaceutical
market
2010
results
summing up: pharmexpert
main achievements, 2010
Ne w a n a ly tic a l data ba se s
l aunched
• Brick: Monitoring of retail sales in Russia’s key cities (monthly). Seven Russia’a larg-est cities, i.e. Moscow, St. Petersburg, Ekaterinburg, Nizhniy Novgorod, Novosi-birsk, Perm, and Krasnodar, were broken down into 79 bricks (territories based on Russia’s zip codes). Such breakdown provides for a unique level of sales data details and makes it possible to ana-lyze pharmaceutical, homeopathic, and supplement sales by districts and areas of Russia’s key cities.
• Monitoring of supplement sales in drug-stores, hospitals, and other institutions: Serbia (monthly; update period: 30 days). This project provides for evaluating sales of a new product category, i.e. biologically active supplements. Proceeding from specifics of supplement sales in Serbia, a special set of methods was developed for estimating the market size, including detailed data on three market segments, viz. out-of-pocket, hospital as well as supplement sales outside clinics and drugstores.
L aunche s of ne w a n a ly tic a l
data ba se s from Q111 prov ided for
All preparatory work has been made for launching A NEW VERSION of the database “Monitoring of hospital drug purchasing in Russia (new)”. Unique computing methods provide for much higher accuracy of drug and medical device sales data at clinics and hospitals. The new DB will be updated MONTHLY (instead of quarterly) and, besides the existing national level of data detail, will provide detailed data for 83 Federal subjects.
The e x ist ing a n a ly tic a l
data ba se s op timized
The year 2010 saw more consorted efforts for improving quality of services for customers using analytical databases (ADBs).
Changes in ADBs for Russia:• Monitoring of retail drug and supplement
sales in Russia: details were provided for 10 new regions.
Changes in other country-specific ADBs:• Monthly updated for – Monitoring of retail drug sales in Mol-
dova; – Monitoring of hospital drug purchasing in
Moldova; – Monitoring of retail drug sales in Pri-
dnestrovie.• For Ukraine, analytical databases were
provided in 2010 by Morion; Pharmexpert signed a license agreement with this com-pany in 2009.
Technological changes implemented:• An allocated high-speed Internet channel
was put in operation exclusively for Pharm-expert customers;
• High reliability and productivity server equipment has been purchased and in-stalled for Internet-based ADBs;
• A new Internet-based ADB interface was developed (it is available to the customers from 1st February, 2011). It relies on com-mercial database management software by a world famous provider, which boosts report generation rate as well as provides for uploading data into MS Excel 2010 hav-ing more that 1 million lines. It has become more convenient to generate reports com-bining a variety of databases, e.g. on the CIS.
The r a nge of m a r keting r e se a rch
in ph a r m a a nd a llied m a r kets
substa n ti a lly w idened
• In 2010, Pharmexpert made a number of integrated marketing researches using sociological methods. This type of research is characterized by data collection employ-
As Pharmexpert CEO Nikolay Demidov put it,
“the year 2010 was marked by an accelerated
corporate growth and the development of new
projects”. Let’s look closer at the events that
made the company’s operational background
quite positive.
6 <7 summing up:
pharmexpert main
achievements, 2010
ing all possible techniques; thus, all target groups are being polled on one and the same problem.
• A new aspect of Pharmexpert Sociological Research Department activities in 2010 was research based on analysis of clinical prescription and surgery logs.
• The value of research made by sociological methods grew by 150% in 2010 vs. 2009. The number of sociological research customers also increased by 1.5 times.
New businesses set up
• Medtechexpert — Medical equipment. The first analytical product of this new business unit will be an analytical database “Monitoring of clinical and hospital pur-chasing/Medical equipment and devices: Russia” (from Q111).
• Medical Information Systems. Starting from 2011, Pharmexpert provides imple-mentation and maintenance services for modern customer relation and process man-agement systems (CRM/HRM/SRM) as well as customer support and consulting services for corporate change management. System-atization and updating of your customer databases will be provided following your subscription for the Syndicate Database Service.
Ne w functions in the e x ist ing
busine sse s cr e ated
The Mathematical Modeling and Forecast-ing Group was set up in Pharmexpert Analytical Research and Consulting De-partment. The new group has developed and implemented the Methods of Build-ing Dynamic Market Forecasting Models providing for making forecasts based on historic data and current changes of multifactor model factors. Some of Russia’s pharma market players have already ben-efited from this model that is unique for this market.
The number of customer s h a s
grow n. Once aga in…
• Pharma market players were greatly inspired by the statistical database “Monitoring of state and municipal drug purchasing in Russia”. This project giving access to drug purchase auctions all over Russia and providing for current online data on active and completed auctions was a record-setter in terms of the number of customers for a product launched just a year ago.
• In 2010, Pharmexpert became stronger by 20 new customers using the company’s ana-lytical databases. The number of customers has grown for basically all drug sales and purchasing audits in the countries where Pharmexpert operates.
A pa rt ner ship agr eemen t signed
Pharmexpert and the Editorial Board of the Pharmatsevtichesky Vestnik (Pharmaceutical Bulletin) newspaper have signed a partnership agreement based on which, Pharmexpert will promote and carry out sales of the electronic database “PHARMWATER. Lessons in Cartography” developed by correspondents and analysts of the Pharmatsevtichesky Vestnik. The PHARMWATER is based on an interactive map of the Russian Federation showing geographic coverage of three drugstore chain types, viz. largest interregional, regional, and local retail operators (with not less than three drugstores).
A n in ter n ation a l confer ence
hosted
In November 2010, Pharmexpert hosted a business conference in Minsk (Republic of Belarus) on issues related to organizing and making research in Belarus pharmaceutical market.
The conference was attended by top managers of Belarus pharma companies, directors of representative offices of international pharma companies, top ranks of the largest
The Russian
pharmaceutical
market
2010
results
distributor companies and drugstore chains as well as managers of marketing depart-ments of pharmaceutical companies operat-ing in Belarus.
Alexey Pryakhin, Pharmexpert’s new country manager for Republic of Belarus, was intro-duced to the business community.
The pr actice of customer
wor kshops a nd confer ence s
con tinued
In May and September 2011, Pharmexpert held its traditional workshops on the analytical research data interpretation and applications of sociological techniques in marketing research for pharma market customers.
In November 2010, Pharmexpert hosted the 1st conference on investment opportunities in the pharma and medical sector. This conference was attended by investment
consultants speaking to CEOs and CFOs of pharmaceutical and medical companies. Pharmexpert intends to build up its influence in the investment consulting field.
INPH A R M ACI A Pharma A nalytical
Monthly r edesigned
Pharmexpert ’s electronic analytical monthly INPHARMACIA boasting ca. 3000 subscribed has been profoundly redesigned. In October 2010, an INPHARMACIA special issue on contract drug manufacturing was released also redesigned.
Tr a dit ions of gi v ing birth to
e xperts m a in ta ined
In 2010, Pharmexpert staff and family mem-bers gave birth to five new potential experts, including one expert granddaughter.
8 <9
macroeconomics:
russia
and federal
subjects
II.
The Russian
pharmaceutical
market
2010
results
Table 1. Macroeconomic indices of Russian pharma market, 2010
* Calculated based on the data on change of physical volume of agricultural production, mining, processing industries, power, gas, and water generation and distribution, con-
struction, transportation, retail and wholesale trade.
** Pharmexpert expert estimation.
*** Based on payment balance methodology (as of 11.03.2011).
Source: Pharmexpert
Index Ja
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Macroeconomic indices
Commodity and services index for basic economic activities*, % m-on-m vs. 2009 104.10 104.10 106.40
Transportation turnover, % m-on-m vs. 2009 112.20 109.80 112.70
Fixed capital investment, % m-on-m vs. 2009 91.70 92.50 100.40
Retail trade turnover, % m-on-m vs. 2009 100.50 101.30 103.40
Consumer price index, % m-on-m vs. 2009 108.02 107.18 106.47
Drug consumer price index, % m-on-m vs. 2009 113.92 107.56 101.62
Medical services consumer price index, % m-on-m vs. 2009 113.65 112.22 111.93
Basic inflation rate, % vs. December 2009 100.50 101.00 101.50
Real cash income, % m-on-m vs. 2009 115.40 104.70 104.60
Total unemployment (ILO methodology), % vs. economically active population 9.20 8.60 8.60
Commodity import***, % m-on-m vs. 2009 108.00 115.40 129.70
RUB:USD exchange rate as of the end of month (rubles for 1 USD) 30.43 29.95 29.36
RUB:EUR exchange rate as of the end of month (rubles for 1 EUR) 42.46 40.80 39.70
Source: Rosstat, CB of RF
Supply characteristics
Pharma market supply, wholesale prices, mn USD 3 000
Imports, wholesale prices, mn USD 2 130
Local manufacture without exports, wholesale prices, mn USD 870
Market sector characteristics (without auctions)
Drug sales (without auctions), consumer prices, mn USD 4 600
Imported drug sales (without auctions), consumer prices, mn USD 3 600
Local drug sales (without auctions), consumer prices, mn USD 1 100
Out-of-pocket market, retail prices, mn USD 3 420
Hospital market, wholesale prices, mn USD 230
Beneficiary drug coverage (LLO) market, state register prices*, mn USD 950
Average price per unit, wholesale prices, USD (including LLO/high-cost) 3.27
Average price per unit, retail prices, USD (including LLO/high-cost) 3.92
This section carries basic macroeconomic indices of the Russian pharma market
calculated based on the data of the Russian Federal Statistics Service (Rosstat)
and Central Bank of Russian Federation (CB of RF).
Pharmexpert proprietary data are used to describe different pharma market
sectors both in Russia and Federal subjects. Presented are data on basic pharma
market sectors; average drug consumption per capita etc.
10 <11 macroeconomics:
russia and federal
subjects
Ap
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107.70 108.70 107.10 103.10 102.40 101.30 103.20 104.50 105.50 104.70
115.60 114.20 109.30 101.10 101.40 102.50 104.60 103.30 99.50 106.90
101.70 105.60 108.30 99.50 108.10 107.80 110.60 108.00 113.30 106.00
104.70 105.40 106.00 106.80 106.60 104.80 103.00 99.00 119.00 104.40
106.04 105.97 105.75 105.47 106.05 106.97 107.50 108.06 108.78 106.86
97.32 96.12 95.88 96.32 96.84 97.32 97.86 98.22 98.11 99.76**
110.62 109.88 109.34 108.95 108.99 108.80 108.65 108.41 108.35 109.98**
101.70 101.80 102.00 102.40 103.10 104.30 105.10 105.80 106.60 102.98**
105.70 101.70 103.60 106.80 105.00 101.40 100.20 103.10 102.00 104.10
8.20 7.30 6.80 7.00 6.90 6.60 6.80 6.70 7.20 7.49**
130.10 140.50 127.60 132.80 153.70 133.90 127.00 126.30 124.30 129.50
29.29 30.50 31.20 30.19 30.66 30.40 30.78 31.31 30.48 30.48
38.70 37.63 38.19 39.47 39.03 41.35 42.73 41.57 40.33 40.33
3 410 4 360 3 850 14 620
2 530 3 510 2 600 10 770
880 850 1 250 3850
4 400 4 080 4 520 17 600
3 400 3 100 3 300 13 400
1 000 1 000 1 100 4 200
3 250 3 090 3 540 13 300
350 390 530 1 500
800 600 450 2 800
3.13 2.75 2.76 2.98
3.76 3.40 3.46 3.63
The Russian
pharmaceutical
market
2010
results
Table 2. Macroeconomic indices of Russian pharma market split for Federal subjects, 2010
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Russian Federation 142 914 136 17 600.00 123.15 13 300.00 93.06 2 800.00 1 500.00
Central Federal
District 38 456 865 6 193.37 161.05 4 496.70 116.93 1 048.65 648.02
Belgorod region Belgorod 1 532 497 166.46 108.62 124.26 81.08 29.04 13.16
Bryansk region Bryansk 1 275 224 121.62 95.37 96.98 76.05 22.22 2.41
Ivanovo region Ivanovo 1 061 087 65.18 61.43 34.74 32.74 26.16 4.28
K aluga region K aluga 1 009 869 82.18 81.38 53.54 53.02 20.76 7.89
Kostroma region Kostroma 666 306 62.71 94.11 48.55 72.86 10.45 3.71
Kursk region Kursk 1 125 071 110.58 98.29 87.27 77.57 18.50 4.81
Lipetsk region Lipetsk 1 171 331 127.00 108.42 89.65 76.53 21.75 15.60
Moscow region - 7 104 036 946.49 133.23 752.49 105.92 140.27 53.73
Oryol region Oryol 785 820 49.97 63.59 30.11 38.31 13.97 5.89
Ryazan region Ryazan 1 151 955 112.87 97.98 85.66 74.36 21.94 5.26
Smolensk region Smolensk 982 831 108.77 110.67 86.77 88.28 16.11 5.89
Tambov region Tambov 1 090 102 59.88 54.93 35.23 32.32 16.81 7.83
Tula region Tula 1 550 279 134.07 86.48 82.65 53.31 31.85 19.57
Tver region Tver 1 350 244 111.41 82.51 80.90 59.91 24.01 6.51
Vladimir region Vladimir 1 442 042 109.03 75.61 80.24 55.65 22.70 6.09
Voronezh region Voronezh 2 335 218 289.14 123.82 248.82 106.55 29.82 10.50
Yaroslavl region Yaroslavl 1 271 023 131.79 103.69 102.87 80.93 21.44 7.48
Moscow (city) 11 551 930 3 404.21 294.69 2 375.96 205.68 560.85 467.40
Northwestern
Federal District 13 593 512 1 897.67 139.60 1 455.54 107.08 312.47 129.66
Komi Republic Syktyvkar 899 668 45.17 50.21 20.08 22.32 19.58 5.51
Republic of K arelia Petrozavodsk 644 239 61.93 96.13 43.92 68.18 14.93 3.08
Archangel region
(incl. Nenetskiy
autonomous
district) Archangel 1 225 310 142.72 116.48 110.13 89.88 27.34 5.24
K aliningrad region K aliningrad 941 424 46.61 49.51 22.96 24.39 20.15 3.50
Leningrad region - 1 714 403 228.91 133.52 191.18 111.51 33.41 4.32
Murmansk region Murmansk 794 785 121.37 152.71 93.42 117.54 20.10 7.84
Novgorod region
Great
Novgorod 632 823 26.32 41.60 12.42 19.63 9.15 4.76
Pskov region Pskov 671 300 24.66 36.74 11.24 16.74 10.11 3.32
Vologda region Vologda 1 201 040 116.00 96.58 84.08 70.00 24.82 7.11
St. Petersburg 4 868 520 1 083.39 222.53 866.10 177.90 132.89 84.40
Southern Federal
District 13 853 722 1 306.19 94.28 979.75 70.72 220.75 105.69
Republic of Adygeya Maikop 440 327 27.44 62.33 18.39 41.76 7.09 1.97
K almyk Republic Elista 288 885 16.14 55.87 10.41 36.03 5.03 0.70
Krasnodar
territory Krasnodar 5 229 177 523.82 100.17 396.58 75.84 91.25 35.99
12 <13
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Astrakhan region Astrakhan 1 010 407 81.74 80.90 64.29 63.63 10.73 6.72
Rostov region Rostov 4 276 426 381.07 89.11 265.28 62.03 68.77 47.02
Volgograd region Volgograd 2 608 500 275.97 105.80 224.80 86.18 37.87 13.30
North Caucasian
Federal District 9 507 004 575.01 60.48 424.11 44.61 91.14 59.75
Republic of
Daghestan Makhachkala 2 981 374 156.66 52.54 119.74 40.16 21.30 15.62
Chechen Republic Grozny 1 275 219 70.85 55.56 53.36 41.85 9.60 7.89
Ingush Republic Magas 414 992 28.45 68.56 17.39 41.90 7.83 3.24
K abardino-Balkar
Republic Nalchik 859 655 48.74 56.69 32.95 38.33 11.73 4.06
K arachai-Cherkess
Republic Cherkessk 478 059 25.33 52.98 17.88 37.40 4.67 2.78
Republic of
Northern Ossetia
— Alania Vladikavkaz 712 378 35.61 49.99 24.13 33.88 9.02 2.46
Stavropol territory Stavropol 2 785 327 209.38 75.17 158.65 56.96 27.00 23.72
Volga Federal
District 29 880 413 3 214.16 107.57 2 514.31 84.15 471.10 228.76
Republic of
Bashkortostan Ufa 4 071 895 458.71 112.65 367.62 90.28 69.88 21.21
Chuvash Republic Cheboksary 1 250 498 84.96 67.94 56.88 45.48 14.68 13.41
Republic of Mariy El Yoshkar-Ola 695 380 34.47 49.58 19.78 28.44 8.02 6.68
Republic of
Mordovia Saransk 833 327 63.93 76.71 44.01 52.81 14.16 5.76
Republic of
Tatarstan K azan 3 787 355 443.83 117.19 334.71 88.38 62.88 46.24
Udmurt Republic Izhevsk 1 521 731 145.35 95.51 108.83 71.52 20.41 16.11
Perm territory Perm 2 634 123 249.14 94.58 177.80 67.50 53.92 17.42
Kirov region Kirov 1 338 711 161.99 121.01 121.70 90.91 20.30 19.99
Nizhniy Novgorod
region
Nizhniy
Novgorod 3 307 613 324.20 98.02 268.43 81.16 48.69 7.08
Orenburg region Orenburg 2 031 340 212.61 104.66 154.97 76.29 33.96 23.68
Penza region Penza 1 383 998 127.31 91.99 99.62 71.98 24.52 3.18
Samara region Samara 3 215 440 463.33 144.10 392.64 122.11 50.92 19.77
Saratov region Saratov 2 519 149 283.54 112.55 241.95 96.04 25.83 15.76
Ulyanovsk region Ulyanovsk 1 289 853 160.79 124.66 125.38 97.20 22.94 12.47
Urals Federal
District 12 089 111 1 565.32 129.48 1 241.95 102.73 201.57 121.80
Chelyabinsk region Chelyabinsk 3 478 037 435.59 125.24 357.78 102.87 47.21 30.59
Kurgan region Kurgan 908 838 75.10 82.63 56.45 62.11 13.84 4.81
Sverdlovsk region Ekaterinburg 4 297 510 671.08 156.16 552.83 128.64 82.10 36.15
Tyumen region
(incl. Khanty-
Mansiyskiy and
Yamalo-Nenetskiy
autonomous
districts) Tyumen 3 404 726 345.82 101.57 274.89 80.74 58.41 12.52
macroeconomics:
russia and federal
subjects
The Russian
pharmaceutical
market
2010
results
Fe
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Siberian Federal
District 19 249 798 2 042.22 106.09 1 561.37 81.11 339.72 141.12
Altai Republic Gorno-Altaisk
206 557 8.51 41.18 4.06 19.67 3.68 0.77
Buryat Republic Ulan-Ude 972 175 93.35 96.02 71.30 73.34 15.38 6.67
Republic of
Khakassia Abakan 532 202 22.28 41.86 10.42 19.57 6.41 5.45
Tyva Republic Kyzyl 308 160 12.40 40.24 6.08 19.72 4.26 2.06
Altai territory Barnaul 2 416 982 240.95 99.69 187.97 77.77 41.22 11.76
Krasnoyarsk
territory Krasnoyarsk 2 829 125 244.15 86.30 166.43 58.83 57.01 20.71
Transbaikal
territory Chita 1 105 659 132.93 120.22 108.72 98.33 18.93 5.27
Irkutsk region Irkutsk 2 427 900 293.94 121.07 238.07 98.06 38.26 17.61
Kemerovo region Kemerovo 2 761 601 278.02 100.67 216.91 78.55 42.91 18.20
Novosibirsk region Novosibirsk 2 666 407 391.81 146.94 302.87 113.59 64.73 24.20
Omsk region Omsk 1 976 345 226.28 114.49 178.12 90.13 31.57 16.59
Tomsk region Tomsk 1 046 685 97.61 93.26 70.42 67.28 15.36 11.83
Far Eastern Federal
District 6 283 711 806.07 128.28 626.28 99.67 114.60 65.20
Republic of Sakha
(Yakutia) Yakutsk 958 021 107.25 111.94 80.09 83.60 16.88 10.27
K amchatka
territory
Petropavlovsk-
K amchatskiy 321 344 40.13 124.87 28.20 87.76 5.87 6.06
Khabarovsk
territory Khabarovsk 1 343 289 213.53 158.96 171.50 127.67 32.55 9.48
Primorie territory Vladivostok 1 953 474 246.72 126.30 201.94 103.38 24.44 20.34
Amur region Blagoveshchensk 827 761 95.40 115.25 69.07 83.44 17.20 9.13
Magadan region Magadan 156 494 18.98 121.26 14.25 91.04 2.69 2.04
Sakhalin region
Yuzhno-
Sakhalinsk 496 665 57.62 116.02 41.04 82.63 10.25 6.33
Evreyskaya
autononous region Birobijan 176 313 19.84 112.55 15.92 90.32 4.15 0.77
Chukotka
autonomous
district Anadyr 50 350 5.61 111.37 4.26 84.65 0.57 0.77
Calculations: Pharmexpert
14 <15
“weather
forecast”
for russia’s
pharma
III.
The Russian
pharmaceutical
market
2010
results
M a in economic indic ator s of 2010
The consumer confidence index grew steadily
during 2009—2010 and reached a positive
value of 1% in Q110, for the first time since
the Russian economy entered the crisis.
In Q310, the subjective opinion of the
population about the actual and expected
changes in the economy deteriorated
(evidently due to a protracted summer
drought and the resulting spike in prices
of certain foods, as well as the slump in
energy prices in the same period). By the
year end, perception of the economic situa-
tion improved: the consumer confidence
results of russia’s pharma
market development
in 2010 and forecast for 2011
Table 1. Some macroeconomic indicators according to Mineconomrazvitiya forecast and report data (preliminary), 2010
1 CPI — Consumer Price Index.
Indicator Report Recovery from crisis — Mineconomrazvitiya forecast. 2009 Expert estimates
inertia fast protracted
2008 2009 2010 2010 2010 2010
Oil prices (Urals.
USD/bbl) 94.4 60.7 65.0 80.0 40.0 75.0
Real GDP growth
rate (%) 5.6 –7.9 4.3 5.5 –4.1 4.1
Nominal GDP (bn RUB) 41 265 39 016 44 142 45 024 40 965 44 491
Federal budget
revenues (% of GDP) 22.4 18.8 17.0 17.7 15.8 17.4
Federal budget
surplus / deficit (-)
(% GDP) 4.0 –6.54 –5.4 –4.26 –8.34 –4.0
Export (bn USD) 471.6 303.3 321.0 360.0 245.0 378.0
Import (bn USD) 291.9 192.7 235.0 253.0 169.0 241.0
CPI growth rate1 (%) 13.3 8.8 7.4 8.3 8.4 8.8
Source: Russia’s Ministry of Economic Development, Goskomstat
index gained 3.5 percentage points (reach-
ing -0.5%), and the expected change index
grew by 1% (Fig. 1).
Unemployment in 2010 was 7.5%, which is
0.9% less than in the previous year. The
consumer price index did not change as
compared to 2009 (8.8%), while the real
disposable income grew by 4.3%, which
is higher than in 2009 (2.1%) and 2008
(2.3%) (Fig. 2).
The Russian economy was growing at a steady
pace in 2010; the results achieved as of the year
end even exceeded, to a certain extent, what
was expected according to the inertia forecast
scenario of the Ministry of Economic Devel-
opment (Mineconomrazvitiya) of the Russian
Federation (Table 1). However, the pre-crisis
maximum has not been achieved, and according
to experts, it will take at least two years to
achieve it.
16 <17
Fig. 2. Unemployment, real disposable income of population and Consumer Price Index in pre-crisis, crisis, and post-crisis periods, 2007—2010
“weather forecast” for
russia’s pharma
results of russia’s pharma
market development in 2010
and forecast for 2011
Source: Goskomstat
Fig. 1. Consumer Confidence Index and Expected Change Index in Russia, Q108 — Q410
Consumer Confidence IndexExpected Change Index
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
-35
-40
-30
-25
-20
-15
-10
-5
0
5
8
0-2
1
-20
-35-32
-25
-20
-10 -7-11
10
9 8
-19
-27
-15
-10-5
15
-4
-1
10
15%
0
1
6.1 6.3
8.4
7.5
111.9
102.3 102.1
104.3
113.3
108.8 108.8
112.0
2
3
4
5
6
7
8
9
2007 2008 2009 2010
Un
empl
oym
ent,
%
94
96
98
100
102
104
106
108
110
112
114
116
Gro
wth
, %
Unemployment, %
Real disposable income (y-on-y, %)CPI (December, y-on-y, %)
8.4
1
113 37.5
113.3112.0
102.3 102.1
104.
1
6.1 6.3
1.9108.8 108.8
Source: Goskomstat
The Russian
pharmaceutical
market
2010
results
He a lthc a r e a nd soci a l sector
in 2010
The total state healthcare expenditures
in 2010 amounted to 675.59 bn RUB,
which is 0.7% less than the year before
(Table 2). Expenditures decreased in
the fields of in-patient care (–0.4%) and
sanitary and epidemiological welfare
(–57.6%). In all other sectors, funding
increased: thus, expenses on day patient
facilities and blood banks increased by
14.6%, emergency care by 9.5%, sanatoria
care by 5.5%, and out-patient care
by 1.6%.
Table 2. State healthcare expenditures (bn RUB), 2009—20101
Indicator Federal budget
Consolidated budgets of
Federal subjects
Budgets of territorial
branches of state funds Total
2010 2009 2010 2009 2010 2009 2010 2009
Healthcare expenditures,
total* 201.40 219.84 450.13 434.04 24.07 26.75 675.59 680.63
Share of healthcare
expenditures in state
total expenditures (%) 2.42 2.69 8.21 8.42 4.66 5.43 4.72 4.92
In-patient care 128.69 130.46 281.65 279.70 2.31 4.07 412.65 414.24
Out-patient care 34.20 38.70 97.90 90.20 20.88 21.61 152.98 150.51
Day patient care in all
types of facilities - - 1.87 1.53 0.11 0.20 1.98 1.73
Emergency care 0.43 0.15 50.16 45.89 0.43 0.54 51.02 46.57
Sanatoria care 23.43 22.30 10.25 9.61 0.13 0.15 33.81 32.06
Blood and components
donation, processing,
storage, and safety
provision 4.73 4.27 7.90 6.76 0.20 0.17 12.83 11.20
Sanitary and
epidemiological welfare 9.92 23.96 0.40 0.36 - - 10.32 24.32
1 January through November.
* Without expenditures on physical culture and sports; applied and fundamental research in the field of healthcare, physical culture, and sports; other issues of healthcare, physical
culture, and sports.
Source: Federal Treasury of Russian Federation
18 <19
Expenditures on beneficiary drug coverage in 2010 amounted to about 87.95 bn RUB, which is somewhat higher than the year before (87.88 bn RUB). Expenditures on provision of essential drugs to beneficiary population categories in 2010 amounted to 43.3 bn RUB, which is 2% less than the year before; seeing that the number of benefi-ciaries went down by 13.5%, the per capita quota increased.
Spending on provision of high-cost drugs amounted to 41.6 bn RUB, plus 7.4% year-on-year. At the same time, the number of beneficiaries entitled to high-cost thera-pies significantly grew, from 52,800 to 77,100 people. The inclusion of cheaper local analogues in the list of drugs being purchased and price control helped reduce expenditures on drug purchases under the program.
In 2010, several legislative documents were adopted designed for the modernization of healthcare as a whole and drug coverage in particular.2
• A program was developed for the modern-ization of healthcare in Russia’s Federal subjects starting from 2011 (each region developing a modernization program of its own). The program provides for the improvement of the material and tech-nological infrastructure of healthcare institutions, implementation of modern information technologies and healthcare standards as well as improvement of qual-ity and availability of healthcare services in general.
• Unified approaches to healthcare and Fed-eral Healthcare Standards were adopted.
• The law “On mandatory health insur-ance” aimed at the provision of stronger guarantees for the rights of residents and improvement of quality and availability of
healthcare services was adopted.• A draft law “On fundamental healthcare
principles in the Russian Federation” was drawn up.
• A draft law “On biomedical technologies” was drawn up, regulating issues arising in connection with the development, pre-clini-cal trials, assessment, and state registration of biomedical cell technologies.
• The law “On drug circulation” was adopted.• A list of strategically important drugs, the
production of which is to be organized in Russia before 2015, was adopted.
• The List of Vital and Essential Drugs (VED) was updated.
• State regulation of VED-listed drugs was implemented.
• In 2010 vs. 2009, expenditures on essential drug coverage of beneficiary population cat-egories increased by 13.4%. As per one re-cipient, spending reached 757 RUB/month (668 RUB in 2009). There were 100,000 people in 2010 with diseases requiring high-cost treatment, against 52,800 people as of January 1, 2009.
• The minimum list of drugs for drugstores was updated to include 60 products. One of the new requirements provided for by the legislation is that if a patient comes to a drugstore for a prescribed medication and finds out that it is unavailable, such medica-tion must be delivered to the drugstore within five days.
• The rules of importing to Russia of drugs to be used for medical indications were simpli-fied.
The drug manufacture in Russia in 2010 amounted to 110 bn RUB, while drug import reached 330 bn RUB. The growth year-on-year was 13% and 18%, respec-tively, which is notably higher than in 2009 (Fig. 3).
2 Source: Ministry of Healthcare and Social Development of the Russian Federation.
“weather forecast” for
russia’s pharma
results of russia’s pharma
market development in 2010
and forecast for 2011
The Russian
pharmaceutical
market
2010
results
* Estimate
105.8 97.1110.1
249.13
280.3
330.3
+18%
+13%
+13%-8%
0
50
100
150
200
250
300
350
2008 2009 2010* 2008 2009 2010*
Drug manufacture
Bn
RU
B
-10
-5
0
5
10
15
20
Drug import
Gro
wth
, %
Fig. 3. Drug manufacture and import, Russian Federation, 2009—2010
Source: Russia’s Ministry of Economic Development; Pharmexpert — Drug import to Russia
Russi a n ph a r m a m a r ket in 2010
The main trends of the Russian pharma market in 2010 were as follows:
In the out-of-pocket sector: • VED price decrease as a result of the state
price control and the resulting decrease in prices of many non-VEDs (in order to maintain their competiveness), and the concurrent price increase of specific low-cost drugs not included in the VED list (in order to offset lost profits from VED price decrease). The notable decrease of the overall price level became one of the fac-tors of the growing drug demand. Com-bined with the general economic recovery after the 2008—2009 crisis, it resulted in a
significant market growth in real terms. In the beneficiary drug coverage sector: • decrease of the number of the ONLS (es-
sential drug coverage) program partici-pants, which resulted in a decrease of drug supplies in real terms through the basic tender;
• growth of high-cost drug supplies under the ONLS program manifested by an increase of the average price in that sector;
• increase of the number of participants of the 7VZN (7 high-cost nosologies) subprogram;
• decrease of an average price of drugs sup-plied for the 7VZN program due to price control and heavier purchases of cheaper local medications.
20 <21
In the hospital purchases sector:• decrease of purchase prices;• replacement of imported drugs by local
analogues (in specific ATC groups);• growth of high-cost drug purchases for
treating severe diseases (antineoplastics, new generation antibiotics, immunosup-pressive and diagnostic agents etc.), result-ing in a significant increase of the average drug price in the hospital sector;
• lower purchases of comparatively low-cost drugs (offset by their increase in other mar-ket sectors).
In 2010, the total size of the Russian pharma market reached 17.7 bn USD (in end-user prices), growing year-on-year by 13%
(Fig. 4). Sales in ruble terms went up just 8%. At the same time, the market grew by 9% in real terms, which is the highest rate since 2005.
Russi a n ph a r m a m a r ket
de v elopmen t for ec a st for 2011
The inertia scenario of the Russian economy
development for 2011 assumes energy prices
at the last year level and slower growth rates
of prices (6—7%), industrial output (4%),
real disposable income of the population, real
salaries, and retail turnover. The GDP growth
in 2011 is expected to reach 4.2% (Table 3).
The healthcare expenditures as planned in the federal budget amount to 371.9 bn RUB,
9.0 11.6 11.8 13.3
2.0
3.0
2.9
1.58
1.7 1.3
2.6
1.5
2007 2008 2009 2010
Sale
s, b
n U
SD
Hospital purchases
Beneficiary supplies (LLO)
Retail sales
Fig. 4. Russian pharma market growth dynamics, 2008—2010
Source: Pharmexpert — Monitoring of drugstore+hospital drug procurement and reimbursable distribution (LLO): Russia
“weather forecast” for
russia’s pharma
results of russia’s pharma
market development in 2010
and forecast for 2011
The Russian
pharmaceutical
market
2010
results
Table 3. Expected indicators of Russia’s economic development in 2011
Source: Russia’s Ministry of Economic Development
Indicator 2009 (report) 2010 (estimate) 2011 (forecast)
Average oil price (Urals. USD/bbl) 61.1 75.0 75.0
Consumer Price Index (December y-on-y, %) 8.8 8.8 6–7
GDP (%) –7.9 4.0 4.2
Industrial output (%) –9.3 7.6 4.1
Agricultural production (%) 1.2 –9.9 8.5
Investment in fixed capital (%) –16.2 2.5 9.0
Real disposable income of population (%) 2.3 4.4 3.6
Real salaries (%) –3.5 4.9 3.5
Retail turnover (%) –4.9 5.2 4.8
Export, bn USD 303.4 378.0 389.0
Import, bn USD 191.8 241.0 277.0
which is 27% higher than those in 2010 (executed budget) (Table 4).
156.8 bn RUB (39% more than in 2010) will be allocated to the Priority National Healthcare Project in 2011; 49.3 bn RUB (11% more than in 2010) will be allocated to purchas-ing high-cost drugs under the 7 High-Cost Nosologies Program; 41.3 bn RUB will be allocated for purchases under the essen-tial drug coverage program; the per capita quota will amount to 952 RUB, which is 26% higher than the year before.
The pharma industry output in 2011, accord-ing to the estimates of Russia’s Ministry of
Economic Development, will exceed the 2010 level by 6.4%.
According to the amendment to the Law “On drug circulation” adopted in September 2010, VED manufacturers will have the right to increase their drug prices if prices of the raw materials used for the production thereof have grown. Therefore, one may ex-pect an increase of VED prices in 2011 (not dramatic and controlled by the state) as well as non-VED prices (somewhat higher than in the VED group).
Besides, beginning from 2011, drugstores will lose their tax benefits (thus, the unified so-
22 <23
Table 4. Healthcare expenditures (bn RUB), 2011
* Without expenditures on physical culture and sports; applied and fundamental research in the field of healthcare, physical culture,
and sports; other issues of healthcare, physical culture, and sports.
Source: Federal Treasury of Russian Federation; Federal Law #357-FZ dated 13.12.2010 “On the Federal Budget for 2011 and the plan-
ning period of 2012 and 2013” 1
Indicator 2010 (executed) 2011
Healthcare expenditures. total* 292.2 371.9
In-patient care 194.2 211.7
Out-patient care 48.4 114.0
Emergency care 0.4 0.4
Sanatoria care 31.7 27.0
Blood and components donation, processing, storage,
and safety provision 5.9 6.2
Sanitary and epidemiological welfare 11.7 12.7
1 Adopted by the State Duma of Russia’s Federal Council on 24.11.2010.
cial tax that was equal to 14% for drugstores will be replaced by tax levies equal to 34% of their payroll; for large drugstore chains with workforce exceeding 100 people, the imputed income tax of 6% will be repealed, and VAT (12%), profit tax (22%), and as-set tax (2%) will be applied), which will increase the total tax load and result in a bigger retail markup.
Thus, the main factors affecting end-user prices in 2011 will be: 1) higher manufacturer prices growing in proportion with the raw materials price growth (probably by 5—8%) and 2) higher retail markups (by 4—6%).
Given higher prices and an increasing share of
high-cost drugs, retail sales growth in value terms will reach 16 to 21% in 2011.
Hospital purchases will grow by 15 to 22% depending on the level of high-cost drug purchases, import substitution and price dynamics in the sector.
The growth in the beneficiary drug coverage sector will be 11—13%. Such low growth rate is expected due to a decreasing number of ONLS beneficiaries in 2011. At the same time, the proportion of high-quality, effec-tive, costlier drugs in the overall supplies will rise.
In total, the Russian pharma market is expected to grow by 15—21% (Fig. 5).
“weather forecast” for
russia’s pharma
results of russia’s pharma
market development in 2010
and forecast for 2011
The Russian
pharmaceutical
market
2010
results
Fig. 5. Russia’s pharma market growth indicators (USD, end-user prices), 2011
Source: Pharmexpert
17
20
-3
29
21
1315
-5
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011
Gro
wth
, %
OptimisticRealistic
Pessimistic
77
5
7
5
20
-3
29
21
17
20
1713
15
24 <25
summary
of most
important
events
in russia’s
pharma market
IV.
The Russian
pharmaceutical
market
2010
results
SIA International purchases 25 % of stocks of Apteki 36.6 Drugstore Chain for $ 30–50 mn1
Rapharma announces construction of an antibiotics and antineoplastics plant in Lipetsk region. Investment: USD 88 mn
Yu. Gaisinsky, Pharmcomplect CEO, acquires 74 % of stocks of Nizhniy Novgorod Drugstore Chain for USD 15 mn
Berlin-Chemie AG and Kaluga regional administration sign an investment agreement on a pharma plant con-struction. Investment: USD 40 mn
Samson-Med announces construction of a plant in St. Petersburg pharma cluster. Investment: USD 30–50 mn
january ∧ march ∧ may ∧
february ∨ april ∨ june ∨Oriola-KD purchases remaining 25 % of
stocks of Foreti Oy (managing com-pany of retailer Vitim (Staryj lekar Drugstore Chain) and wholesaler Moron) for USD 95 mn
Biocad announces construction in St. Petersburg of a plant to manufacture APIs and monoclonal antibody drugs. Investment: USD 20 mn
Geropharm invests USD 33 mn in a pharma plant construction in St. Petersburg
State regulation of maximum drug selling price markups for retail and wholesale companies comes in force pursuant to Russia’s Government Order # 2135-r dated 30.12.2009
Protek Group raises ca. USD 400 mn as a result of its IPO
Pharmstandard purchases 11.3 % of Grindeks stocks later resold to an investment company. Investment: USD 14–16 mn
Sanofi-Aventis launches its manu-facture in city of Oryol on Bioton Vostok’s site purchased in late 2009 for USD 40 mn
Nycomed launches construction of a plant for manufacturing sterile solu-tions and solid drugs in Yaroslavl region. Investment: USD 100 mn
1 Expert estimation.
26 <27 summary of most
important events
in russia’s pharma market
26 <27
The list of strategically important drugs to start being manufactured locally before 2015 was approved pursu-ant to Russia’s Government Order # 1141-z
Novo Nordisk purchases a site for an insulin plant construction in Kaluga region. Investment: USD 80–100 mn
Diod raises ca. 300 mn RUB following its IPO
Federal Law # 61-FZ «On Drug Circula-tion in Russian Federation» comes in effect on 01.09.2010
Pharm-Sintez launches construction of a full-cycle plant for manufacturing cancer and diagnostic agents using its own APIs. Investment: USD 13 mn
R-Pharm and Novartis Pharma an-nounce a strategic partnership that will result in manufacturing Novar-tis Pharma multiple sclerosis drugs at R-Pharm’s site
Vertex launches construction of a new plant in St. Petersburg as a result of its extended portfolio. Investment: USD 30–40 mn
Russia’s Government Order # 694 cancels state regulation of wholesale and retail markups to selling prices of non-VED drugs and medical devices
Binnopharm and GlaxoSmithKline ally for organizing manufacture of specific vaccines in Russia, including first combination vaccine for prevent-ing six infections
RIA Panda voices its intent to build a finished drug plant in Leningrad region. Investment: USD 45 mn
EVER Neuro Pharma plans to build a drug packaging plant in St. Peters-burg pharma cluster. Investment: USD 3.5 mn
Federal Law «On Mandatory Health Insurance in Russian Federation» is signed that empowers a patient with choice of insurance company, clinic, and doctor
Pharmsintez makes its IPO, the first public offering of stocks of a Russian life science company
july ∧ september ∧ november ∧
august ∨ october ∨ december ∨Pursuant to Russia’s Government Order
# 650, the scope of responsibility was revised for Minzdravsotsrazvitiya, Roszdravnadzor, Minpromtorg. Minpromtorg will license drug manufacture; Roszdravnadzor will control preclinical and clinical trials, quality, manufacture, and other drug circulation stages; Minzdravsotsraz-vitiya will be in charge of drug registration
Akrikhin signs agreements with Emcure Pharmaceuticals Ltd and Celon Pharma Ltd to include anti-HIV / AIDS drugs in its portfolio
Minzdravsotsrazvitiya order # 805-n approves a new list of minimum admissible drug range for medical aid
Russia’s Government Order # 1660-r approves Federal Target Program for Russia’s Pharma Industry Develop-ment till 2020 focused on supporting local manufacturers and import sub-stitution. Investment: USD 5 675 mn
Novartis announces a plant construc-tion in St. Petersburg pharma cluster. Total 5-year investment: USD 500 mn
R-Pharm and Hemogenomics Insti-tute make a research agreement for developing technologies for manufac-turing import substituting APIs. Total investment: USD 17 mn
Pharmasintez and Naprod Life Sci-ences ally for a cancer generics plant construction in St. Petersburg. Investment: USD 55 mn
The Russian
pharmaceutical
market
2010
results
28 <29
imports reached
pre-crisis level
in value terms
V.
The Russian
pharmaceutical
market
2010
results
In 2009, the euro was the main currency used in payments for drug imports (46.0%; Fig. 2). The US dollar was also in high de-mand as a payment tool (28.4%). However, positions of these currencies in 2010 were considerably shattered, and the ruble took over as the main means of payment: the share of that currency in the drug import payment structure grew from 25.0% in 2009 to 51.4% in 2010. In turn, the shares of payments in EUR and USD decreased to 34.5% and 13.9%, respectively.
OTC drug imports significantly increased to boost their share in the overall import from 23.7%1 in 2009 to 27.2% in 2010 in value terms and from 52.0% to 53.0% in real terms (Fig. 3). Notably, the fall of ship-ments in 2009 caused by the economic crisis affected the OTC segment most of all.
Drug imports to Russia in 2010 totaled 2.0 bn
units (10.8 bn USD; Fig. 1). Imports grew year-
on-year 25% in USD, 29% in EUR, and 17% in RUB.
The sector growth in real terms was 8%.
drug import
to russia
10.0 8.9 10.8
+25%
–11%
0.0
2.0
4.0
12.0
10.0
6.0
8.0
2008 2009 2010
a) In value terms
Bn
USD
b) In real terms
Bn
unit
s
2.4 1.9 2.0
+8%–21%
2008 2009 2010
0.0
0.5
1.0
1.5
2.0
2.5
Fig. 1. Drug import to Russia, 2008—2010
Source: Pharmexpert — Drug import to Russia
1 Hereinafter, without Customs Warehousing data.
30 <31 imports reached pre-crisis
level in value terms
drug import to russia
2009 20102009 2010
46.0
28.4
25.0
0.6
34.5
13.9
51.4
0.2
28.4
Impo
rt s
har
e, %
Import share, EUR
Import share, USD
Import share, RUB
Import share, other currencies
Exchange rate EUR:RUB
Exchange rate USD:RUB
0
20
40
60
80
100
120
25.0 51.4
50
10
30
20
40
50
60
Cu
rren
cy e
xch
ange
rat
e to
RU
B
Fig. 2. Split of different currencies in structure of payments for drug imports to Russia, 2009—2010
Source: Pharmexpert — Drug import to Russia; CB of RF
23.7 27.2 52.0 53.0
2009 2010 2009 2010
In value terms In real terms
OTC
Rx
76.3 72.8 47.048.0
Fig. 3. Split of Rx and OTC drugs in total imports to Russia, 2009—2010
Source: Pharmexpert — Drug import to Russia
The Russian
pharmaceutical
market
2010
results
12
–18
3
–12
11
–16
29
–12
10
31
–12
3
17
–2
–15
22
Impo
rt s
har
e, %
Shar
e gr
owth
, %
2
0
4
6
8
10
12
14
20
18
16
–20
–30
–10
0
10
20
30
40
JA L R C N M G B D S H K T V P
Share growth, 2010/2009
Group share growth, 2010
12
–188
3
–12
11
–16
29
–12
10
31
–12
33
17
–2
–15
22
A — Alimentary tract and metabolismL — Antineoplastic and immunomodulating agentsR — Respiratory systemC — Cardiovascular systemJ — General anti-infectives systemicN — Nervous systemM — Musculo-skeletal systemG — Genito-urinary system and sex hormonesB — Blood and blood forming organsD — DermatologicalsS — Sensory organsH — Systemic hormonal preparations, excl. sex hormones K — Hospital solutions T — Diagnostic agents V — Various P — Parasitology
Fig. 4. Split of 1st level ATC groups1 in total drug imports to Russia, 2009—2010
Source: Pharmexpert — Drug import to Russia
1 Hereinafter, ATC EphMR A classification.
Therefore, we observe a manifest recovery of demand for imported drugs in 2010.
Traditionally, Group A “Alimentary tract and metabolism” accounted for the largest im-port share in value terms (17.8%; Fig. 4), whereas Group R “Respiratory system” boasted for the largest share in real terms (22.7%). The highest growth rate was demonstrated by Group T “Diagnostic
agents” (+31%), its share reaching 0.5% in total drug imports in value terms in 2010. Group S “Sensory organs” also demon-strated a high share growth rate, both in value and real terms (+29% and +23%, respectively).
The rating of the TOP25 trademarks imported to Russia is mostly made of drugs selling mainly in the out-of-pocket sector: specifi-
32 <33 imports reached pre-crisis
level in value terms
drug import to russia
cally, viz. 16 trademarks out of 25 (Table 1). The beneficiary drug coverage (LLO) sector is represented by the 7 Nosologies and ONLS segment drugs (4:4).
Ten new participants joined the TOP25 trade-mark rating in 2010. In particular, of note
is Nurofen that demonstrated the largest share growth, which promoted it from rank 71 straight to rank five.
The three leaders of the trademark rating were Glivec and Mabthera purchased under the 7 Nosologies program as well as hepatopro-
Table 1. ТОР25 trademarks by imports to Russia, 2010
R ank Trademark
Main pharma market sales
channel1
Share in total imports, (%,
USD)
Share growth
(%, USD), 2010/2009
2010 2009 2010 2009
1 3 Glivec 7 Nosologies 1.69 1.48 14
2 10 Essentiale Out-of-pocket 1.06 0.74 44
3 4 Mabthera 7 Nosologies 1.00 1.10 –10
4 15 Concor Out-of-pocket 0.84 0.61 39
5 71 Nurofen Out-of-pocket 0.82 0.30 178
6 11 Lantus ONLS 0.70 0.70 1
7 32 K aletra Out-of-pocket 0.68 0.45 53
8 29 Alflutop Out-of-pocket 0.68 0.45 50
9 12 Pegasys ONLS 0.66 0.68 –3
10 2 Octanate 7 Nosologies 0.63 1.73 –63
11 22 No-spa Out-of-pocket 0.63 0.54 17
12 30 Sumamed Out-of-pocket 0.62 0.45 38
13 43 Linex Out-of-pocket 0.62 0.38 63
14 14 Seretide ONLS 0.59 0.64 –9
15 27 Mezym forte Out-of-pocket 0.56 0.46 21
16 44 Amoxiclav Out-of-pocket 0.54 0.36 49
17 38 Combivir Hospital 0.53 0.39 35
18 24 Actovegin Out-of-pocket 0.52 0.49 6
19 17 Humulin ONLS 0.52 0.59 –11
20 5 Copaxone 7 Nosologies 0.52 0.90 –43
21 96 Tropicamide Out-of-pocket 0.51 0.22 131
22 20 Movalis Out-of-pocket 0.51 0.56 –9
23 33 Mildronate Out-of-pocket 0.48 0.44 10
24 8 Heptral Out-of-pocket 0.48 0.75 –36
25 7 Viagra Out-of-pocket 0.47 0.82 –43
TOP25, total 16.86 16.23
Source: Pharmexpert — Drug import to Russia
1 The main sales channel accounts for more than 70% of any given TM
in total sales in Russia as of 2010.
The Russian
pharmaceutical
market
2010
results
tector Essentiale selling mainly at drugstores.The rating of the TOP10 trademarks not
imported before 2010 includes Rx drugs only (Table 2). The leader of this rating is Extavia (0.41% of total imports), a Group L03 “Immunostimulators” drug. The total share of the ten imported newcomers reached 0.96% in 2010 (to compare, 0.55% in 2009).
Sanofi-Aventis leads the manufacturer rating by its total imports share (7.9%) in value terms (Table 3). With trademarks Glivec and Extavia leading the ratings above, Novartis came in second with a 7.8% share. Grow-ing supplies of Prostamol uno, Fastum gel,
Espumisan, Iodomarine, and Mezym forte pushed Berlin-Chemie/Menarini up to the third place (4.8%).
The biggest share growth in total imports among pharma corporations was demon-strated by Astellas Pharma Inc (183%).
Aventis Pharma ZAO, the Russian representa-tive office of Sanofi-Aventis, ranks first among the importers (6.6% of total imports in value terms; Table 4). The former lead-ers Protek (5.55%) and SIA International (5.2%) gave way to Aventis Pharma but remained among the three best importers of 2010. Their respective shares decreased by 17% and 22%.
Table 2. ТОР10 trademarks first imported to Russia in 2010
Rank among
newcomers,
2010 Trademark Corporation INN OTC / Rx
2nd
level ATC
group
Total imports share
(%, USD)
1 Extavia Novartis interferon beta-1b Rx L03 0.412
2 Genfaxon
Teva Pharmaceutical
Industries Ltd interferon beta-1a Rx L03 0.177
3 Poliorix GSK poliomyelitis vaccine Rx J07 0.066
4 Rifapex Lupin Laboratories Ltd rifapentin Rx J04 0.055
5 CAPD/DPCA Fresenius AG
peritoneal dialysis
solutions Rx K06 0.052
6 Vectibix Amgen Europe B.V. panitumumab Rx L01 0.052
7 Victose Novo Nordisk liraglutide Rx A10 0.050
8 Temomid Jodas Expoim Pvt. Ltd temozolomide Rx L01 0.038
9 Nplate Amgen Europe B.V. romiplostim Rx B02 0.031
10 Remedia Simpex Pharma Pvt. Ltd levofloxacin Rx J01 0.029
TOP10, total 0.962
Source: Pharmexpert — Drug import to Russia
34 <35 imports reached pre-crisis
level in value terms
drug import to russia
The biggest share growth among the importers was demonstrated by the Russian representa-tive office of Eli Lilly, Lilly Pharma (+269%),
which significantly increased supplies of drugs used in diabetes (Humulin, Humalog, Byetta) and a number of other drugs.
Table 3. ТОР25 corporations by total drug imports share in Russia, 2010
R ank Corporation Total imports share (%. USD)
Share growth
(%. USD). 2010/2009
2010 2009 2010 2009
1 1 Sanofi-Aventis 7.94 6.94 14
2 2 Novartis 7.82 6.60 18
3 5 Berlin-Chemie / Menarini 4.76 3.95 21
4 9 GSK 3.97 3.32 19
5 6 Abbott 3.93 3.89 1
6 3 Roche 3.93 4.48 –12
7 10 Teva Pharmaceutical Industries Ltd 3.83 3.27 17
8 13 Nycomed 3.21 2.38 35
9 7 Merck Sharp and Dohme 2.95 3.77 –22
10 8 Gedeon Richter 2.87 3.59 –20
11 14 AstraZeneca 2.69 2.35 15
12 12 Boehringer Ingelheim 2.67 2.90 –8
13 18 Pfizer 2.29 2.14 7
14 11 Bayer Healthcare 2.27 2.96 –23
15 15 Krka 2.08 2.34 –11
16 20 Dr. Reddy’s 1.73 1.64 6
17 4 Janssen-CILAG 1.64 4.26 –61
18 19 Novo Nordisk 1.63 1.86 –12
19 40 Astellas Pharma Inc 1.51 0.53 183
20 21 Egis 1.42 1.63 –13
21 22 Eli Lilly 1.30 1.38 –6
22 28 Ropharm 1.23 0.72 72
23 38 Reckitt Benckiser Healthcare 1.23 0.55 122
24 33 Actavis 1.07 0.62 72
25 16 Octapharma AG 1.04 2.18 –52
TOP25, total 71.01 70.25
Source: Pharmexpert — Drug import to Russia
The Russian
pharmaceutical
market
2010
results
Conclusion: The significant slump in imports
in the crisis year of 2009 ended in 2010.
The market partly recovered reaching the
pre-crisis level and exceeding the 2008 import
rate in value terms, but manufacturers
and importers have yet to achieve the pre-
crisis rate in real terms. Also of note is the
consolidation of the status of the Russian ruble
as the main means of payment. Ceteris paribus,
the trends of the year past will logically
continue into 2011.
Table 4. ТОР25 importers by drug imports to Russia, 2010
R ank Importer Share in total imports (USD, %)
Share growth
(USD, %), 2010/2009
2010 2009 2010 2009
1 3 Aventis Pharma ZAO 6.58 5.50 20
2 1 Protek CV ZAO 5.55 6.71 –17
3 2 SIA International Ltd ZAO 5.19 6.66 –22
4 5 Novartis Pharma ZAO 4.32 3.39 28
5 6 R-Pharm ZAO 4.05 2.99 35
6 10 GlaxoSmithKline Trading 3.55 2.51 42
7 19 Lek ZAO 3.45 2.03 70
8 11 Galena Pharma OOO 3.38 2.49 36
9 12 Nycomed Distribution Center TOO 3.17 2.41 32
10 21 Berlin Pharma ZAO 3.12 1.93 62
11 8 Rosta ZAO 3.05 2.86 6
12 9 Orfe ZAO 2.82 2.62 8
13 4 K atren NPK ZAO 2.76 3.51 –21
14 13 AstraZeneca Pharmaceuticals 2.69 2.35 15
15 18 Pfizer 2.34 2.11 11
16 28 Bayer ZAO 2.33 1.20 94
17 24 Solvay Pharma OOO 2.17 1.80 21
18 7 Pharmaceutical Import. Export 2.15 2.91 –26
19 17 Johnson&Johnson Inc 1.99 2.16 –8
20 15 Alliance Healthcare (Apteka Holding ZAO) 1.79 2.25 –20
21 25 Dr. Reddy’s Laboratories OOO 1.73 1.63 6
22 23 Novo Nordisk 1.63 1.85 –12
23 39 Astellas Pharma ZAO 1.53 0.53 186
24 29 Krka Pharma OOO 1.29 1.17 10
25 53 Lilly Pharma 1.26 0.34 269
TOP25, total 73.89 65.91
Source: Pharmexpert — Drug import to Russia
36 <37
industrialization
in a separate
industry
VI.
The Russian
pharmaceutical
market
2010
results
Just a year ago, in 2009, positive dynamics of the local product market share was secured, to a great extent, by a jump in local antiviral drug sales due to the fears of an A/H1N1 flu (dubbed “swine flu” by the media) epidemic. It so happened that in the sphere of virology Russian companies were able to effectively compete with foreign firms. Rushed demand for such drugs resulted in a tangible growth of local drug sales on the market. As of 2010, antivirals also rank second by produc-tion size in the ATC group rating (Table 1).
In 2010, the out-of-pocket segment gave way to government purchases as the main driver of the local pharma production growth, or, to be more exact, to the beneficiary drug coverage segment and, to a smaller extent, to the hospital segment. Here, a number of potential local blockbusters appeared all at once that put a considerable pressure on their foreign competitors. In particular, Coagil VII (Lekko) became second accord-ing to purchases for the nosological group of
The past year can be well regarded as a certain
milestone in the evolution of Russia’s pharma
manufacturers. Firstly, drug production demon-
strated an unprecedented growth: local facto-
ry output amounted to 4.19 bn USD in 2010 sur-
passing that of 2009 by 39% (Fig. 1). Secondly,
the domestic pharma industry secured a long-
awaited financial foundation for its develop-
ment strategy in the form of the Federal Target
Program “Development of the Pharmaceutical
and Medical Industry of the Russian Federation
for the Period till 2020 and beyond”, which pro-
vides for the allocation of an unprecedented
sum of 122.9 bn RUB to support Russian pharma
companies. And thirdly, the overall market
share of local pharma products demonstrated
an uptrend having grown by 22.2% in 2010.
pharmaceutical
industry development
in russia
19.8
21.5
30.023.1
14.9
25.118.9
1.09 0.90 1.07 1.30 1.69 2.08 2.39 2.99 3.01 4.19
Industrial output, bn USD
Growth y/y, %
bn U
SD
2001
0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
2002 2003 2004 2005 2006 2007 2008 2009 2010
19.8
21.5
30.023.1
14.9
25.118.9
0.6
39.3
-17.4
%
-40
-30
-20
-10
0
10
20
30
40
50
Fig. 1. Russia’s pharmaceutical manufacturing dynamics, 2001—2010
Source: Russia’s Ministry of Industry and Trade (Minpromtorg)
38 <39
Hemophilia; Ronbetal (Biocad) accounted for almost 10% of the multiple sclerosis bud-get; Rastan (Pharmstandard) became the undisputed leader in the nosological group of Hypophyseal dwarfism.
That said though, the fate of local drugs in the sphere of government purchases is far from rose-colored; in particular, Biocad appealed to the Federal Antitrust Service (FAS) several times complaining of competition constraints. The company had faced the situation where in a number of cases, the so-called lot bundling took place when drug purchase auctions were announced: several drugs were bundled together in a single lot; as a result, manufacturers that did not have all the listed drugs in their portfolios could not take part in the auction. Importantly, an auction in Moscow was cancelled after one of the complaints by Biocad to the FAS; the company was able to take part in the tender, with the budget saving 90% of the initial price. Certainly Biocad is not alone to en-
counter problems in the field of government purchases. The story of Milanfore (Pharm-Sintez) registration certificate suspension drew public attention in the market; but almost two years on, the company is still in court. Certainly, lot bundling is just one example of competition restriction in gov-ernment purchases. Such restrictions can be imposed for many formal reasons: avail-ability of a wholesaler license; ungrounded requirements to packaging, dosage etc. Of course, the problem of corruption in the sphere of government purchases cannot be resolved at once. Certain efforts by the State in this field are not commensurate with the scale of the problem by far, and while relevant amendments to the applicable leg-islation are being made, the hopes are with the companies’ perseverance in fighting for their rights.
Still, in the middle of last year Russia’s Gov-ernment approved, by its Order #1141-r dated 06.07.2010, a list of 57 strategically
industrialization
in a separate industry
pharmaceutical industry
development in russia
Table 1. ТОР10 2nd level АТС groups (EphMRA) by production size in Russia in value and real terms, 2010
R ank АТС group
Share, total drug production in Russia (%)
In value terms In real terms
1 J01 — Systemic antibacterial 7.05 12.80
2 J05 — Antivirals for systemic use 6.39 1.40
3 J07 — Vaccines 5.94 1.41
4 L01 — Antineoplastics 5.07 0.09
5 N06 — Psychoanaleptics excluding anti-obesity preparations 4.63 2.23
6 L03 — Immunostimulating agents 4.19 0.85
7 K01 — Intravenous solutions 3.56 6.06
8 N02 — Analgesics 3.42 12.47
9 D08 — Antiseptics and disinfectants 3.04 5.04
10 R05 — Cough and cold preparations 3.01 4.60
Source: Pharmexpert — Drug manufacture in Russia
The Russian
pharmaceutical
market
2010
results
important drugs; their manufacturing facili-ties must be localized in Russia before 2015. The development of a number of drugs on the approved list will be subsidized by Minpromtorg; tenders for the development and upscaling of technological processes had been held by Minpromtorg before the list was formally approved. The list of companies to receive subsidies includes the Institute of Bioorganic Chemistry RAS, ChemRar, Pharmsintez (St. Petersburg), Binnopharm etc. Minpromtorg is not the only organization that provides funding for the development of import substitut-ing drugs; a number of projects aimed at developing technologies of mass production of specific drugs on the “list of 57” are being funded via the Commission for the Mod-ernization and Technological Develop-ment of Russia’s Economy under the aus-pices of Russia’s President. The register of projects of the working group that oversees medical technologies and pharmaceuticals, as of this writing, included 20 projects, with 11 related to the pharma industry. Projects of such companies as Generium, Biocad, Bioprocess, and R-Pharm are represented in the register.
By the way, there are not only generics among the projects of the President’s Commission but also innovative products.
Pharmstandard leads Russia’s pharma market by production size (Table 2). It mostly deals with OTC drugs; however, this manufactur-er has been actively building its Rx port-folio lately: some years back, the company marketed Rastan that had been developed at the Institute of Bioorganic Chemistry RAS. Presently, the company cooperates with Lekko within the biotechnological project Generium. It became known last March that the company had applied for the registration of two biosimilars, viz. Innona-factor (coagulation factor IX) and Infibeta (interferon beta-1b).
Among the largest local manufacturers of 2010, there are Russia-based companies of foreign origin and companies working in strategic partnership with foreign manufacturers, in particular STADA CIS, Akrikhin, Krka RUS, and Gedeon Richter RUS. It should be noted that field-specific foreign inves-tors have been actively building their own production base in the territory of the Rus-sian Federation; besides the above projects, subsidiaries of such companies as Servier, Sanofi-Aventis, Actavis etc. are currently operating in Russia. Moreover, several greenfield projects are underway: in par-ticular, in April 2011, AstraZeneca started construction of its own facility; construction of Nycomed and Berlin-Chemie’s facilities have been underway for some time; Novar-tis has made a decision to start construction of a production facility and, more interest-ingly, an R&D center. Field-specific inves-tors also consider an acquisition of the exist-ing facilities, although factories meeting modern requirements to pharma production are virtually nonexistent.
At the same time, certainly not all pharma companies are prepared for long-term investments in construction or acquisition of the existing facilities in Russia. Evidently, companies take such steps hoping to get certain preferences regarding their market access as well as reduce logistic costs. But the contemplated investment is not always commensurate with the profit expected. Under such conditions, contract or joint manufacturing may become effective, and there are many such projects in the Russian market now. Several options are possible here: transfer of a number of production operations to Russia, full-cycle production and even licensing by Russian companies of the rights to manufacture and market drugs of foreign origin; in the latter case, the Russian company in question will pay royalty to its partner. The examples of So-
40 <41
tex, Pharmstandard, Veropharm etc. are typical with regard to the latter option. For example, Binnopharm has been actively building its portfolio by entering into an agreement with GSK in late 2010 to localize manufacturing of a number of vaccines, and announcing a strategic partnership with UCB Pharma in April 2011.
Generally speaking, the issue of the Russian pharma industry development is not so much about the infrastructure, i.e. construc-tion of facilities proper, as about the lack of
competitive products that can be success-fully marketed. Up till now, the second rank in the rating of trademarks by production size has been retained by Sodium chloride (Table 3); an indisputably in-demand prepa-ration, but essentially testifying to the fact that Russian companies have not succeeded in creating truly significant brands. Only Ar-bidol was able to compete with Sodium chlo-ride in terms of production value in 2010. That said, one should acknowledge that the TM rating has changed considerably over the
Table 2. ТОР20 corporations by production size in Russia in value and real terms, 2010
R ank Manufacturer
Share, total drug production in Russia (%)
In value terms In real terms
1 Pharmstandard 14.95 14.26
2 STADA CIS 5.14 2.74
3 Valenta 4.94 2.34
4 Microgen NPO 4.50 1.94
5 Veropharm ZAO 4.07 1.21
6 Pharm-Center 3.79 10.25
7 Sotex 2.98 0.43
8 Akrikhin 2.96 1.12
9 Krka RUS 2.83 0.60
10 Biotec OOO 2.70 8.54
11 Petrovax Pharm 2.04 0.37
12 RosBio 1.98 0.69
13 Ozon 1.70 3.41
14 Gedeon Richter RUS 1.69 0.34
15 Biocad 1.67 0.09
16 Moskhimpharmpreparaty 1.66 3.86
17 Escom 1.59 2.66
18 Polysan 1.42 0.22
19 Abolmed 1.33 0.31
20 Altayvitaminy ZAO 1.27 1.49
Source: Pharmexpert — Drug manufacture in Russia
industrialization
in a separate industry
pharmaceutical industry
development in russia
The Russian
pharmaceutical
market
2010
results
last several years: Hawthorn tincture, Validol and some other traditional preparations are no longer there. Moreover, the rating has included a number of original Russian in-novations and modern biogenerics.
In turn, the issue of building portfolios of local companies based on promising drug is not so much about the lack of R&D as about commercialization of the existing projects. In this respect, the Russian pharma industry is objectively in need of an R&D-to-produc-tion transfer institution. In a number of
countries, that function is performed by all kinds of private and public investment funds; for example, there are over 100 such organizations in Germany. In Russia, venture investors can be counted by finger; most such investments, therefore, is made by the State. Such entities can be men-tioned in this context as ROSNANO Corp., Skolkovo, Russian Venture Company and several others; private capital is also present but rather as individual efforts than systematically.
Table 3. ТОР20 trademarks by production size in Russia in value and real terms, 2010
R ank Trademark
Share, total drug production in Russia (%)
In value terms In real terms
1 Arbidol 3.61 0.76
2 Sodium chloride 2.48 4.28
3 Grippol 1.81 0.56
4 Pentalgin 1.46 0.80
5 Chlorhexidine 1.31 0.39
6 Grippol plus 1.24 0.31
7 Complivit 1.11 0.39
8 Viferon 0.96 0.27
9 Mydocalm 0.91 0.17
10 Ethyl alcohol 0.87 0.50
11 Terpincodum 0.86 0.18
12 Glucose 0.82 1.58
13 Phenotropil 0.81 0.04
14 Imovax 0.81 0.13
15 Ronbetal 0.79 0.01
16 Cefazolin 0.76 2.52
17 Coagil VII 0.76 0.0004
18 Phenazepam 0.75 0.29
19 Amixin 0.75 0.05
20 Immunoglobulin 0.73 0.08
Source: Pharmexpert — Drug manufacture in Russia
42 <43
The efforts made to market innovative drugs provide for expecting growth of the pharma industry’s export potential, too. The share of exports in 2010 was just 7% of the total drug output in Russia. It is under-standable as most CIS countries (effec-tively, the main export markets for Russia’s pharmaceuticals) have generic production facilities of their own; only innovative products or biosimilars of truly unique (hard to reproduce) preparations may be successful in such countries. Still, the main problems Russian companies face with re-gard to export are in the field of marketing and sales; very few Russian companies are prepared to adequately fund that sphere. With regard to drug export volumes and structure, positive changes are also to be expected on part of foreign companies building production facilities of their own in Russia; the relevant provisions of Federal Law #61-FZ dated 12.04.2010 “On Drug Circulation” do not prohibit manufactur-ing drugs not registered in Russia provided they are exported.
Besides the above problems, the Russian pharma industry also faces such large-scale problems as high raw material dependency. Most APIs are imported, their main suppli-ers being Chinese companies controlling about 40% of the market. In Russia, only a limited number of companies produce API on mass scale (in fact, not more than 15 as of 2010). Biotec is the leader in 2010 by production in value terms; the runner-up is
Samson-Med specializing in the production of biologically active ingredients of natural origin. Polisintez, Troitsk Iodine Plant, and Bion follow after them. All those companies manufacture a limited list of substances (2-10 names). There is also a group of manufacturers (mostly oriented to innova-tive production) that produce APIs for their own needs, more often than not on a lab and not on mass scale. API production in Russia may also be considered a problem because their cost takes a significant share in the overall drug production cost structure; therefore, it is but natural that any fluctua-tions on the Forex market result in the drug price changes for the end user, the fact that was visible in 2009 during the economic crisis. Besides the social aspect, there is also that economic: modern API production is a highly profitable business that employs technological and intellectual potential of other industries, in particular chemical and machine-building branches.
When analyzing the situation as it evolved since the start of work on the local pharma industry development strategy, certain unmeant analogies with the industrializa-tion period in the USSR of the 1930s come to mind. At that time, the Soviet Union accomplished a truly unprecedented break-through, which transformed an agrarian country into a major industrial power. Many industrial and infrastructural facili-ties form the foundation of the Russian economy up to this time.
industrialization
in a separate industry
pharmaceutical industry
development in russia
The Russian
pharmaceutical
market
2010
results
Conclusion: Today, the country’s economy as
a whole and the pharmaceutical industry in
particular face a challenge no less ambitious
than the one the State had to resolve 80 years
ago. Under the existing economic model, the
development of Russia’s pharma production is
necessary from different viewpoints: social
(drug price control, taxes and jobs), national
security, tackling global economic tasks with
regard to diversification of the economy. The
ambitiousness of the plans comprised in the
Pharma-2020 Strategy remains a subject of
discussions up till now; nevertheless, a window
of opportunities has opened for businesses,
which promises an unprecedented capitalization
growth. That fact puts pharma production
among the most attractive industries for
investment in Russia.
44 <45
time of unrealized
apprehensions
and realized
predictions
VII.
CU M U L AT I V E
R AT ING OF RUSSI A N
PH A R M ACEU T IC A L
DIST R IBU TOR S
distributors
The past year brought about many changes associated with state initiatives
in the sphere of pharmaceutical market regulation. The post-crisis en-
vironment inspired many hopes and brought along many hardships that
were energetically confronted by the wholesale sector. Many legislative
initiatives, including drug price markup regulation, made a great impact on
the pharmaceutical distributor business. Other initiatives made indirect
impact rather than direct, but nevertheless set a certain trend in the dis-
tribution business development.
Each company has a story of its own: some started out with computer trade
and became pharma distributors only later; others had supplied drugs to
various state structures before they began cultivating the commercial
market. Such metamorphoses are not accidental in most cases, and the
events of 2010 gave a boost, to a certain extent, to the “origin of species”
with wholesale companies as forefathers.
The Russian
pharmaceutical
market
2010
results
cumulative rating
of russian pharmaceutical
distributors: compilation
methods
The system of drawing up a Cumulative Rating of Russian Pharmaceutical Distributors is based on streamlining of participants by 9 categories. It consists of two parts, viz.
• Criteria for streamlining distributors by rating categories;
• Calculating an aggregate index for rank-ing companies inside the categories.
The cumulative rating is based on weight coefficients as well as on comparison vs. similar previous periods of gross and direct sales indices, the number of customers, product range entries, subsidiaries and branches and their development dynamics. Since 2007, this rating also embraces the compa-
nies that have been given an expert evaluation.
Cr iter i a for str e a mlining
distr ibu tor s by r ating
c ategor ie s
A company is to be included in a rating category in accordance with threshold indices represented in Table A:
• Sales (in value; for F3 category it is the only threshold index);
• Number of branches/subsidiaries (F1 and F2 categories);
• Number of Federal Districts where the company’s certified warehouses are located (F1 and F2 categories).
The sales dynamic index is calculated
distributors
Table A. Threshold indices for categories F1-F3
Index F1: National distributors F2: Interregional distributors F3: Regional distributors
Subcategory, category F1-А F1-B F1-C F2-A F2-B F2-C F3-A F3-B F3-C
Gross sales, mn RUB, on
average per month for period
under study 6000 3000 1500 600 300 200 120 80 ≤80
Number of affiliates /
branches 15-20 5 -
Number of federal districts
where company has certified
warehouses 6-7 2 -
46 <47 time of unrealized
apprehensions and realized
predictions
cumulative rating
of russian pharmaceutical
distributors
monthly according to the sales infor-mation provided by distributors. The index characterizing the distributor sales dynamics in the period since the year’s beginning is published once a quarter.
R a nking compa nie s inside F1-F3
c ategor ie s
Inside each category, the companies are ranked relative to an aggregate index calculated on the basis of a monthly questionnaire filled out by participating companies. Each of quantitative and dy-namic indices of a company’ activity has
its own weight and affects the aggregate index’s value.
The company’s rank is calculated in for stages:
1. The company’s indices values are ranked relative to maximum indices in the category.
2. The company’s relative indices are calculated by way of multiplying the ranked indices by the weight values (Table B).
3. An aggregate index is calculated as a sum of relative indices for the company.
4. The companies are ranked inside the cat-egory according to the aggregate index.
Источник: Фармэксперт Аналитика и Консалтинг — Методика определения категорий
Совокупного рейтинга фармацевтических дистрибьюторов 1st of Pharmacia
Table B. Weights of indices used to determine monthly ranks of companies included into Cumulative Rat-ing of Russian Pharmaceutical Distributors
Index group
Weight, % (for determining
ranks inside category)
F1-F2 F3
Economic indices
Sales, mn RUB 50 65
Direct sales (in value) to drugstores and hospitals 10 10
Number of branches/subsidiaries/representative offices 5 1
Product range, number of items on the pricelist 5 5
Number of customers (drugstores, hospitals, and clinics) 2 2
Strategic development indices (including dynamic indices)
Number of Federal Districts where the company’s certified warehouses are located 10 -
Sales dynamics (1)
(in value) 10 10
Product range dynamics (2)
2 2
Dynamics of the number of branches/subsidiaries/representative offices 1 -
Customer number dynamics (drugstores, hospitals, and clinics) (3)
5 5
Aggregate index 100 100
1 Month-on-month to previous year.2 Determined according to the average number of items on the pricelist in the period under analysis (month) in month-on-month comparison with previous year. 3 Determined according to the number of customers (drugstores including drugstore chains, healthcare and prophylactic institutions) supplied by the company
during the month under analysis.
The Russian
pharmaceutical
market
2010
results
To step away from the fa ll
In the classical three-sector economic model, distributors rank the highest, i.e. in the service sector. However, wholesalers have channeled a significant portion of generated profits to the diversification of their main activities for a long time. In particular, notable efforts were made by a number of companies striving to make a shift to the real economy sector, i.e. pharmaceutical manufacturing. External in-fluences, including changes in the legislative base, have given this process a major boost.
For a short illustration, let us look at an eloquent example, which partly explains the desire of service companies to cement their interests in the manufacturing sphere.
In spring 2010, the Russian market saw a milestone event: the biggest Russian pharma distributor Protek held an IPO. The event was doubly important: first, because Protek became the first Russian wholesaler to enter the public stock market, and second, the company was among those first to do it after the crisis year 2009, triggering a wave of positive sentiment in the market. However, the company’s capitalization has considerably declined since the IPO: at the MICEX, the stock was quoted at about 65 RUB as of December 30, 2010 (down from about 120 RUB in April the same year). We will not analyze the causes of such a strong correction in detail: the issue has already been discussed by the industry stock market analysts. We’ll just give an opposite example: the same year, another IPO was held; specifically, it was Diod, a large drug and dietary supplement maker. Certainly the company’s stock price has undergone correction, too, but not that dramatically (as of December 30, 2010, the stock traded at 32-33 RUB, down from slightly over 38 RUB at the start of trading at the MICEX). Of course, market capitalization of the above mentioned companies is incomparable; the business structures of the two are also dif-ficult to compare; that said, investors, under the conditions existing in the market for
the past year, clearly preferred companies representing the real sector.
The distributor business diversification is by no means one-dimensional, that is in the direction of manufacturing only. Generally speaking, the decrease in the profitability of wholesale business as such over the past 4 to 5 years has boosted activities of wholesale companies in all spheres of drug circula-tion. Besides drugmaking, wholesalers have tried their hand at retail, logistics, medical services etc. The state initiatives that capped wholesale markups in 2010 for drugs on the VED list (which account for almost 50% of the aggregate market size in value terms) became catalysts for such diversification.
We have given multiple examples of distributors striving to develop retail businesses of their own. It is especially true with regard of the national-level companies, e.g. Protek (Rigla drugstore chain), Katren (Melodiya zdoro-vya drugstore chain) and some others.
Distributors from other categories are keeping pace. Notably, a record of sorts was set by interregional company Imperia Pharma that jumped 20 positions up in the ranking in one year. To a large extent, such positive dynam-ics of the company is associated with strategic changes in its market behavior. Adjustments have been made in the service sphere: the services have become more customer-oriented with more attention paid to customer needs. The product range of Imperia Pharma, its pricing terms for customers, product purchas-ing, and stock replenishment policies have undergone significant changes.
Over the past year, interregional distributors also demonstrated different approaches, not nec-essarily related to vertical integration, with respect of strategy modification. For example, Baltimore, whose business in the pre-crisis period was associated largely with state drug procurement, took a timely decision to boost its sales in the commercial sector. Baltimore streamlined its internal business processes and seriously revised its contract portfolio: priority was given to direct contracts and
distributors
48 <49
drugs with the highest profit potential. Inci-dentally, during the economic crisis it enabled the company to retain a stable growth rate against the background of not always opti-mistic trends among its wholesaler peers.
Distr ibu tor s bunch in to
cluster s
The development of pharma industry, particu-larly of manufacturing facilities, is a general trend of the Russian pharma market initiated at the very top. We will leave possible causes of that, among which are foreign investments issues, possibilities for more efficient drug price regulation, social aspects such as creat-ing new jobs and larger tax revenues, outside the scope of this review. The trend of pharma-ceutical manufacturing development has been laid down by the Pharma—2020 Strategy, which had stimulated significant changes in the field even before it was formally ap-proved. Production clusters became one of the incarnations of the principles set forth in the Strategy.
Pharmaceutical clusters have been and are being created in all Russia’s economically developed regions, especially where large industry-specific educational institutions are represented: St. Petersburg, Moscow, Volgograd, Yaroslavl, Kaluga regions etc. Pharma distributors, too, has been trying to take an active part in the common trend. For most large wholesalers, the idea of setting up production facilities is not new of course: Protek, SIA International, Biotec and others have implemented production projects. There are examples of production facilities cre-ated by smaller companies, such as Genesis, Akonit etc. Seemingly different projects are implemented, by and large, along two lines. In the first case, it is straightforward business diversification; the production company in question makes its business as a separate busi-ness unit, and more often than not produc-tion is focused on generic drugs. Synergy is achieved in that case due to logistic capa-bilities of the wholesale company. Suppos-
edly goods produced in-house should enjoy certain benefits with regard to the wholesaler purchasing policies, but in that case there is a threat of internal competition with the rest of the distributor’s product range. Moreover, significant resources need to be invested in promotion; otherwise wholesaler’s customer will refuse to sell the goods. In the second case, the production facility is used as a con-tract manufacturing site, where trademarks of a partner company — foreign more often than not — are produced. In this case, promo-tion costs can be reduced but royalty has to be paid out of profits.
The most interesting from the profit perspec-tive and, correspondingly, the most capital intensive and risky option is the production of innovative drugs. It needs to be said that distributors began to seriously consider their participation in such projects only after the adoption of the Pharma—2020 Strategy. A good example is Protek, which has signed a strategic partnership agreement with CHEMRAR Hi-Tech Center. Information has been given in official releases on the establishment of a medical and pharmaceu-tical cluster for innovations on the basis of Moscow Physics and Technology Institute. The mechanics of functioning of such cluster is not yet clear; in all probability, a structure similar to a business incubator is meant where cluster participants will be able to set up small businesses with a view to commer-cialization of R&D results.
Another large distributor, SIA International, has taken a decision to participate in the pharma cluster project in Volgograd region. Essentially, SIA International will be the “anchor” company and principal inves-tor into the new plant construction. At the initial stage, the company will focus on producing generics that are in high demand, with subsequent plans to manufacture new drugs developed by the scientists of the Volgograd State Medical University. SIA has an adequate experience in generic production, including greenfield facility
time of unrealized
apprehensions and realized
predictions
cumulative rating
of russian pharmaceutical
distributors
The Russian
pharmaceutical
market
2010
results
construction; however, until recently, it has had virtually zero experience of marketing original pharmaceuticals.
Specialized distributors, participating in the high-cost drug procurement programs under government contracts, are actively developing their production business as well. In particular, R-Pharm acquired an unfinished construction project in 2010 of a baby food plant in Yaroslavl, which is to be converted to a drug production facility; some time later, the company announced purchase of Novosibkhimpharm. The company’s owner and founder Alexei Repik has announced the company’s interest in other purchases, too; more specifically, there is information on negotiations with drug packer Ortat. It is not very difficult to notice that the company is creating a fairly large industrial complex, which, in all probability, will focus on both generic production and contract manufacturing for foreign partners. Considering R-Pharm specialization, it is most probable that the company will not manufacture mass demand drugs, but rather high-cost prod-uct range, perhaps drugs supplied in the framework of the so-called “7 nosologies”
(VZN) program. Potential contract manu-facturing partners of the company may be interested not only in saving on customs duties, but also in a secure supply channel, for R-Pharm is one of the key suppliers of high-cost drugs.
Another specialized distributor, Pharmaimpex, has been mentioned in the framework of a partnership with Serbian manufacturer Galenica. The two companies announced their cooperation this February. The project provides for investments in constructing a new facility on the territory of the pharma cluster in Kaluga region. Incidentally another company of Serbian origin, Hemopharm (presently part of German STADA), is also located there. In this case, however, despite the wholesaler specifics, mass demand drugs will be manufactured here.
Obviously the cited examples of production ven-tures initiated by distributors are not the last in the pipeline. We may forecast that within the next two or three years, other large whole-salers will give a serious thought to produc-tion. Typically, such projects are connected with pharma clusters, which makes it possible to conclude that the production format dis-cussed herein is highly relevant.
-5-10-15
05
101520 14.46
18.38
-4.38
19.7023.80
-9.01
25.8030.11
2530
% 35
Grosssales
(RUB)
Directsales
(RUB)
Exchangerate
fluctuation,USD:RUB
Grosssales
(USD)
Directsales
(USD)
Exchangerate
fluctuation,EUR:RUB
Grosssales
(EUR)
Directsales
(EUR)
Fig. 1. Growth of gross and direct sales of pharmaceuticals and parapharmaceuticals by Rus-
sian distributors (RUB, USD, and EUR), 2010/2009
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of compa-
nies under monitoring; Central Bank of Russian Federation
50 <51
Sales growth y/y (%, USD)Sales growth y/y (%, RUB)
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
30.1
19.8 18.9
25.0
11.013.0
-23.0
-13.0
-13.6
-18.7
8.1
10.017.0
22.728.4
9.7
33.0
24.017.0
5.1
16.9
-4.5
25.6
34.3
%
-10
-20
-0
10
20
30
40
50
60
70
Fig. 2. Long-term growth of pharmaceutical distributor gross sales, 2008—2010
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distribu-
tors; based on data of companies under monitoring
45.3 44.2 44.8
27.0 30.1 30.8 32.0
-10.0
-23.0-28.3
-5.7
7.6
19.4
24.4
35.9
12.0
45.0
28.0
7.0
-7.4
2.0
-6.6
32.6
42.1%
-20
-30
-10
0
10
20
30
40
50
Sales growth y/y (%, USD)Sales growth y/y (%, RUB)
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Fig. 3. Long-term growth of pharmaceutical distributor direct sales (to drug-stores as well as in-patient and out-patient clinics), 2008—2010
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distribu-
tors; based on data of companies under monitoring
time of unrealized
apprehensions and realized
predictions
cumulative rating
of russian pharmaceutical
distributors
The Russian
pharmaceutical
market
2010
results
ImportedLocal
37
63
Fig. 4. Distributor sales split for imported/local products in value terms (%), 2010
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distribu-
tors; based on data of companies under monitoring
Rx
OTC
Parapharmaceuticals
Medical devices
Regional
Interregional
National
0% 20% 40% 60% 80% 100%
56 33 7 4
62 26 9 3
48 35 7 10
Fig. 5. Distributor sales structure (in value) split for categories (%), 2010
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distribu-
tors; based on data of companies under monitoring
52 <53
Table 1. ТОР25 importing distributors, 2010
R ank
Importing distributor Imports share*, %
Imports
growth
(%, USD),
2010/2009
importing
distributors importers
2010 2009 2010 2009 2010 2009
1 1 2 1 Protek CV ZAO 5.55 6.71 4.89
2 2 3 2 SIA International Ltd ZAO 5.19 6.66 –1.22
3 4 5 6 R-Pharm ZAO 4.05 2.99 71.47
4 6 11 8 Rosta ZAO 3.05 2.86 35.01
5 3 13 4 Katren NPK ZAO 2.76 3.51 –0.45
6 5 18 7 Pharmaceutical Import. Export 2.15 2.91 –6.29
7 7 20 15 Alliance Healthcare Rus (Apteka Holding ZAO) 1.79 2.25 1.04
8 8 30 27 Oriola (Moron) 1.08 1.23 10.71
9 11 35 34 Euroservice ZAO 0.68 0.80 7.75
10 12 36 35 National Distributor Company ZAO 0.63 0.65 22.70
11 10 37 33 Pharmstore OOO 0.59 0.82 –9.42
12 13 39 44 Pulse ООО 0.54 0.47 45.57
13 14 40 50 Medipal-Onco OOO 0.52 0.39 68.53
14 9 42 31 Biotec ТОО 0.51 0.99 –35.12
15 21 52 93 Imperia Pharma ZAO 0.30 0.09 337.79
16 16 55 54 Irvin-2 OOO 0.25 0.33 –3.21
17 17 60 64 Intermedservice ZAO 0.24 0.23 30.32
18 20 61 84 Medintorg ZAO 0.23 0.12 149.45
19 18 72 75 Baltimore FAK ZAO 0.15 0.14 30.64
20 26 87 102 Dominanta Service ZAO 0.07 0.07 34.08
21 24 91 96 Akonit MFF 0.06 0.08 3.47
22 23 95 95 Pharmcomplect OOO 0.06 0.08 –8.58
23 19 100 83 Baltic Security Service OOO 0.05 0.12 –41.79
24 34 101 161 Uralpharmcenter AOZT 0.05 0.02 279.37
25 15 125 52 Shreya Corporation AO 0.03 0.34 –88.02
* Total imports were adjusted for the value of overestimated sales (customs regimes 40 and 42 only were taken into account; commodities imported to Russia via
customs warehouses under regimes not for the company’s own customers (71, 96, 93, 94, 63) were not considered); overestimation was due to taking into account the
drugs imported for the Customs warehousing regime.
Source: Pharmexpert — Drug import to Russia (monthly)
time of unrealized
apprehensions and realized
predictions
cumulative rating
of russian pharmaceutical
distributors
The Russian
pharmaceutical
market
2010
results
Table 2. Cumulative rating of pharmaceutical distributors, 2010
Legend
# Data not available.
«+» Companies focused on supplying their own drugstore chains.
↑+1 Companies focused on supplying their own drugstore chains.
↓-1 Company has moved 1 position down in its category vs. preceding rating.
↑↓ Sales change within ±1%.
↑ (↓) Company has moved to a higher (lower) subcategory.
R ank
Corporation
2010 9 months 2010 H110 Q110 2009 2008
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Category F1: National
F1–A
1 1 1 1 1 1 1 1 1 1 Protek CV ZAO
2 2 2 2 2 2 2 2 2 2 SIA International Ltd
3 3 3 3 3 3 3 1 3 3 K atren NPK ZAO
F1-B
4 1 4 1 4 1 4 2 4 4 Rosta
5 2 5 2 5 2 5 3 5 5 Alliance Healthcare Rus (Apteka Holding ZAO)
F1-С
6 1 6 1 6 1 6 1 6 6 Biotec Group
Category F2: Interregional
F2-A
7 1 7 1 7 1 7 1 7 7 R-Pharm
8 2 8 2 8 2 9 3 10 8 Oriola (Moron)**
9 3 9 3 9 3 8 2 8 14 Pulse
10 4 10 4 30 4 30 5 28 30 Imperia Pharma ↑11 5 11 5 12 6 11 5 11 15 Euroservice
12 6 13 7 11 5 10 4 9 16 Akonit MFF
13 7 14 8 13 7 12 6 12 11 Shreya Corporation**
14 8 12 6 10 4 # # # # Irvin-2
15 9 15 9 14 8 13 7 13 20 Pharmstore**
F2-B
16 1 16 1 15 1 14 1 15 13 BSS
17 2 18 3 19 5 16 3 18 32 Pharmcomplect
18 3 17 2 16 2 17 4 19 19 Baltimore FAK
19 4 19 4 17 3 18 5 16 17 Pharmimex Group**
20 5 21 6 18 4 15 2 14 18 Intermedservice
21 6 22 7 21 7 20 7 20 25 Godovalov
22 7 20 5 20 6 19 6 17 24 Profit-Med
23 8 23 8 22 8 21 8 21 22 Pharmacevt
24 9 24 9 23 9 22 9 22 9 Genesis**
F2-С
25 1 26 2 25 2 24 2 24 - Lekrus
26 2 25 1 24 1 23 1 23 26 Nadezhda Pharm
27 3 27 3 26 3 25 3 25 29 Severo-Zapad
Category F3: Regional
F3-A
28 1 28 1 27 1 26 1 27 31 Volgopharm+
29 2 30 3 34 8 32 7 # # Vitta Company
30 3 29 2 28 2 27 2 29 33 Agroresursy
31 4 31 4 29 3 28 3 32 35 Medexport
32 5 32 5 32 6 29 4 33 36 Lipetskpharmacia+
33 6 33 6 31 5 31 6 31 27 Parma Medical**
34 7 34 7 33 7 35 3 38 43 Pharm-SKD
F3-B
35 1 35 1 39 5 36 4 30 48 Medical Leasing Consulting
36 2 36 2 35 1 34 2 35 39 Geopharm
37 3 37 3 36 2 33 1 34 38 Pharmacia**+
38 4 38 4 38 4 41 3 37 40 Solvex-Olbi
39 5 39 5 37 3 38 6 26 28 Avikon-Med
40 6 40 6 40 6 37 5 36 41 Bolear
F3-C
41 1 41 1 41 1 39 1 40 47 Medservice-Region
42 2 42 2 43 3 40 2 39 46 Vostok Pharm
43 3 44 4 44 4 43 5 42 52 Donskoy hospital
44 4 43 3 42 2 42 4 41 51 Cortes-Pharm (Cortes Travel)
54 <55
Comments on calculated indicators
*Dynamic index is calculated based on data provided by distributor, RUB incl. VAT.
**Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of companies under monitoring
time of unrealized
apprehensions and realized
predictions
cumulative rating
of russian pharmaceutical
distributors
HQ location
Dynamic sales index*, %
Change
of intercategory
rank vs. 9 months 20102010/2009
9 months
2010 /
9 months
2009 H110 / H109 Q110 / Q109 2009/2008
Moscow 9 13 11 6 22 ~
Moscow –6 –16 –27 –43 0.4 ~
Novosibirsk region 11 18 21 11 38 ~
Moscow 9 18 18 21 49 ~
Moscow 35 44 44 35 88 ~
Moscow 15 –20 –20 –17 11 ~
Moscow 28 27 12 19 40 ~
Moscow 7 15 18 –3 8 ~
Moscow region 36 40 35 18 54 ~
St. Petersburg 15 12 0 # 43 ~
Moscow 4 1 1 –5 35 ~
St. Petersburg –5 –2 1 2 57 ↑+1
Moscow –13 –16 –16 –16 –7 ↑+1
Moscow region 14 26 39 ↓-2
Moscow –12 –15 –15 –15 21 ~
St. Petersburg 13 19 11 0 3 ~
Nizhniy Novgorod region 27 32 28 29 54 ↑+1
Moscow 26 33 49 31 14 ↓-1
Moscow 0 0 0 0 25 ~
Moscow –11 –4 –5 0 31 ~
Perm 19 21 12 –3 37 ~
Moscow 24 18 10 0 65 ~
Rostov region –9 –10 2 14 5 ~
St. Petersburg # # –17 # –69 ~
Moscow 47 38 22 11 57 ↑+1
Moscow 14 15 18 19 23 ↓-1
St. Petersburg –6 5 –12 –2 22 ~
Volgograd region 0 4 5 1 25 ~
Moscow 17 21 21 8 # ↑+1
Novosibirsk region 15 17 15 9 21 ↓-1
Omsk region 18 19 24 28 41 ↓-1
Lipetsk region 0 4 8 24 14 ~
Moscow 0 0 0 # # ~
Samara –19 –23 –32 –5 26 ~
Moscow 23 39 –11 17 172 ~
Moscow 24 33 19 0 22 ~
Ekaterinburg –2 4 2 3 28 ~
Moscow 14 19 70 25 2 ~
Moscow –19 –23 –33 –54 –27 ~
Moscow 1 0 1 7 26 ~
Chelyabinsk region 2 2 3 4 8 ~
Rostov region –3 –5 –13 –25 15 ~
Rostov-on-Don –23 –28 –37 –50 1 ↑+1
Moscow –29 –2 2 –13 42 ↓–1
The Russian
pharmaceutical
market
2010
results
Table 3. ТОР25 distributors by gross sales*, 2010
* Based on distributor data: gross sales, which is sum total of sales in out-of-pocket segment and supplies under state programs (in reimbursement prices).
**Relative to the leader.
***Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of companies under
monitoring
R ank Distributor Relative gross sales**
2010
9 months
2010 H110 Q110 2009 2008
1 2 2 2 2 2 SIA International Ltd 1.000
2 1 1 1 1 1 Protek CV 0.983
3 3 3 3 3 3 K atren NPK 0.725
4 4 4 4 4 4 Rosta 0.636
5 5 5 5 5 5
Alliance Healthcare Rus
(Apteka Holding ZAO) 0.515
6 6 6 6 6 6 R-Pharm 0.358
7 7 7 7 8 8 Oriola (Moron)*** 0.229
8 8 8 8 7 9 Biotec 0.131
9 9 9 9 9 13 Pulse 0.130
10 10 11 23 22 n/a Imperia Pharma 0.128
11 12 12 11 10 15 Euroservice 0.080
12 11 10 n/a n/a n/a Irvin-2 0.077
13 14 15 13 16 14 BSS 0.070
14 13 13 10 12 17 Akonit 0.068
15 15 16 14 15 18 Pharmimex*** 0.062
16 17 19 18 19 24 Pharmcomplect 0.059
17 18 20 20 18 25 Profit-Med 0.059
18 16 18 16 14 16 Intermedservice 0.057
19 19 22 21 21 n/a Baltimore 0.053
20 26 17 15 13 11 Shreya Corporation*** 0.048
21 20 21 19 20 21 Volgopharm 0.046
22 21 24 24 23 22 Godovalov 0.042
23 22 25 22 24 20 Nadezhda Pharm 0.038
24 25 17 15 13 25 Lekrus 0.037
25 23 23 17 17 16 Pharmacevt 0.035
56 <57
Table 4. ТОР10 distributors by gross DRUG sales*, 2010
R ank Distributor Relative gross drug sales**
1 SIA International Ltd 1.000
2 Protek CV 0.973
3 K atren NPK 0.684
4 Rosta 0.672
5 Alliance Healthcare Rus (Apteka Holding ZAO) 0.532
6 R-Pharm 0.394
7 Oriola (Moron)*** 0.206
8 Pulse 0.143
9 Biotec 0.117
10 Imperia Pharma 0.099
*Based on distributor data: gross sales without parapharmaceuticals.
**Relative to the leader.
***Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of companies under monitoring
Table 5. ТОР10 distributors by direct DRUG sales*, 2010
R ank Distributor Relative direct drug sales**
1 Protek CV 1.000
2 Rosta 0.737
3 K atren NPK 0.719
4 SIA International Ltd 0.716
5 Alliance Healthcare Rus (Apteka Holding ZAO) 0.535
6 R-Pharm 0.246
7 Oriola (Moron)*** 0.190
8 Biotec 0.121
9 Pulse 0.112
10 Imperia Pharma 0.101
* Based on distributor data: direct sales to end customers, in particular to drugstores and clinics.
**Relative to the leader.
***Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of companies under
monitoring
Table 6. ТОР10 distributors by secondary sales*, 2010
R ank Distributor Relative secondary sales**
1 SIA International Ltd 1.000
2 R-Pharm 0.433
3 Protek CV 0.285
4 Alliance Healthcare Rus (Apteka Holding ZAO) 0.176
5 K atren NPK 0.172
6 Oriola (Moron)*** 0.120
7 Pulse 0.110
8 Irvin-2 0.099
9 Pharmcomplect 0.085
10 Rosta 0.084
*Based on distributor data: secondary sales.
**Relative to the leader.
***Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of companies under
monitoring
time of unrealized
apprehensions and realized
predictions
cumulative rating
of russian pharmaceutical
distributors
The Russian
pharmaceutical
market
2010
results
Conclusion: There are a great many ways for
a wholesale company to develop. What is impor-
tant is that in the existing market environment,
pharma distributors are not just entities with
sufficient financial resources to make invest-
ments, but also a distribution channel, which
makes it possible to use the synergy effect from
diversification beyond the main activity. The
year past, despite the multiplicity of regula-
tory changes, has not brought about any dra-
matic consequences for the industry. To a de-
gree, it can even be assessed positively, because
it encouraged wholesale companies to enter
the real sector of the economy, which should,
in the final analysis, positively affect both the
capitalization of individual companies and the
implementation of global objectives of the Rus-
sian economy.
Table 7. ТОР10 distributors by direct DRUG supply share (including reimbursable drug coverage), 2010
R ank Distributor Direct drug supply share, %
1 Protek CV 19.06
2 Rosta 14.04
3 K atren NPK 13.72
4 SIA International Ltd 13.65
5 Alliance Healthcare Rus (Apteka Holding ZAO) 10.19
6 R-Pharm 4.68
7 Oriola (Moron)* 3.63
8 Biotec 2.31
9 Pulse 2.14
10 Imperia Pharma 1.93
*Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of companies under
monitoring
58 <59
artificial
“natural
selection”
VIII.
pharmacy chains
R AT ING
OF RUSSI A N
DRUGSTOR E
CH A INS
The past year may be called positive for the retail pharma sector. As com-
pared to the previous year, the retail pharma market showed a growth of
9.2% in RUB and 11.6% in real terms. These results testify to the recov-
ery of consumer demand, which allows one to count on dynamic market
growth. Notably, the sales growth was caused, to a certain extent, by high
rates of growth of regional drugstore chains that outperformed the
market on average. Regional chains did not experience significant systemic
problems related to aggressive growth and were able to respond quickly
to external changes, which enabled them to shore up internal resources
for development. A certain slowing down was observed in the operations
of large chains, which is associated with the transfer from extensive to
intensive development due to poorer manageability of large entities. That
said, a positive trend is still visible when looking at the retail pharma sec-
tor as a whole.
The Russian
pharmaceutical
market
2010
results
rating of russian drugstore
chains: compilation methods
Table A. Basic threshold indices
Index А1: National А2: Interregional А3: Regional
Category,
subcategory А1 А2 А3-A А3-B А3-C А3-D
Average sales value
per quarter, mn RUB 2000 500 300 100 50 <50
Number of federal
districts where
drugstore chain
operates (as of end of
reporting period) 6 3 -
1. A company is categorized proceeding
from its sales in value terms as well as its
territorial coverage (Table A).
2. The rating takes into account two
groups of indices, viz. financial &
economic as well as those of strategic
development. Each of these groups has
a specific weight when calculating the
drugstore’s cumulative rank (Table B).
The compa n y ’s r a nk is
c a lcul ated accor ding to the
follow ing procedur e:
1. The company’s indices are ranked rela-tive to maximum values.
2. The company’s relative indices are cal-culated as ranked indices multiplied by the weights (Tables A and B).
3. A cumulative index is calculated as a sum of the company’s relative indices.
4. The companies are ranked in accor-dance with their cumulative indices.
pharmacy chains
60 <61
Table B. Weights of indices used to calculate drugstore chain’s rank, %
Group of indices А1: National А2: Interregional А3: Regional
Subcategory А1 А2 А3-A А3-B А3-C А3-D
Financial and economic 50 50 55 60 60 60
Sales (in value) 45 45 50 55 55 55
Specific turnover (per 1
outlet) 5 5 5 5 5 5
Strategic development 50 50 45 40 40 40
Number of Federal subjects
where drugstore chain
operates 10 10 - - - -
Regional coverage (number
of regions where drugstore
chain operates) 10 10 10 - - -
Number of outlets 10 10 15 20 20 20
Sales growth 10 10 10 10 10 10
Number of purchases
(receipts) 5 5 5 5 5 5
Floor area 5 5 5 5 5 5
artificial
“natural selection”
rating of russian
drugstore chains
The Russian
pharmaceutical
market
2010
results
A n a ssortmen t of for ms
Due to great social importance of the pharma market, the government paid a lot of atten-tion last year both to the industry as a whole and the retail sector in particular. Unfortu-nately, the impact of legislative initiatives on the retail sector was not always positive. Thus, the goal of price registration of VED-listed drugs undertaken in early 2010 was achieved: the rise of drug prices came to a halt. At the same time, the reduced profits from the sales of vital and essential drugs forced drugstores to focus on higher margin products, both pharmaceuticals and para-pharmaceuticals.
But one should not forget that drugstores face a number of serious restrictions as to their ability to manage their product selection: in particular, a new minimal product offer-ing list was adopted in 2010, with market participants having many reservations with regard to that list (e.g. about the reasons for including such drugs as activated charcoal in capsules, TM Relensa etc.).
On the other hand, the range of parapharma-ceuticals that may be sold at a drugstore has also been greatly restricted. Therefore, in spite of drugstores having been reclas-sified from social sphere to trade institu-tions, the rigid limits set for their product selection policy do not allow retailers to undertake any large-scale actions in order to change their product offering and retain profitability.
Moreover, in accordance with the Law on the Protection of Competition (Antitrust Law), drugstores can no longer extend their lease agreements with municipalities and the state on preferential terms. These circum-stances are certainly to take their toll on drugstore outlets and may be a factor in deciding the future fate of specific outlets.
In a situation like this, drugstores will have to look for new forms of collaboration with lessors. A possible example was set by Х5 Retail Group, which allowed the А5 drugstore chain to open retail outlets under lease agreements in its supermarkets for ten year stints. In return, Х5 received an option to buy 100% of the chain stock. There is a possibility that drugstore chains will start cooperating with some other social infra-structure facilities for the purpose of getting favorable lease terms or increasing customer traffic of drugstore outlets. This is exempli-fied by the Sto Dorog (Hundred Roads) drugstore chain, whose retail outlets will be located at railway stations. The project was launched in 2010 jointly by Russian Railways OAO (RZhD) and Pharmacia OAO (St. Petersburg); RZhD holds a block-ing stake in the newly established com-pany. The integration of drugstore outlets in social infrastructure, in particular, the deployment of drugstores on the premises of medical centers etc. may be convenient for customers, too.
In the course of the year, participants of the re-tail pharma sector did not just cut their costs but resorted to various methods of stream-lining their internal processes. Different retailers pursued different goals. Some of them opted for decreasing the number of their regions of presence and concentrated on developing drugstore retail business in priority regions. Thus, Pervaya pomoshch drugstore chain (St. Petersburg) abandoned its assets in Ekaterinburg in favor of opening new drugstores in St. Petersburg in Decem-ber 2010. The retailer has revealed its plans of aggressive growth in the capital cities (Moscow and St. Petersburg).
Incidentally, the Pervaya pomoshch drug-stores in Ekaterinburg were bought up by
pharmacy chains
62 <63
large regional retailer Klassika, which thereby significantly boosted its presence in the regional market in question. Besides, the chain plans to increase the number of outlets in the region by opening drugstores on the premises of a general store chain ac-quired by Klassika earlier. National pharma retailer Rigla also increased its presence in St. Petersburg after the acquisition of Pana-cea chain; it also purchased Biopharm and TK TOKO chains in Yaroslavl and Samara regions, respectively. The markets of large cities are as yet more attractive for retailers, and not just pharma retailers. But this is true only up to a certain limit: with tough-ening competition companies will have to look for other growth ways.
Certainly, drugstore chains pursue not only the goal of geographical expansion, but also of maintaining and strengthening their existing positions in the regions. The choice of a business development way is always individual. For example, retail chain Rigla’s growth vectors include, among oth-ers, business format diversification. This is confirmed by the fact that several economy segment drugstores were opened during the year under the brand of Bud Zdorov by way of changing retail formats of some regional chains managed by Rigla. The company has also demonstrated interest in the development of projects in the field of beauty and health by opening an institution of a new format, namely a drugstore and consultation center. In summer 2010, shops for moms and babies were opened offering baby care products, baby food, clothes and toys. Such actions may increase profits from the sales of non-drug goods and, hence, increase overall profitability of the business.
Speaking further of non-core assets of drug-store chains, it is worth mentioning the
Early Learning Center (ELC) opened by Apteki 36.6 drugstore chain in late 2006, the core of whose product offering consists of goods for kids. Thanks to non-core assets (Veropharm production company being one of them) the chain was able to overcome many hardships it encountered in the recent years. Despite refunding its credit debt, the borrowings made to increase the working capital have led to growth of the aggregate debt load of the chain. As of this writing, information appeared on the intention of the drugstore chain to sell a 50% stake in the ELC. Perhaps the move will generate enough cash to stabilize Apteki 36.6 core business.
V E D a nd U I I T1: 10 differ ence s
In 2010, the retail pharma sector had to face a lot of challenges. However, the industry stabilized in the end; some companies even resumed their aggressive growth. Of important events of that year, one can single out the increase of social security payments and as well as bringing drugstores under the general tax regime beginning from 2011. Before, drugstores could enjoy a special tax regime, namely UIIT, where tax payments amounted to just 14% of the payroll. With the new tax regulations coming into force, such payments rose to 34%.
These circumstances, combined with the VED price cap, will certainly cause drugstore profitability to suffer, with a number of drugstores becoming loss-making. Property rent and employee payroll are the main ex-penses of drugstores. Most probably, the tax novelties will affect drugstores in remote and sparsely populated areas of the country most of all. However, the issue of providing just those areas with drugs is very urgent at present. In part, the responsibility for that,
artificial
“natural selection”
rating of russian
drugstore chains
1 Unified imputed income tax.
The Russian
pharmaceutical
market
2010
results
in case of communities with no drugstores, was assigned to FAPs (paramedic-midwife stations) by the Law on Drug Circulation adopted in September 2010. The number of regions with FAPs selling drugs may be expected to grow, if drugstores were to close due to unprofitability.
Obviously, the winding up of drugstore chains and outlets is an extreme measure, and drugstores will start first looking for ways to cut expenses. Changes in the internal busi-ness processes are to be expected.
Under the circumstances, fundamental changes in the industry are required. One can expect a jump in the number of M&A deals, whereby smaller regional chains will be merged with large regional or national play-ers. Such deals will help the larger players strengthen their own positions or enter new regional markets. The acquired chains will avoid closure by becoming part of larger structures, but it is evident that individual drugstores that do not demonstrate target profitability will be closed. Investors will most likely be interested in chains located in economically favorable areas possessing sufficient potential for further growth.
The likelihood of non-core investors being attracted to the retail pharma sector is also quite high. In particular, one can expect not just financial support and investment in the chain retail, but also reprofiling of the existing business of companies represent-ing related sectors. That said, if we take into account the lack of stability in the drugstore segment due to the array of legislative changes of last year and a considerable
degree of uncertainty with regard to the nearest future, the segment can hardly be considered a priority investment target by most non-core investors for some time.
Consolidation of drugstore chains with other market players is also to be expected. At present, there are already examples of wholesale and chain retail companies consolidating. The partnership of such businesses, given the drug markup cap and reducing margins of both the wholesale and retail segments, is becoming all the more rel-evant. Such arrangements could produce an aggregate economic effect by summing up the retail and wholesale margins. A reduc-tion of the number of drugstores, which is very likely this year, will evidently affect the distribution sector as well, with quite a few players facing the need to find opportunities to retain their customer bases to maintain sales. In resolving that problem, a drugstore chain of one’s own may also play a role.
Legislative changes in the retail pharma sector met with an active response on part of the chain retail. Over 2010, the retail sector was dynamically changing in several direc-tions at the same time. However, while the year past made drugstore chains put up significant efforts to retain profitability, adjusting, among other measures, their product offering, this year the challenges faced by drugstore chains may acquire a much greater dimension and put their very presence in the market in question. Relative sector stability, not to mention fast growth, is probably to be expected only in case the state calms down its regulatory frenzy.
64 <65 artificial
“natural selection”
rating of russian
drugstore chains
0
100
200
300
400
500
600
700
As of 2010, the category of the National drugstore chains includes Apteki 36.6 (989 drugstores)
and Rigla (645 drugstores).
Implozia* Raduga Pharmacor* Doctor Stoletov Biotec
105, 8
-2
-3
-6
-9
+13%
-1
Implozia* Raduga Pharmacor* t St l t Bi
-10
-9
-7
-8
-6
-5
-3
-1
0
-2
-4
663
502
402 396 358
6
-9
-1
-2
-3
+
-6
9
663
502
402 396 358
Number of outlets, 2010
Number of outlets growth (%), 2010/2009
Fig. 1. ТОР5 largest interregional drugstore chains, 2010
* Including franchising drugstores.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia rating of drugstore chains; based on data of
companies under monitoring
0
100
200
300
400
500
600
Mosoblpharmacia А5 Gubernskie apteki Pharmland Apteka Nevis*
-8
62
6 11
-6
osoblpharmacia А5 bernskie aptek
-20
-10
10
0
20
30
50
70
60
40
500425 280
199 191
62
6 11
-8 -6
6500
425 280
199 191
Number of outlets, 2010
Number of outlets growth (%), 2010/2009
Fig. 2. ТОР5 largest regional drugstore chains, 2010
* Including franchising drugstores.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia rating of drugstore chains; based on data of
companies under monitoring
The Russian
pharmaceutical
market
2010
results
National А1
Interregional А2
RegionalА3-А
RegionalА3-В
RegionalА3-С
RegionalА3-D
-1
-13
03
-3
12
62
59
10 10
29
Pharmaceuticals
Parapharmaceuticals
Reimbursable drugs (LLO)
-20
-10
10
0
20
30
50
70
60
40
Fig. 3. Comparison of total turnover growth in various drugstore chain categories (%), 2010/2009
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia rating of drugstore chains; based on data of
companies under monitoring
Parapharmaceuticals
Pharmaceuticals
Reimbursable drugs (LLO)
Regional
Interregional
0% 20% 40% 60% 80% 100%
23.7 70.1 6.2
22.0 65.2 12.9
23.5 67.5 9.0
National
2009
2010
2009
2010
2009
2010 29.5 70.5
32.2 67.8
22.4 70.9 6.7
Fig. 4. Drugstore chain sales structure split for pharmaceuticals / parapharmaceuticals / reimbursable drugs (LLO) (%; calculated by sales in value terms), 2010 and 2009
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia rating of drugstore chains; based on data of
companies under monitoring
66 <67 artificial
“natural selection”
rating of russian
drugstore chains
TOP5 TOP10 TOP20 TOP40
Market share (%), 2009
Market share (%), 2010
9.03
9.5013.19
13.77
18.92
20.08 23.09
34.32
Fig. 5. Top players aggregate market share change in pharma retail sector, 2010/2009
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia rating of drugstore chains; based on data of
companies under monitoring
Table 1. Cumulative rating of national and interregional drugstore chains, 2010 (for rating participants)
R ank Drugstore chain HQ location Number of outlets Cumulative score
National: А1
1 Apteki 36.6 Moscow 989 0.79
2 Rigla (including Zhivika and 03) Moscow 645 0.79
Interregional: А2
1 Implozia* and
** Samara 663 0.73
2 Pharmacor St. Petersburg 402 0.71
3 R aduga St. Petersburg 502 0.65
4 Pharmaimpex Izhevsk 259 0.55
5 Melodiya zdorovya Novosibirsk 253 0.51
6 Doctor Stoletov Moscow 396 0.45
7 Biotec Moscow 358 0.40
8 Vita** Samara 309 0.40
9 Zdorovye lyudi St. Petersburg 207 0.36
*Including franchising drugstores.
**Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia rating of drugstore chains; based on data of companies under monitoring
The Russian
pharmaceutical
market
2010
results
Table 2. Cumulative rating of regional drugstore chains, 2010 (for rating participants)
Rank Drugstore chain HQ location Number of outlets Cumulative score
Regional: А3-А
1 Mosoblpharmacia Moscow region 500 0.70
2 A5 Moscow 425 0.57
3 Pervaya pomoshch St. Petersburg 152 0.37
4 Gubernskie apteki Krasnoyarsk 280 0.36
5 Pharmland Ufa 199 0.36
6 Staryj lekar* Moscow 184 0.35
7 Apteka Nevis* St. Petersburg 191 0.33
8 Samson Pharma Moscow 16 0.33
9 Severo-Zapad Holding Drugstore Chain St. Petersburg 116 0.26
10 Peterburgskie apteki St. Petersburg 92 0.18
11 Lipetskpharmacia Lipetsk 132 0.18
12 Hexal Moscow 44 0.17
13 Novaya apteka Khabarovsk 75 0.17
14 Kazanskie apteki** K azan 51 0.16
15 Pharmacia Tyumen 149 0.16
16 Pharmacon Izhevsk 102 0.16
17 Bryanskpharmacia Bryansk 142 0.15
18 Kurganpharmacia Kurgan 140 0.15
Regional: А3-В
1 Nizhniy Novgorod Drugstore Chain** Nizhniy Novgorod 64 0.63
2 Pharmacia Ekaterinburg 100 0.62
3 Zdorovie Krasnodar territory 25 0.57
4 Apteki Lekrus** Moscow 33 0.56
5 Apteka IFK Moscow 22 0.55
6 Zdorovyj gorod Voronezh 32 0.51
7 Vitapharm Samara region 74 0.49
8 Moya apteka Novosibirsk region 51 0.47
9 Apteka Avicenna Irkutsk 23 0.43
10 Evalar Biysk 17 0.34
11 Zdrava Omsk 27 0.33
12 DOMpharma Kolomna 23 0.29
13 Novaya bolnitsa Ekaterinburg 36 0.28
14 Bonum Saratov 40 0.27
15 Gorodskaya apteka Stavropol 22 0.27
Regional: А3-С
- - - -
Regional А3-D
- - - -
*Including franchising drugstores.
**Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia rating of drugstore chains; based on data of companies under monitoring
68 <69 artificial
“natural selection”
rating of russian
drugstore chains
Table 3. ТОР25 of drugstore chains by sales (value), 2010
R ank, total sales Drugstore chain HQ location
Sales index (relative to leader)
sales
total pharmaceuticals parapharmaceuticals
1 Apteki 36.6 Moscow 1.000 1.000 1.000
2
Rigla (including
Zhivika and 03)** Moscow 0.878 0.962 0.701
3 Pharmacor** St. Petersburg 0.576 0.672 0.376
4 Mosoblpharmacia Moscow region 0.507 0.281 0.147
5 Implozia* and
** Samara 0.482 0.560 0.318
6 R aduga St. Petersburg 0.421 0.319 0.376
7 Stolichnye apteki* Moscow 0.385 0.253 0.143
8 Pharmaimpex Izhevsk 0.340 0.440 0.130
9 A5 Moscow 0.334 0.372 0.254
10 Doctor Stoletov Moscow 0.314 0.329 0.284
11 Vita* Samara 0.302 0.320 0.266
12 Biotec Moscow 0.278 0.200 0.043
13 Staryj lekar** Moscow 0.272 0.290 0.236
14 Pervaya pomoshch St. Petersburg 0.272 0.301 0.211
15 Samson Pharma Moscow 0.242 0.301 0.119
16 Pharmland Ufa 0.238 0.263 0.183
17 Gubernskie apteki Krasnoyarsk 0.225 0.083 0.133
18 Zdorovye lyudi St. Petersburg 0.224 0.232 0.209
19 Melodiya zdorovya Novosibirsk 0.217 0.231 0.187
20 Klassika* Chelyabinsk 0.216 0.223 0.201
21 Apteka Nevis** St. Petersburg 0.195 0.175 0.237
22 Hexal Moscow 0.129 0.150 0.084
23
Peterburgskie
apteki St. Petersburg 0.123 0.139 0.088
24 Lipetskpharmacia Lipetsk 0.122 0.138 0.006
25 Pharmacia Tyumen 0.108 0.079 0.170
*Including franchising drugstores.
**Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia rating of drugstore chains; based on data of companies under monitoring
The Russian
pharmaceutical
market
2010
results
Table 4. Shares of ТОР10 Russian drugstore chains in out-of-pocket drug market, 2010
*Including franchising drugstores.
**Expert estimation.
Source: Pharmexpert Analytics and Consulting — 1st of Pharmacia rating of drugstore chains; based on data of companies under
monitoring
R ank Drugstore chain HQ location
Number of outlets
as of end 2010
Share (%)
2010 2009
1 Apteki 36.6 Moscow 989 2.53 3.16
2
Rigla (including
Zhivika and 03) Moscow 645 2.44 2.28
3 Pharmacor* St. Petersburg 402 1.70 1.83
4 Implozia* and
** Samara 663 1.42 1.65
5 Pharmaimpex Izhevsk 259 1.11 0.73
6 A5 Moscow 425 0.94 0.74
7 Doctor Stoletov Moscow 396 0.83 0.92
8 Vita** Samara 309 0.81 0.95
9 R aduga St. Petersburg 502 0.81 0.91
10 Samson Pharma Moscow 16 0.76 0.75
70 <71
out-of-pocket
pharma market
has grown.
really
IX.
The Russian
pharmaceutical
market
2010
results
Against the background of economic recovery taking place after the recession of 2008—2009, Russia’s out-of-pocket pharma market significantly grew in real terms in 2010. Month-on-month dynamics of drugstore sales in real terms bears witness, first, to demand recovery, and second, to a relatively normal seasonality of the market (Fig. 2). It should be noted that in November 2010 cough and cold drug sales did not peak as
In 2010, the size of Russia’s out-of-pocket phar-
ma market reached 4.4 bn units in real terms
and 13.3 bn USD1 in value terms, which is equiva-
lent to 10.0 bn EUR (Fig. 1). Compared to 2009,
drugstore sales grew by 11% in units, 13% in
USD, and 19% in EUR. The out-of-pocket sector in
rubles grew by 9% to 404.5 bn RUB.
report on out-of-pocket
sector of russia’s pharma
market
11.6 11.813.3
+13%
+2%
0
2
4
6
8
10
14
12
2008 2009 2010
a) In value terms, bn USD
Sale
s, b
n U
SD
b) In value terms, bn EUR
Sale
s, b
n E
UR
288.7 372.8404.5
+9%+29%
2008 2009 2010
c) In value terms, bn RUB
Sale
s, b
n R
UB
3.8 4.04.4
+11%
+3%
0
1
2
3
5
4
2008 2009 2010
d) In real terms, bn units
Sale
s, b
n u
nit
s
7.98.4
10.0
+19%
+6%
0
2
4
6
8
10
14
12
2008 2009 2010
0
50
100
150
250
350
450
400
300
200
Fig. 1. Dynamics of Russia’s out-of-pocket pharma market, 2008—2010
Source: Pharmexpert — Monitoring of retail drug sales in Russia
1 Here and hereafter — in customer prices.
72 <73 out-of-pocket pharma market
has grown. really
report on out-of-pocket
sector of russia’s pharma
market
they did in 2009 due to high demand related to a widening flu epidemic. In 2010, consum-ers stocked up on cough and cold medica-tions in September, even before the start of a potentially dangerous season. Sales of the respective drugs grew in that month by 30% compared to September 2009 and by 70% — to August 2010, in real terms. In par-ticular, demand increased for Antigrippin, Arbidol, and Theraflu: by 258%, 224%, and
187% in real terms, respectively. Moreover, high demand for medications was observed in the summer months, when, besides a period of extreme heat, yet another factor that adversely affected consumers’ health was the strong smog that enveloped central Russia. Extreme weather conditions made an especially marked impact on the sales of car-diac and cough drugs as well as specific eye moisturizing and anti-inflammatory drugs.
Source: Pharmexpert — Monitoring of retail drug sales in Russia
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
a) Total market
Sale
s, b
n un
its
20092008 2010
b) Cough and cold drugs
Sale
s, b
n un
its
20092008 2010
275
250
300
325
350
375
400
425
45
30
60
75
90
105
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Fig. 2. Month-on-month drugstore drug sales (in real terms), 2008—2010
The Russian
pharmaceutical
market
2010
results
The average retail price in the drugstore seg-ment for the year was 92.1 RUB/unit, which is 2% less than in the previous year (Fig. 3). The main reason of the price slump was the implementation of the state price regula-
tion with regard to vital and essential drugs (VED). The average price in the VED group declined by 10% y-on-y to 85.6 RUB/unit, but increased in the group of “other” drugs by 2% to 95.6 RUB/unit.
a) Average price, USD/unit
USD
Total market
VED
non-VED
2.7
2.6
2.8
2.9
3.0
3.1
3.2
2009 2010
3.00
2.97
2.95
2.82
3.04
3.15
b) Average price, RUB/unit
RU
B
Total market
VED
non-VED
82
80
84
86
90
94
98
96
92
88
2009 2010
95.094.0
93.5
85.6
92.1
95.6
0000
55
92
Fig. 3. Average retail price dynamics in drugstore sector as a whole and in VED/non-VED groups, 2009—2010
Source: Pharmexpert — Monitoring of retail drug sales in Russia
The VED group price deterioration resulted in the group share decline in the overall Russian out-of-pocket pharma market from 34.8% in 2009 to 32.4% in 2010. In real terms, the VED share increased from 34.5% to 34.9% (Fig. 4).
As to the ratio of local to imported drug sales, it changed insignificantly in 2010 (Fig. 5). The share of imported drugs in value terms grew from 74.5% to 74.9%, in real terms — from 35.4% to 36.3%. However, the average price of those drugs declined by 4%
(from 198.4 to 190.2 RUB/unit), while the average price of local drugs slumped in 2010 by 2% (from 37.2 to 36.5 RUB/unit).
Besides, the share of Rx drugs increased insignificantly in real terms (from 26.3% to 26.8%), even if in value terms, their share declined somewhat (from 48.6% to 48.5%) (Fig. 6). The change was accompanied by the downturn in prices for Rx drugs by 4% (from 173.6 to 167.1 RUB/unit). At the same time, the price of OTC drugs declined by just 1% (from 65.6 to 64.7 RUB/unit).
74 <75 out-of-pocket pharma market
has grown. really
report on out-of-pocket
sector of russia’s pharma
market
Source: Pharmexpert — Monitoring of retail drug sales in Russia
34.8 32.4 34.5 34.9
2009 2010 2009 2010
In value terms In real terms
VED
non-VED
65.2 67.6 65.165.5
Fig. 4. VED and non-VED sales split in Russia’s out-of-pocket pharma market (%), 2009—2010
Source: Pharmexpert — Monitoring of retail drug sales in Russia
74.5 74.9
35.4 36.3
2009 2010 2009 2010
In value terms In real terms
Imported
Local
25.5 25.1
63.764.6
Fig. 5. Imported and local drug sales split in Russia’s out-of-pocket pharma market (%), 2009—2010
The Russian
pharmaceutical
market
2010
results
51.4 51,5
73.7 73.2
2009 2010 2009 2010
In value terms In real terms
OTC
Rx
48.6 48.5
26.826.3
Fig. 6. Rx and OTC drug sales split in Russia’s out-of-pocket pharma market (%), 2009—2010
Source: Pharmexpert — Monitoring of retail drug sales in Russia
The Fisher index1 in 2010 was equal to 0.93 indicating a reduction of prices in the out-of-pocket sector by 7% on average. However, the real market size2 recorded an increase of the average price (Fig. 7). Therefore, the change of the “real average price” caused by a consumption shift towards more expen-sive drugs was 5%. A somewhat different situation was observed in 2009: the Fisher index was equal to 1.24, which indicated a price increase of 24% on average; at the same time, the average price adjusted for inflation went up just 1%.
As far as the 2010 price segmentation of the sector under study is concerned, one can see a notable increase, compared to 2009, of the low-cost drug segment, with prices
not exceeding 5 USD/unit, and a reduc-tion of the high-cost segment priced 100 USD/unit and above (Fig. 8). Naturally, these trends are observed to a greater extent in the VED group, for the state regu-lation of the drugs has set the pace for the price dynamics of the market as a whole. The low-cost (priced below 5 USD/unit) drug market share gain amounted in this case to 21%, while at the same time, the similar price sector of non-VED drugs gained just 11%. The share gains of VED drugs priced at 100 to 500 USD/unit and above 500 USD/unit were –63% and –64%, respectively; while in the non-VED group the negative growth was –6% and –20%, respectively.
1 The Fisher index offsets the downsides of the Pa asche index (price change overestimation in case of prices going down and
underestimation for prices going up) and the Laspeyres index (inflation overestimation in case of prices going up and underestimation
for prices going down) by way of averaging. It is computed as the square root of the product of the two indices.
2 Market size calculated in 2009 prices.
76 <77 out-of-pocket pharma market
has grown. really
report on out-of-pocket
sector of russia’s pharma
market
Source: Pharmexpert — Monitoring of retail drug sales in Russia
2008 2009 20102008 220092009 2201001050
60
80
70
90
100
120
140
150
130
110288.7
372.8
300.8
404.5
435.1
Market size in preceding year’s prices
Average price
Average price without state regulation
Nominal market size
Sale
s, b
n R
UB
Pri
ce, R
UB
/un
it0
50
100
150
200
250
350
450
400
300
75.9
94.092.1
99.1
75.3
Fig. 7. Nominal and real size of Russia’s out-of-pocket pharma market, 2008—2010
The recently launched immunomodulator Rev-limid (INN lenalidomide) priced at 450,700 RUB/unit became the most expensive drug of 2010; Bramitob (IMM tobramycin) inha-lation solution priced at 89,800 RUB/unit was the most expensive drug in the entire VED group.
The leader among manufacturers in 2010 was Sanofi-Aventis (Table 1). The company’s share grew last year from 4.74% to 5.17% in value terms due to an increase in the sales of hepatoprotector Essentiale, hyperten-sion agent Losap, and Magne B6 contain-ing magnesium in combination with B6 vitamin.
The runner-up was last year’s leader Pharm-standard, whose share decreased from
5.76% to 5.12%, mostly due to decreased sales of antiviral drug Arbidol.
Berlin-Chemie/Menarini came third with a market share of 3.84%; Mezym forte, a digestive ferment, constituted a major part of its retail sales. Bayer Healthcare came fourth lagging behind just a bit with a mar-ket share of 3.80% of total drugstore sales. The biggest sales share gain compared to last year was posted by Abbott Products (former Solvay Pharma which merged with Abbott in 2010).
Among trademarks, Arbidol retained its lead-ership in spite of the sales share reduction from 2.02% to 1.46% in value terms (Table 2). It should be noted that the sales of other cough and cold drugs that enjoyed high
The Russian
pharmaceutical
market
2010
results
demand in 2009 in the midst of the flu epi-demics also decreased. Thus in 2010, such trademarks as Theraflu, Oscillococcinum, and Anaferon also demonstrated negative growth.
In contrast, high sales share growth rates were demonstrated by Essentiale, Concor, and
Nurofen, as well as by Alflutop (up from rank 25 in 2009 to 13 in 2010) and Detralex (up from rank 21 in 2009 to 15 in 2010) that had not been among the TOP15 before. Vitrum and Enap dropped out of the TOP15 (downgraded from 13th to 17th and from 14th to 16th, respectively).
<5 USD
a) Total market b) VED c) non-VED
5—20 USD
20—100 USD
100—500 USD
>500 USD
32.92 33.98 23.88 29.00 23.76 26.31
49.80 48.85 52.80 52.65 52.40 51.11
15.93 16.29 18.22 16.48 22.81 21.621 93
1.24 0.78
18.22 16
4.53 1.66 0.97 0.914 0.7
0.11 0.10
33 1.6
0.57 0.21
7 0.9
0.06 0.05
2009 2010 2009 2010 2009 2010
Fig. 8. Price segmentation of Russia’s out-of-pocket pharma market (in value terms), 2009—2010
Source: Pharmexpert — Monitoring of retail drug sales in Russia
78 <79 out-of-pocket pharma market
has grown. really
report on out-of-pocket
sector of russia’s pharma
market
Table 1. TOP15 corporations in Russia’s out-of-pocket pharma market (in value terms), 2010
R ank Trademark Sales share (%, USD) Share growth (%), 2010/2009
2010 2009 2010 2009
1 2 Sanofi–Aventis 5.17 4.74 9
2 1 Pharmstandard 5.12 5.76 –11
3 4 Berlin-Chemie/Menarini 3.84 3.66 5
4 3 Bayer Healthcare 3.80 3.71 3
5 5 Sandoz 3.35 3.18 5
6 8 Nycomed 3.24 2.94 10
7 6 Gedeon Richter 3.14 3.12 1
8 9 Servier 2.73 2.76 –1
9 7 Novartis 2.72 2.95 –8
10 10 STADA CIS 2.42 2.37 2
11 13 Abbott Products 2.37 1.89 26
12 11 Teva Pharmaceutical Industries Ltd* 2.09 2.11 –1
13 12 Krka 2.03 2.02 1
14 17 Pfizer 1.83 1.66 10
15 15 Boehringer Ingelheim 1.74 1.70 2
* Data on Teva do not include Ratiopharm GMBH sales.
Source: Pharmexpert — Monitoring of retail drug sales in Russia
Table 2. TOP15 trademarks in Russia’s out-of-pocket pharma market (in value terms), 2010
R ank Trademark Sales share (%, USD) Share growth (%), 2010/2009
2010 2009 2010 2009
1 1 Arbidol 1.46 2.02 –28
2 2 Essentiale 1.07 0.89 20
3 4 Viagra 0.88 0.81 8
4 5 Actovegin 0.85 0.78 8
5 10 Concor 0.76 0.63 20
6 12 Nurofen 0.71 0.59 20
7 9 Linex 0.71 0.68 4
8 8 Pentalgin 0.69 0.68 1
9 7 Theraflu 0.68 0.74 –8
10 3 Oscillococcinum 0.61 0.86 –29
11 11 Mezym forte 0.61 0.61 –1
12 14 No-spa 0.54 0.55 –2
13 25 Alflutop 0.53 0.44 19
14 6 Anaferon 0.53 0.76 –31
15 21 Detralex 0.52 0.46 13
Source: Pharmexpert — Monitoring of retail drug sales in Russia
The Russian
pharmaceutical
market
2010
results
Conclusion: The main out-of-pocket sector
trend in 2010 was the decline of VED prices due
to the implementation of the state regulation.
In turn, the general economic recovery
observed after the crisis of 2008—2009 led
to a significant market growth in real terms.
According to preliminary estimates, given
further strengthening of consumer confidence
and the continuation of economic trends of
2010, the market will continue growing in value
terms, but any significant gains in real terms
are probably not to be expected.
80 <81
hospital market
has recovered
after crisis
X.
The Russian
pharmaceutical
market
2010
results
Traditionally, the largest share of drugs purchased for hospitals and other medi-cal institutions was represented by Group J “General anti-infectives systemic” (Table 1). Their share in the aggregate purchases amounted to 26.2% in value terms and 32.2% in real terms. The TOP5 trademarks of the group included beta-
As of the end of 2010, the aggregate hospital
segment of Russia’s pharma market reached
1.5 bn USD in value terms, which is equivalent
to 1.1 bn EUR or 45.7 bn RUB (Fig. 1). As compared
to 2009, drug procurement spending grew 15%
in USD, 27% in EUR, and 7% in RUB. In real terms,
purchases decreased to 0.33 bn units, consump-
tion declining by 8%.
report on russia’s
hospital drug
purchase market
1.7 1.3 1.5
+15%
+24%
0.0
0.5
1.0
2.0
1.5
2008 2009 2010
a) Bn USD b) Bn EUR
42.3 42.5 45.7
+7%+0.5%
0
10
20
30
50
40
2008 2009 2010
c) Bn RUB
1.2 0.9 1.1
+27%
-25%
2008 2009 2010
0.0
0.2
0.4
0.6
0.8
1.0
1.4
1.2
Fig. 1. Drug purchasing dynamics in hospital sector, 2008—2010
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
82 <83 hospital market
has recovered after crisis
report on russia’s hospital
drug purchase market
lactam antibiotics Meronem and Tienam, fluroquinolone Tavanic, cephalosporin Ceftriaxone, and broad spectrum penicil-lin Ampicide.
The share of Group L “Antineoplastic and immunomodulating agents” grew in value terms from 14.6% in 2009 to 20.1% in 2010. However, such growth should be analyzed in the context of the entire hos-pital segment recovery after the financial crisis that peaked in 2009. Comparison with the growth rates for preceding years (14.3% in 2007 and 18.1% in 2008) welcomes a conclusion that the pre-crisis growth dynamics has been regained. In addition, it is worth noticing that Mab-thera and Leucostim ranking among the TOP5 trademarks of this group built up their aggregate purchase shares by 108% and 280%, respectively.
The highest share growth rate in value terms was demonstrated by Group G “Genito-uri-nary system and sex hormones” (+57%); this growth was largely due to heavier pur-chasing of Menopur, Gonal-F, and Puregon. The maximum negative growth was shown by Group P “Parasitology” (–32%) because of decreased Medifox™ sales.
Group K “Hospital solutions” with an 8.5% aggregate purchase share in value terms has the largest market share in real terms (27.7%). The group leader, Sodium chlo-ride™, also ranks first among the TOP5 trademarks in the hospital purchase seg-ment (Table 2). The 2nd place goes to beta-lactam antibiotic Meronem. Mabthera™ ranks third after having made its way back to the TM rating; it is part of Group L01X “All other antineoplastics” and it demonstrates the highest share growth in value terms (108%). As of the end of 2010, the TOP15 trademarks included Curosurf, Sevorane, and Ultravist, while Avastin™
(0.8% in 2009 in value terms), Actovegin (0.9%), Naropin (0.8%), and Omnipaque (1.0%) have left the rating.
The hospital purchase segment as well as the entire Russian pharma market is largely represented by imported drugs (Fig. 2). However, as of the end of 2010, their share in value terms went slightly down (from 78.7% to 78.0%). Domination of foreign companies is also illustrated by the corporation rating (Table 3). Local manufacturers are represented by Biotec and Veropharm (the latter company was for the first time on that list — primarily owing to increased purchases of Tautax from Group L01C “Vinca alkaloids and other plant products”).
As of the end of 2010, the average price in the hospital segment was 4.61 USD/unit, up 25% vs. the previous year (Fig. 3). One of the reasons for the price growth was the implementation of the state regulation of vital and essential drug prices. Manufac-turers and distributors were given more freedom in pricing of drugs on the VED list. Therefore, the average price in the VED group went up 14% (from 3.47 to 3.97 USD/unit); in the non-VED group the average price grew 72% (from 4.57 to 7.85 USD/unit), which boosted the latter’s market share in value terms from 23.0% in 2009 to 28.1% in 2010 (Fig. 4).
It should be noted that the segment’s average price also grew due to the growth of prices of imported drugs whose share went down from 28.5% to 26.1% in real terms (Fig. 5), which testifies to the import substitution trend. The average price for imported drugs grew 25% to reach 15.69 USD/unit, whereas the price for local drugs went up 14% to 1.56 USD/unit in 2010.
Traditionally, the most expensive drugs on the hospital purchase market include
The Russian
pharmaceutical
market
2010
results
Table 1. TOP5 trademarks of 1st level АТС groups (EphMRA) in hospital purchasing sector (%, USD), 2010
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
R ank АТС group / Trademark
Group’s total purchases
share / ТМ share in group’s
purchases (%)
Share growth
(%), 2010/2009
2010 2009
I J — General anti-infectives systemic 26.18 27.36 –4
1 Meronem 7.10 6.98 2
2 Tienam 4.31 4.20 3
3 Tavanic 3.79 4.39 –14
4 Ceftriaxone 2.49 2.29 9
5 Ampicide 2.30 2.19 5
II L — Antineoplastic and immunomodulating agents 20.08 14.60 37
1 Mabthera 7.02 4.65 51
2 Taxotere 5.69 6.90 –18
3 Gemzar 4.42 7.59 –42
4 Oxatera 3.83 5.20 –26
5 Leucostim 3.64 1.32 177
III B — Blood and blood forming organs 10.13 9.89 2
1 Clexane 13.01 11.27 15
2 Heparin 10.41 8.90 17
3 Actilise 8.74 9.65 –9
4 Feiba Tim 4 Immuno 7.31 5.54 32
5 Fraxiparine 5.72 6.33 –10
IV N — Central nervous system 9.52 11.94 –20
1 Sevorane 8.04 5.31 51
2 Naropin 6.21 6.80 –9
3 Propofol 5.74 4.50 27
4 Diprivan 5.08 5.29 –4
5 Zyprexa 3.47 2.92 19
V K — Hospital solutions 8.51 8.10 5
1 Sodium chloride 38.24 36.84 4
2 Glucose 11.49 13.42 –14
3 Albumin 8.41 7.87 7
4 Voluven 3.92 2.28 72
5 Rheopolyglucine 3.07 3.67 –16
VI A — Alimentary tract and metabolism 5.69 8.09 –30
1 Quamatel 6.48 4.59 41
2 Heptral 5.40 4.48 20
3 Essentiale 5.12 2.99 71
4 Berlithion 4.14 2.19 89
5 Losec 3.52 2.37 48
VII C — Cardiovascular system 5.37 6.09 –12
1 Actovegin 13.56 14.53 –7
2 Vasoprostan 5.57 3.85 44
3 Mexidol 4.49 5.34 –16
4 Cordarone 3.10 2.43 27
5 Potassium-magnesium asparaginate Berlin-Chemie 3.03 3.11 –3
VIII T — Diagnostic agents 3.24 2.89 12
1 Ultravist 22.91 25.15 –9
2 Omnipaque 22.29 35.07 –36
3 Optiray 16.51 12.17 36
4 Omniscan 8.96 3.76 138
5 Urographin 6.83 10.45 –35
84 <85
R ank АТС group / Trademark
Group’s total purchases
share / ТМ share in group’s
purchases (%)
Share growth
(%), 2010/2009
2010 2009
IX M — Musculo-skeletal system 2.76 2.81 –1
1 Zometa 13.89 8.53 63
2 Ketonal 11.15 12.66 –12
3 Esmeron 9.41 9.73 –3
4 Ketorol 6.09 8.28 –26
5 Arduanum 5.50 7.44 –26
X R — Respiratory system 2.31 2.40 –4
1 Curosurf 38.98 28.87 35
2 Xolair 8.31 4.83 72
3 Suprastin 6.91 8.81 –22
4 Berodual 5.42 7.36 –26
5 Pulmicort 3.75 2.81 34
XI H — Systemic hormonal preparations (excluding sex hormones) 1.79 1.83 –2
1 Octreotide 23.92 27.04 –12
2 Dexamethasone 10.96 11.12 –1
3 Mimpara 9.40 4.44 112
4 Sandostatin 9.01 10.83 –17
5 Cetrotide 7.50 0.37 1952
XII G — Genito-urinary system and sex hormones 1.55 0.99 57
1 Menopur 28.11 1.43 1866
2 Gonal-F 14.70 7.06 108
3 Puregon 12.67 12.52 1
4 Hinipral 5.55 8.27 –33
5 Oxytocin 5.22 12.12 –57
XIII D — Dermatologicals 1.36 1.64 –17
1 Chlorhexidine 17.92 10.53 70
2 Ethyl alcohol 17.28 30.43 –43
3 Tachocomb 15.65 0.00 ~
4 Mistral 4.99 4.56 9
5 Antiseptic medical solution 3.19 4.62 –31
XIV V — Various 1.05 0.91 16
1 Medical oxygen 40.84 30.89 32
2 Leucovorin 15.71 8.81 78
3 Uromitexane 8.53 9.40 –9
4 Exjade 7.64 0.42 1733
5 Anexate 6.97 11.66 –40
X V S — Sensory organs 0.42 0.41 2
1 Lucentis 21.58 15.46 40
2 Vita-Iodurol 8.86 0.16 5535
3 Inocaine 4.79 4.28 12
4 Corneregel 4.61 3.81 21
5 Sulfacylum-natrium 4.12 5.27 –22
X VI P — Parasitology 0.03 0.04 –32
1 Medifox 45.61 45.50 0.26
2 Plaquenil 9.15 8.41 9
3 Nemozole 8.79 3.96 122
4 Benzyl benzoate 7.33 6.53 12
5 Biltricide 4.13 8.39 –51
hospital market
has recovered after crisis
report on russia’s hospital
drug purchase market
The Russian
pharmaceutical
market
2010
results
78.7 78.0
28.5 26.1
2009 2010 2009 2010
In value terms In real terms
21.3 22.0
73.971.5
Imported
Local
Fig. 2. Split of imported and local drug purchases in hospital sector (%), 2009—2010
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
Table 2. TOP15 trademarks in hospital purchasing sector (%, USD), 2010
R ank Trademark TM’s total purchases share (%) Share growth (%), 2010/2009
2010 2009
1 Sodium chloride 3.25 2.98 9
2 Meronem 1.86 1.91 –3
3 Mabthera 1.41 0.68 108
4 Clexane 1.32 1.12 18
5 Taxotere 1.14 1.01 13
6 Tienam 1.13 1.15 –2
7 Heparin 1.06 0.89 20
8 Tavanic 0.99 1.20 –18
9 Glucose 0.98 1.09 –10
10 Curosurf 0.90 0.69 30
11 Gemzar 0.89 1.11 –20
12 Actilise 0.89 0.95 –7
13 Oxatera 0.77 0.76 1
14 Sevorane 0.77 0.63 21
15 Ultravist 0.74 0.73 2
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
86 <87
a) average price, USD/unit
USD
Market, total
VED
non-VED
0.00
3.00
6.00
9.00
0.0
100.0
200.0
300.0
2009 2010
4.57
3.683.47
3.97
4.61
7.85
b) average price, RUB/unit
RU
B
Market, total
VED
non-VED
2009 2010
144.2116.3109.9
120.8140.3
239.1
2239
147
87
3.9
4
242
39
1214
Fig. 3. Average price dynamics in hospital purchasing sector as a whole and in VED/non-VED groups, 2009—2010
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
Table 3. TOP15 corporations in hospital purchasing sector (%, USD), 2010
R ank Corporation Total purchase share (%) Share growth (%). 2010/2009
2010 2009
1 Sanofi-Aventis 6.30 6.66 –5
2 AstraZeneca 4.10 4.65 –12
3 Roche 4.08 3.86 6
4 Nycomed 3.56 3.27 9
5 Baxter 3.07 2.02 52
6 Pfizer 2.70 2.08 30
7 Genfa Medica S.A. 2.21 1.53 44
8 GSK 2.16 2.09 4
9 Veropharm ZAO 2.10 0.98 114
10 Bayer Healthcare 2.01 1.84 10
11 Sandoz 1.98 2.32 –15
12 Boehringer Ingelheim 1.96 1.85 6
13 Biotec OOO 1.95 2.40 –19
14 Novartis 1.92 1.55 24
15 Gedeon Richter 1.87 2.29 –18
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
hospital market
has recovered after crisis
report on russia’s hospital
drug purchase market
The Russian
pharmaceutical
market
2010
results
77.0 71.9 81.5 83.5
2009 2010 2009 2010
In value terms In real terms
VED
non-VED
23.0 28.1 16.518.5
Fig. 4. Split of VED/non-VED purchases in hospital sector (%), 2009—2010
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
a) average price, USD/unit
USD
Market, total
Local
Imported
0.00
5.00
10.00
15.00
20.00
0.0
200.0
400.0
600.0
2009 2010
12.58
3.68
1.37 1.56
4.61
15.69
b) average price, RUB/unit
RU
B
Market, total
Local
Imported
2009 2010
398.1
116.3
43.0 47.6
140.3
477.9
3
0
140
77 1.51 5 0 47.0 47
Fig. 5. Average price dynamics in hospital purchasing sector as a whole and in local/imported drug groups, 2009—2010
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
88 <89
those of Group T “Diagnostic agents” and Group L “Antineoplastic and immuno-modulating agents” (Figs. 6 and 7). The maximum price growth was demonstrated by Group G “Genito-urinary system and sex hormones”, the average price going up
110% to 8.1 USD/unit. As regards price segmentation, the share of drugs cheaper than 50 USD/unit went down (from 56.9% to 48.9%) as of the end of 2010. The high-est share growth was demonstrated by the most expensive drug segment (+6.4%).
Average price in ATC group
Average price in sector
A — Alimentary tract and metabolismB — Blood and blood forming organsC — Cardiovascular systemD — DermatologicalsG — Genito-urinary system and sex hormonesH — Systemic hormonal preparations (excluding sex hormones) J — General anti-infectives systemicK — Hospital solutions L — Antineoplastic and immunomodulating agentsM — Musculo-skeletal systemN — Central nervous systemP — Parasitology R — Respiratory systemS — Sensory organsT — Diagnostic agents V — Various
3.2
24.6
5.11.1
8.1
4.04.7 3.1 3.9
3.4
84.5
7.63.7
1.4
60.2
7.0
USD
10.0
0.0
20.0
30.0
40.0
50.0
60.0
70.0
90.0
80.0
GA B C D H J K L M N P R S T V
Fig. 6. Average price per unit in different АТС groups and in hospital purchasing sector as a whole (USD), 2010
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
hospital market
has recovered after crisis
report on russia’s hospital
drug purchase market
The Russian
pharmaceutical
market
2010
results
<5 USD
5-25 USD
25-50 USD
50-100 USD
>100 USD
2010
2009
26.7 49.5 4.55 14.5 4.8
2.7 16.5 8.2 16.3 56.3
19.6 52.9 12.1 4.66 10.8
49.5 18.3 13.5 3.5.5 15.2
11.6 18.1 4.0.0 17.5 48.8
13.6 19.2 14.9 17.4 34.9
20.5 28.2 8.0 11.2 32.1
61.1 15.4 3.6.6 7.66 12.3
1.2 6.4 6.88 6.88 78.8
23.7 28.2 7.00 5.66 35.5
20.4 21.8 20.2 15.9 21.7
38.4 17.0 44.6
28.1 16.4 4.55 49.41.6
35.1 43.2 21.60.1
0.40.6 4.1.1 25.6 69.3
42.5 28.7 9.4 17.42.0
18.6 22.0 8.4 10.9 240.1
22.2 25.3 9.4 9.7 2233.4
A — Alimentary tract and metabolism
B — Blood and blood forming organs
C — Cardiovascular system
D — Dermatologicals
G — Genito-urinary systemand sex hormones
H — Systemic hormonal preparations(excluding sex hormones)
J — General anti-infectives systemic
K — Hospital solutions
L — Antineoplasticand immunomodulating agents
M — Musculo-skeletal system
N — Central nervous system
P — Parasitology
R — Respiratory system
S — Sensory organs
T — Diagnostic agents
V — Various
Fig. 7. Drug price segmentation in different АТС groups and in hospital purchasing sector as a whole (%, USD), 2010
Source: Pharmexpert — Monitoring of hospital drug purchasing in Russia
Conclusion: In 2010, funding of drug purchases denominated in all key
currencies increased considerably. The hospital sector substantially
reached the pre-crisis level in value terms, which was accompanied
by growth of an average price per drug unit, especially for imported
drugs dominating the market. The implementation of the state
regulation of VED prices was also conducive to a significant growth
of non-VED drug prices. Given that healthcare expenditures will
continue growing in 2011, it may be expected that the last year’s
trends will, to some extent, prevail in the current year, too.
However, the price growth and, consequently, the aggregate market
size growth will slow down. Most likely, purchases of local drugs
will be gaining ground thus preventing the overall price growth.
90 <91
local
companies
strengthen
positions
in high-cost
segment
XI.
The Russian
pharmaceutical
market
2010
results
In 2010, a market share of over 58% in value terms was accounted for by purchases un-der the program of essential drug provision to beneficiary population groups (the ONLS program; Fig. 2). However, expansion of the list of high-cost nosologies planned in the future may result in an increase of the share of drugs funded out of the federal budget. What particular diseases will be included in the list is as yet unknown; for example, the All-Russia Patients Union suggests that such nosologies be included in the program as juvenile rheumatoid arthritis; multiple myeloma; mucopolysac-
The post-crisis year was a landmark for Russia’s
pharma market: the new law “On Drug Circula-
tion” was enacted; measures of VED price con-
trol were tightened; the drug coverage issue
was discussed by the government several times
etc. Not only legislative efforts but also econ-
omy was revitalized: the second wave of reces-
sion predicted by some economists spared the
pharma market. In particular, the public sector
of the market demonstrated steadily positive
dynamics in 2010, in spite of the fact that most
drug supply auctions were held as early as 2009.
The sector size reached 2.9 bn USD (+12% vs.
2009), and 88.1 bn RUB (+7%; Fig. 1).
report on beneficiary drug
coverage market in russia
2008 2009 20102000820 200909 220102 0
Growth, RUB
Growth, EUR
Growth, USD
bn EUR
bn USD
bn RUB
11%
-5%
-13%
7%
12%15%
33%
46%
50%
74.6 2.0 3.0 82.6 1.9 2.6 88.1 2.2 2.9
Fig. 1. Drug purchasing dynamics in beneficiary drug coverage sector, 2008—2010
Source: Pharmexpert — Beneficiary drug coverage
92 <93 local companies
strengthen positions
in high-cost segment
report on beneficiary
drug coverage market
in russia
charidosis of types 1, 2, and 6; osteogenesis imperfecta; soft-tissue sarcoma; the resis-tant form of idiopathic thrombocytopenic purpura; Fabry disease; aplastic anemia; blood coagulation factor deficiency; highly aggressive breast cancer forms. The Patients Union also speaks in favor of ex-panding the list of multiple sclerosis drugs.
Federal budget expenditures on drug pur-chases under the 7 Nosologies program amounted to 45.86 bn RUB (to compare, in 2009 the funding size was about 32 bn RUB), of which 1.09 bn RUB were ship-ment costs, the rest being spent on drug purchases proper. Local manufacturers winning a number of lots (trademarks
Coagil VII, Rastan, Ronbetal, Supresta) saved the government 3.36 bn RUB. In the market as a whole, the share of local drugs grew to 9.7% compared to 6.1% the year before (Fig. 3). Among recent newcomers to the market are zoledronic acid prepara-tions Rezoklastin FS and Zolerix. For INN interferon beta-1b, apart from Betaferon purchased every year (28% of total pur-chases of that INN in value terms), Extavia (40%) and Ronbetal (32%) were also purchased. The TOP10 newcomers among hemophilia drugs, besides Coagil VII (epta-cog alpha [activated]), also included Beri-ate (coagulation factor VIII) and Mononine (coagulation factor IX; Table 1).
ONLS
7 Nosologies
2008
2009
2010 41.50
59.78
58.50
40.22
53.89 46.11
Fig. 2. Split of drug purchases under 7 Nosologies/ONLS programs in beneficiary drug coverage sector (%, USD), 2008—2010
Source: Pharmexpert — Beneficiary drug coverage
The Russian
pharmaceutical
market
2010
results
Imported
Local
2008
2009
2010 9.68
93.90
90.32
6.10
94.38 5.62
Fig. 3. Split of imported and local drugs in beneficiary drug coverage sector (%, USD), 2008—2010
Source: Pharmexpert — Beneficiary drug coverage
Table 1. TOP10 trademarks purchased in beneficiary drug coverage sector for the first time in 2010 (%, USD)
R ank Trademark Corporation ONLS/7 Nosologies INN
Supplies
(%, USD)
1 Coagil VII Lekko Hemophilia eptacog alpha [activated] 1.44
2 Extavia Novartis Multiple sclerosis interferon beta-1b 1.06
3 Ronbetal Biocad Multiple sclerosis interferon beta-1b 0.87
4 Beriate GSK Hemophilia coagulation factor VIII 0.59
5 Rezoklastin FS F-Sintez ZAO ONLS zoledronic acid 0.14
6 Mononine CSL Behring Hemophilia coagulation factor IX 0.05
7 Galvus met Novartis ONLS vildagliptin+metformin 0.04
8 Zolerix Biocad ONLS zoledronic acid 0.04
9 Supresta Veropharm ZAO Transplantology mycophenolate mofetil 0.04
10 Vincatera Genfa Medica S.A. ONLS vinorelbine 0.04
Source: Pharmexpert — Beneficiary drug coverage
94 <95 local companies
strengthen positions
in high-cost segment
report on beneficiary
drug coverage market
in russia
Table 2. TOP20 trademarks in beneficiary drug coverage sector (USD), 2010
R ank Trademark ONLS/7 Nosologies
TM total
supply share
(%, USD), 2010
Total supply
share (%, USD)
Share
growth
(%)
TM share in ONLS / 7
Nosologies programs
(%, USD)2010 2009
1 Velcade Myeloleucosis 6.07 6.07 6.35 –4 14.63
2 Glivec
ONLS
5.73
0.40 0.39 3 0.69
Myeloleucosis 5.33 4.93 8 12.84
3 Mabthera
ONLS
5.25
0.38 0.42 –8 0.65
Myeloleucosis 4.87 3.65 33 11.73
4 Octanate Hemophilia 4.01 4.01 5.77 –30 9.67
5 Copaxone
ONLS
3.70
0.02 0.03 –21 0.03
Multiple sclerosis 3.68 3.23 14 8.88
6 Lantus ONLS 2.46 2.46 2.13 16 4.21
7 Rebif
ONLS
1.94
0.02 0.00 – 0.04
Multiple sclerosis 1.92 1.25 53 4.62
8 Herceptin ONLS 1.71 1.71 1.57 9 2.92
9 Seretide ONLS 1.65 1.65 1.54 6 2.81
10 Humulin ONLS 1.49 1.49 1.66 –10 2.54
11 Coagil VII Hemophilia 1.44 1.44 0.00 – 3.46
12 Remicade ONLS 1.43 1.43 1.35 6 2.45
13 Hemoctin Hemophilia 1.42 1.42 1.90 –25 3.42
14 Eprex ONLS 1.33 1.33 2.42 –45 2.27
15 Cerezyme
ONLS
1.32
0.004 0.00 – 0.01
Gaucher disease 1.32 1.38 –4 3.19
16 Recormon ONLS 1.10 1.10 1.23 –10 1.89
17 Extavia Multiple sclerosis 1.06 1.06 0.00 – 2.56
18 Pulmozyme
ONLS
1.02
0.00 0.001 – –
Mucoviscidosis 1.02 0.86 19 2.45
19 Avastin ONLS 0.99 0.99 1.08 –9 1.69
20 Novorapid ONLS 0.96 0.96 1.03 –7 1.64
Source: Pharmexpert — Beneficiary drug coverage
The Russian
pharmaceutical
market
2010
results
Table 3. TOP20 corporations in beneficiary drug coverage sector (%, USD), 2010
Rank Corporation
Main products
supplied for
beneficiary drug
coverage
Corporation
market share
(%, USD)
Share
growth
(%)
Total market share of
main products (%, USD)
Share of main products in
beneficiary drug coverage sector
(%, USD)
1 Roche
Mabthera
Herceptin
Recormon 12.59 10 8.07 64.05
2 Novartis
Glivec
Extavia
Sandostatin 11.34 12 7.71 67.95
3 Janssen-CILAG
Velcade
Eprex
Rispolept 9.34 – 15 8.31 88.95
4
Teva
Pharmaceutical
Industries Ltd
Copaxone
Beclazone
Alpha D3 Teva 5.09 10 4.11 80.74
5 Novo Nordisk
Novorapid
Protaphane
Levemir 4.93 – 31 2.73 55.30
6 Octapharma AG
Octanate
Octagam
Octanine 4.89 – 29 4.89 100.00
7 Sanofi-Aventis
Lantus
Insuman
Depakine 4.50 12 3.19 70.95
8 AstraZeneca
Arimidex
Symbicort
Zoladex 3.59 3 2.16 60.18
9 GSK
Seretide
Beriate
Telzir 2.71 40 2.31 84.99
10 Schering-Plough
Remicade
Temodal
Pegintron 2.69 – 2 2.61 96.77
11 Eli Lilly
Humulin
Humalog
Gemzar 2.26 – 10 2.21 97.65
12 Bayer Healthcare
Betaferon
Kogenate FS
Fludara 2.09 – 53 1.87 89.40
13 Merck Serono
Rebif
Saizen 1.95 40 1.95 100.00
14 Baxter
Recombinate
Hemofil
Immunine 1.63 48 1.31 80.31
15 Servier
Prestarium
Diabetone
Pronoran 1.56 – 1 1.00 64.53
16
Biotest Pharma
GMBH
Hemoctin
Pentaglobin
Intratect 1.55 – 22 1.54 99.18
17
Genzyme
Pharmaceuticals
Cerezyme
Aldurazyme
Renagel 1.51 1 1.51 100.00
18 Lekko
Coagil VII
Taurine
Cefazolin 1.44 – 1.44 100.00
19
Boehringer
Ingelheim
Spiriva
Berodual
Berotec 1.43 – 3 1.20 84.10
20 Pharmstandard
Rastan
Biosulin
Phosphogliv 1.28 74 1.04 81.03
Source: Pharmexpert — Beneficiary drug coverage
96 <97 local companies
strengthen positions
in high-cost segment
report on beneficiary
drug coverage market
in russia
The TOP3 market players remained un-changed, i.e. Roche, Novartis, and Jans-sen-CILAG (Table 3). Teva Pharmaceuti-cal Industries Ltd came close to the leaders, with a market share of 5%, with 4% of this share being accounted for by its three main products in the beneficiary drug coverage sector (Copaxone, Beclazone, and Alpha D3 Teva). There are manufacturers that capture considerable market shares with just two or three products in their portfolio. They are, for example, Octapharma AG, Merck Serono, Genzyme Pharmaceuticals, and local company Lekko. The domestic leader of the retail sector, Pharmstandard, also made it to the TOP20: more than 50% of the
company’s share in the BDC sector are ac-counted for by growth hormone Rastan.
Price growth both in rubles and dollars is explained by purchases made at the “crisis year” prices. The effect of the state control measures in the sector will not become ap-parent before 2011 (Figs. 4, 5). The average price per unit of a conventional VED-listed drug grew 17% in dollars and 11% in rubles. Notably, the biggest average price increase was demonstrated by local drugs (thus, in 2009, a unit of drug cost about 5 USD, while in 2010, the price jumped to 9.5 USD). The most receptive market segment comprises drugs in 100-500 USD price range; the seg-ment grew by 1% year-on-year (the share of
2008 2009 2010
VED
Imported
Market as a whole
Non-VED
Local
Ave
rage
pri
ce/u
nit
, RU
B
0
200
400
600
800
1000
1400
1800
1600
1200
13201536
10633 948 1050
7466785
889
600
270 343
181
270 343
1
156
288
113
Fig. 4. Average price per unit of drug in beneficiary drug coverage sector (RUB), 2008—2010
Source: Pharmexpert — Beneficiary drug coverage
The Russian
pharmaceutical
market
2010
results
TM Rebif, Lantus, Pulmozyme etc. increased; Fig. 6). The share of drugs cheaper than 10 USD decreased almost 2%. This is related to the trend of costlier drugs being purchased (that are more efficacious, in most cases) as well as overall drug price growth. For example, due to increased prices for a num-ber of drugs, Group C09A “ACE inhibitors, plain” moved to the higher-cost segment of 10-100 USD. Above 20% (value terms) of all medications provided to beneficiaries were accounted for by antineoplastics (Velcade,
Glivec, Mabthera, Herceptin, Avastin), the vast majority of them being purchased at more than 1,500 USD per unit. The niche of high-cost drugs is represented, besides an-tineoplastics, by coagulation factors (Coagil VII, Novoseven), immunomodulating agents (Copaxone), and interferons (Betaferon, Avonex). The biggest growth was demon-strated by Group A16A “Other alimentary tract and metabolism products”, namely Cerezyme, Elaprase, Aldurazyme, their prices also exceeding 1,500 USD.
2008 2009 2010
VED
Imported
Market as a whole
Non-VED
Local
Ave
rage
pri
ce/u
nit
, USD
0
10
20
30
40
50
60
41.0
51.0
43.0
30.0 35.0
30.030.0
0
24.7
29.424.5
9.0 11.0
7.0
9.0 11.
0
4.9
9.5
4.6
Fig. 5. Average price per unit of drug in beneficiary drug coverage sector (USD), 2008—2010
Source: Pharmexpert — Beneficiary drug coverage
98 <99 local companies
strengthen positions
in high-cost segment
report on beneficiary
drug coverage market
in russia
20080
10
20
30
40
50
60
70
80
90
% 100
2009 2010 2008 2009 2010 2008 2009
BDC ONLS 7 Nosologies
2010
13.2813.28
31.63
<10 USD
10—100 USD
100—500 USD
500—1500 USD
>1500 USD
22.86
22.32
9.91
2009
16.66
23.25
26.38
23.62
10.09
2010
16.8
25.40
27.38
22.74
8.40
2008
0.041.72
20.21
77.87
2009
0.061.74
21.19
76.78
2010
0.082.37
24.28
73.07
2008
19.63
17.56
57.83
4.98
2009
11.1411.14
10.37
67.20
11.29
2010
12.9612.96
10.38
65.22
11.44
0.16 0.23 0.20
Fig. 6. Price segmentation of beneficiary drug coverage sector (%, USD), 2008—2010
Source: Pharmexpert — Beneficiary drug coverage
The Russian
pharmaceutical
market
2010
results
Conclusion: Despite the existing problems in
the field of drug coverage, the sector is on
the rise. The standard monthly allowance per
beneficiary has been growing (to compare, 426
RUB/month was allocated per beneficiary in
2008, 480 RUB/month — in 2009, and for 2011,
President Medvedev approved the allowance
of 579 RUB/month per beneficiary); funding
of the high-cost nosologies (7 Nosologies)
program has increased, with plans to further
expand the program sometime in the future.
Efforts are being made to develop and
improve the system of drug provision to the
population, in particular the drug shipment
and redistribution system. Several regions
are setting up information databases that
simplify the process of information exchange
among healthcare institutions. For example,
Tatarstan has launched the “Electronic
Drugstore”, a pilot project making it possible
to monitor redistribution of drugs among
cities, towns, and districts of the Republic.
The new law on mandatory health insurance
is intended to resolve, at least in part, the
problem of underfunding of the ONLS program.
Besides, Minzdravsotsrazvitiya has voiced the
possibility of providing financial aid to the
regions out of the federal budget.
100 <101
ex-ussr
pharma sector
overcomes
crisis
XII.
The Russian
pharmaceutical
market
2010
results
Over the past year, the aggregate GDP in the CIS area went up 4.5% to reach the 2002 level (Fig. 1). In 2010, Kazakhstan was ahead of the majority CIS countries in terms of the GDP growth. Whilst in 2010 the average economic growth rate in the Commonwealth nations was 4.5%, the same indicator in the Republic of Kazakh-stan reached 7%. Kazakhstan was the third among the countries boasting the highest rates of economic growth. Uzbekistan and Belarus ranked first and second in terms of the GDP growth — 8.5% and 7.6%, re-spectively. Russia’s GDP grew over the past year by 4% (Table 1). Before mid-2010, the inflation rates continued going down in the CIS and Georgia but they started grow-ing again in H210 due to some supply-side disturbances, including a drought in Russia and Ukraine, which resulted in skyrocket-ing food prices. Even though the external
After a significant decline in 2009, the general
economic indicators – such as Gross Domestic
Product (GDP), industrial output, retail trade
turnover, etc. – of all ex-USSR countries started
growing actively in 2010, which was facilitated
by the overall improvement of the external en-
vironment. The resumed production growth was
accompanied by the improvement of the key so-
cioeconomic indicators. Nevertheless, the key
economic indicators still remain below those
potentially achievable. Some of the regions face
economic problems, which may to a certain extent
affect the prospects of the economic growth of
the CIS as a whole.
cis and georgia
pharma market
report
Table 1. Basic socioeconomic indicators of invididual CIS countries1 and CIS as a whole, 2010/2009 (%)
Country GD
P
(a
t c
on
st
an
t p
ric
es
)
In
du
st
ria
l o
ut
pu
t (
at
co
ns
ta
nt
p
ric
es
)
Gr
os
s a
gr
ic
ul
tu
re
pr
od
uc
t (a
t c
on
st
an
t
pr
ic
es
, a
ll
t
yp
es
o
f
ec
on
om
ic
m
od
el
s)
In
ve
st
me
nt
in
c
ap
it
al
as
se
ts
(
at
c
on
st
an
t
pr
ic
es
; a
ll
f
un
din
g
so
ur
ce
s)
Re
ta
il
t
ra
de
tu
rn
ov
er
(
at
co
ns
ta
nt
p
ric
es
:
al
l d
is
tr
ib
ut
io
n
ch
an
ne
ls
)
Pr
ic
e in
dic
es
of
in
du
st
ria
l
ma
nu
fa
ct
ur
er
s
Co
ns
um
er
p
ric
e
in
dic
es
Azerbaijan 105.0 102.6 97.8 121.2 108.8 128.3 105.7
Armenia 102.6 109.7 86.5 96.7 100.8 122.6 108.2
Belarus 107.6 111.3 102.0 116.6 117.5 113.6 107.8
K azakhstan 107.0* 110.0 88.3 99.5 112.3 125.2 107.1
Moldova 107.0* 110.0 88.3 99.5 104.9* 107.9 107.4
Russia 104.0 108.2 88.1 106.0 104.4 114.9 106.9
Uzbekistan 108.5 108.3 106.8 109.2 114.7 … …
Ukraine 105.0* 111.0 99.0 98.0* 107.6 120.9 109.4
CIS total 104.5 108.7 93.1 105.5 105.6 116.5 107.4
1 Data for Georgia is not available due to lack of a reliable data source.
* Estimations were made by CIS Interstate Committee for Statistics on Kazakhstan, Moldova, and Ukraine in order to get CIS totals.
Source: CIS Interstate Committee for Statistics
102 <103 ex-ussr pharma sector
overcomes crisis
cis and georgia pharma
market report
environment improves and economic recovery continues, financial instability is still in place due to currency risks and insufficient mobilization of internal bank resources.
As of the end of 2010, the aggregate out-of-pocket segment of the CIS pharma market reached 19.44 bn USD or 14.66 bn EUR1. It grew year-on-year 11% in USD, 17% in EUR, and 15% in the national currency (Fig. 2).
Source: CIS Interstate Committee for Statistics
GDP dynamics, %
108106 105
108104.5
93
107 107 108109
106
%
85
80
90
95
100
105
110
115
120
20042000 2001 2002 2003 2005 2006 2007 2008 2009 2010
Fig. 1. CIS GDP dynamics (% y/y), 2000—2010
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
0
2
4
6
8
12
16
14
10
Rus Ukr Kaz Bel ArmMolGeoUzbAz
14.3
2.86
0.88 0.67 0.31 0.25 0.16 0.12 0.07-10
-5
5
0
10
20
30
Mar
ket
size
, bn
USD
Gro
wth
, %
Growth in USD, %
Growth in national currency, %
Total sales, bn USD
Rus Uk Kaz
0.88
B l
0.67
Az
0.31
Uzb
0.25
G
0.16
M l
0.12
Arm
0.07
14.314.3
2.86
0 88 0 67
2.86
11
7
12
14
6
5
10
18
11 7
17
3
-4
-1
108
5
Fig. 2. Pharma market size in CIS countries and Georgia, 2010 (plus growth y/y)
1 Hereunder at wholesale prices.
The Russian
pharmaceutical
market
2010
results
The highest market growth rates against 2009 were demonstrated by Ukraine (12%), Rus-sia (11%), Azerbaijan (11%), Belarus (10%), and Uzbekistan (7%), while there was nega-tive growth in Georgia (–4%) and Moldova (–1%).
As of the end of 2010, the countries that demonstrated the lowest pharma market growth rates also saw a steady devalua-tion of their national currencies against USD and the world monetary standard. In Georgia, the national currency lost 7% in value against USD, in Moldova — 11% (Table 2), which significantly affected the growth figures in the national currency. Three countries demonstrated the highest growth in the national currency in 2010,
viz. Belarus (18%), Uzbekistan (17%), and Ukraine (14%). The lowest growth in the national currency was shown by Georgia (3%). Kazakhstan and Azerbaijan had the same growth figures in the national cur-rency and USD: in Kazakhstan, the growth was 6% in USD and 5% in the national currency; in Azerbaijan, the growth was 11% both in USD and the national currency. These two countries’ national currencies remained stable against the world mon-etary standard 1 throughout 2010.
Analysis of the out-of-pocket segment of the pharma market in the region under cover-age in dynamics by half years showed a dramatic slowdown in the growth rates by the end of 2008 (Fig. 3). It was then that
Table 2. Basic macroeconomic indices of CIS countries and Georgia, 2010/2009
Country Population, mn
Retail sales
turnover
(bn, national
currency)
Consumer price
index
Annual average rate, national
currency: USD
Devaluation
rate, national
currency : USD,
2010/2009 (%)
2010 2009
Russia 141.91 16435.8 106.9 30.39 31.93 4.83
Ukraine 45.78 529.9 109.4 7.93 7.81 -1.56
Uzbekistan 28.00 21448.9 107.3 1592.28 1470.44 -8.29
K azakhstan 16.19 3014.0 107.1 147.66 147.93 0.18
Belarus 9.47 66514.4 107.8 2985.78 2808.50 -6.31
Azerbaijan 8.99 13.3 105.7 0.80 0.80 0.15
Georgia 4.37 … 107.1 1.78 1.66 -7.13
Moldova 3.56 25.1 107.4 12.38 11.19 -10.65
Armenia 3.25 1196.6 108.2 372.30 363.30 -2.48
Source: CIS Interstate Committee for Statistics; geostat.ge
1 Average rate against the dual currency basket (USD + EUR).
104 <105 ex-ussr pharma sector
overcomes crisis
cis and georgia pharma
market report
the global economic crisis hit all sectors in-cluding the pharma market. In H109, the re-cession peaked at –13% vs. H208. However, the next six months of 2009 saw the start of the recovery which was largely due to the increased demand for cold and flu preven-tion drugs in several countries. As a result, retail drug sales reached 9.4 bn USD over June — December 2009, up 16% vs. H109 and up 2% year-on-year. H110 saw growth against H209 at 5%. As regards H110, there was a considerable growth (+22%), which testifies to positive changes in the national economies of the countries under coverage in general and in their pharma sectors, in particular. H210 is characterized by a 3% decline against H110, but there was a 1% growth year-on-year.
Drug consumption is determined by a com-plex of factors, such as the overall size and development level of the market, mental-ity of the population, government policy, maturity and attractiveness of the country’s pharma market for manufacturers, and their advertising activity. Drug consumption in the CIS countries goes up year after year. The highest per capita drug consumption rates both in 2010 and 2009 were recorded in Russia, Belarus, Ukraine, and Kazakhstan (Fig. 4). Ukraine and Belarus showed the biggest growth in drug consumption in 2010 against 2009: 13% in USD and 14% in the national currency in the former, 18% in the national currency and 10% in USD in the latter. The fast growing Uzbekistan pharma market also demonstrates a considerable
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
0
2
4
6
8
12
10
H12008
H22008
H12009
H22009
H22010
H12010
-20
-15
-5
-10
0
10
20
15
5
Mar
ket
size
, bn
USD
Gro
wth
, %
Growth, %
Total sales, bn USD
H1 H2 H1 H2 H1 H2
4
-13
16
5
-3
8.9 9.3 8.1 9.4 9.9 9.6
4
-13
16
5
-3
9 6
Fig. 3. Pharma market size in CIS countries in dynamics by half years, 2008—2010
The Russian
pharmaceutical
market
2010
results
growth in the national currency (12%), but a mere 4% growth in USD. There was a negative growth in per capita drug con-sumption in Georgia (–3%) and Moldova (–1%), although they had quite meaningful growth in the national currencies (+4% and +10%, respectively), which was due to their national currencies devaluation against the world monetary standard.
There was just a slight change against 2009 in the drug price segmentation in most coun-tries (except Azerbaijan and Uzbekistan). In Azerbaijan, the share of cheaper pharma-ceuticals grew while that of more expensive drugs fell. Conversely, the share of expen-sive drugs grew in Uzbekistan with the share of those cheaper going down (Fig. 5). The above processes result from a consider-
able progress and expansion of the pharma market in the region under coverage.
There is a common trend on the CIS pharma markets, viz. increasing government participation in their regulation by way of implementation of various target programs to support local drug manufacturing and import substitution. At present, imported drugs dominate on the market in value terms. In real terms, local drugs account for more than 50% of the market, which has been much helped by the proactive government support of the pharma sector (Fig. 6). The rate of growth of local drugs is a positive dynamic characteristic. Whilst in real terms the 2010 growth rate was a mere 2%, it was 5% in value terms, the same as in 2009.
0
20
40
60
80
120
100
Rus Ukr KazBel ArmMolGeo UzbAz
-30
-20
0
-10
10
20
40
30
Dru
g co
nsu
mpt
ion
per
cap
ita,
USD
Con
sum
ptio
n g
row
th, %
Growth in USD, %
Growth in national currency, %
Drug consumption per capita, USD
B l Uk K Geo A M l Arm U b
11
710
1814
13 4
4
-3
4
10
10
10
-1
5
812
4
99.5 70.4 62.4 54.2 35.4 34.5 32.4 22.8 8.9
Fig. 4. Drug consumption per capita in CIS countries and Georgia, 2010
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
106 <107 ex-ussr pharma sector
overcomes crisis
cis and georgia pharma
market report
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
2009
Rus Bel Kaz Ukr Az Uzb Geo Mol Arm
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010220099 20
21.0 21.913.5 14.5 17.6 18.3
12.1 13.5
38.3 35.8
9.9 14.321.6 22.1 19.4 18.7
26.4 31.2
1
9.7 8.2
131 14 5 11
7.3 8.6
1
6.2 5.7
12 1 131 3 513
5.1 4.8 20.4 16.7
9.9 14.314
5.2 6.0 5.8 5.8 4.6 5.1 10.9 9.2
2009 2010
<2 USD
2—5 USD
5—10 USD
10—25 USD
>25 USD
31.6 30.8
23.5 24.927.3 29.0
20.2 21.4
28.3 28.9
19.8 19.9
32.9 34.030.3 29.8
28.9 26.9
26.0 27.4
35.4 31.831.3 30.2
32.1 32.5
10.412.9
27.3 27.7
24.0 24.332.1 31.4
20.5 20.1
11.7 11.7 20.3 20.2 17.6 16.8 30.5 27.8 2.6 5.7 37.8 31.9 15.7 13.6 13.4 14.8 13.3 12.6
Fig 5. Price segmentation of CIS and Georgia pharma markets in dynamics (%, USD), 2009/2010
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
In value terms, USD In real terms, units
Imported
Local
2008
2009
2010
+4.9%
+4.9%
+1.8%
+4.9%
22.1
78.9
77.9
21.1
4.9%4.9%+4+4+
79.9 20.1 2008
2009
2010
+4+4 9%9%
+1+1.8%8%
40.6 59.4
41.7 58.3
+4.9%+4.9%
44.4 55.6
Fig. 6. Split of local and imported drugs in CIS countries and Georgia in dynamics, 2008—2010
The Russian
pharmaceutical
market
2010
results
Ukraine has the biggest share of local drugs (30%) in 2010, just like in 2009. The lo-cal drug share has grown significantly in Belarus (23%) ranking second as of 2010 (Table 3). Uzbekistan ranks third and leads in terms of the local drug share growth rate. Russia cannot boast a very high growth rate and ranks fourth with a 22% local drug share. The share of local drugs sold on the domestic market has grown ap-preciably in Georgia (25%) but went down in Azerbaijan (–4%).
It is but natural that local manufacturers in each of the countries (except Azerbaijan and Ar-menia) promote their countries to the TOP5 manufacturer nations on their respective markets (Table 4). Russia, Ukraine, Belarus, Uzbekistan, and Georgia are leading with appreciable gaps from the competitors. The share of local pharmaceuticals in Kazakhstan is 9.1% as of the end of 2010, up 0.2% year-on-year. Moldova still ranks third with a 0.5% growth of the local drug share vs. 2009. The shares of local pharmaceuticals in Azerbaijan
Table 3. Local drug share (%, USD) in total out-of-pocket pharma market in CIS countries and Georgia, 2009—2010
Country 2010 2009 Share growth (%), 2010/2009
Ukraine 29.82 27.77 7.36
Belarus 23.26 20.48 13.57
Uzbekistan 22.12 13.23 67.27
Russia 21.96 21.37 2.77
Georgia 14.54 11.66 24.75
K azakhstan 9.09 8.95 1.54
Moldova 8.07 7.63 5.86
Armenia 5.92 5.71 3.66
Azerbaijan 3.52 3.66 –3.97
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
108 <109 ex-ussr pharma sector
overcomes crisis
cis and georgia pharma
market report
and Armenia are 3.5% and 5.9%, respective-ly; this share makes each of them #8 among the manufacturer nations on their respective markets.
Local companies are among the TOP5 drug manu-facturers in the out-of-pocket segment of the pharma markets of Russia, Ukraine, Belarus, Kazakhstan, Uzbekistan, and Georgia (Table 5). It should be noted that local manufacturers gradually strengthen their grip in the entire territory under coverage. Whilst in 2009, there were only seven local manufacturers
ranking among the TOP5 in their respective markets, their number reached 10 as of 2010. In Belarus, the first three ranks went to local companies with an aggregate market share of 14.7%, up 5.4% year-on-year. In Kazakhstan, Khimpharm that was # 6 in 2009 with a 3.8% market share increased its market presence to 4% firmly taking the 4th place among the TOP5 manufacturers in 2010. Azerbaijan, Moldova, and Armenia remained outsiders in terms of local manufacturer presence among the TOP5 companies.
Table 4. ТОР5 drug manufacturing countries in out-of-pocket sector of CIS and Georgia pharma markets (%, USD), 2010
Ra
nk
Ru
ss
ia
Uk
ra
in
e
Ka
za
kh
st
an
Be
la
ru
s
Az
er
ba
ij
an
Uz
be
kis
ta
n
Ge
or
gia
Mo
ld
ov
a
Ar
me
nia
1
Russia
25.2
Ukraine
29.8
Germany
16.7
Belarus
23.3
Germany
11.0
Uzbekistan
22.1
Georgia
14.5
Germany
16.2
France
11.7
2
Germany
14.5
Germany
13.9
Austria
9.6
Germany
11.2
India
10.7
Germany
15.2
Germany
9.7
Hungary
9.3
Germany
11.7
3
France
9.3
France
6.4
K azakhstan
9.1
France
7.7
Russia
8.5
Russia
8.8
USA
7.5
Moldova
8.1
Great Britain
8.2
4
Italy
5.4
India
5.8
Russia
7.1
Switzerland
4.8
Turkey
8.1
Great Britain
8.1
India
7.1
India
6.9
USA
7.4
5
India
4.4
Great
Britain 4.9
Belgium
5.9
India
4.6
France
8.0
India
8.0
France
5.8
Russia
5.1
Belgium
6.7
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
The Russian
pharmaceutical
market
2010
results
The share of the TOP10 corporations in 2010 (Fig. 7) did not change much against 2009 in Russia, Belarus, Ukraine, and Kazakhstan, which indicates that competi-tion and the alignment of forces among the manufacturers remain constant. There are, however, very significant changes in the other countries. The minimal value and negative growth (–18.5%) were ob-served in Azerbaijan: the TOP10 manu-facturers account for no more than 18% of the market, which is down 4% year-on-year. Uzbekistan demonstrated the high-est concentration of the TOP10 corpora-tions in 2010 (42%) and also showed the maximum concentration growth at 24% vs. 2009.
It would be fair to suggest that the share of Rx drugs is a true indicator of the population’s living standard. The higher the country’s well-being level the lower the Rx drug share. Vice versa, the share of OTC drugs goes up as the income of the population grows, since people then can afford disease prevention and lifestyle drugs. The domina-tion of the OTC segment also significantly affects the mechanism of drug promotion on the pharma markets of CIS countries (via printed media or TV) as well as drug consumption growth. In 2010, the split of Rx and OTC drugs did not change for the area under coverage as a whole (Fig. 8). However, if analyzed individually, consid-erable differences are obvious among the
Table 5. TOP5 manufacturers in out-of-pocket sector of CIS and Georgia pharma markets (sales share, %, USD), 2010*
Rank Russia Ukraine Kazakhstan Belarus Azerbaijan Uzbekistan Georgia Moldova Armenia
1
Sanofi- Aventis
5.34
Pharmak OAO
3.95
Sanofi-
Aventis
5.43
Belmedpre-
paraty
5.98
Sanofi- Aventis
3.86
Berlin-Chemie/
Menarini
7.90
Aversi
Rational Ltd
4.45
Gedeon Richter
6.66
Servier
6.31
2
Pharm-
standard
4.68
Sanofi-
Aventis
3.77
Nycomed
5.23
Pharmland SP
OOO
4.56
GSK
2.39
Jurabek
Laboratories
6.07
World
Medicine
4.25
Berlin-Chemie/
Menarini
5.26
GSK
5.47
3
Bayer Health-
care
3.60
Menarini
3.66
Bayer Health-
care
5.20
Borisov Plant
of Medicinal
Preparations
4.18
Berlin-Chemie/
Menarini
2.29
Nika Pharm
5.39
G.M.P. Ltd
4.07
GSK
3.87
Nycomed
5.20
4
Berlin-Chemie/
Menarini
3.58
Arterium
3.02
Khimpharm
4.02
Sanofi-
Aventis
3.94
Gedeon Richter
1.69
Sanofi-
Aventis
4.41
GSK
3.71
Krka
3.75
Gedeon
Richter
3.89
5
Nycomed
3.31
GSK
2.87
Sandoz
3.19
Nycomed
3.49
Servier
1.63
GSK
4.03
Sanofi-
Aventis
3.68
World Medi-
cine
2.87
Novartis
3.63
*Local manufacturers are highlighted with blue.
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
110 <111 ex-ussr pharma sector
overcomes crisis
cis and georgia pharma
market report
countries. For example, the OTC segment share is the biggest in Russia (37.5%), where the population’s incomes are higher than in
other countries of the area under coverage (Fig. 9), while Azerbaijan has the smallest OTC drug share (23.6%).
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
2009
Rus Bel Kaz Ukr Az Uzb Geo Mol Arm
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010
4.24.3
5.1 6.0 5.5 5.3
4.03.9
2.73.6
7.0
7.9
4.24.4
8.2 6.6
6.86.3
2009 2010
ТОР10
ТОР5
ТОР3
ТОР1
11.0 11.0
13.5 14.7 15.3 15.5
11.0 11.4
7.48.1
15.6
19.3
11.4 12.7
17.2 15.8
17.1 17.0
16.2 16.5
21.4 22.1 22.6 22.5
16.8 17.3
11.911.2
22.0 27.817.9 20.1 23.8 22.4
25.7 24.5
21.7 27.5 36.5 36.3 36.9 35.9 28.9 29.7 22.3 18.2 34.1 42.4 31.3 32.9 31.7 34.9 41.5 39.6
Fig. 7. Pharmaceutical manufacturer concentration in out-of-pocket sector of CIS and Georgia pharma markets (%, USD), 2009—2010
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
34.7 36.7 36.7
2008 2009 2010
OTC
Rx
65.3 63.3 63.3
Fig. 8. Split of Rx and OTC drugs in CIS pharma market (%, USD), 2008—2010
The Russian
pharmaceutical
market
2010
results
Rus Ukr Kaz Bel ArmMol Geo Uzb AzR
37.5
62.5
Uk
35.7
64.3
M l
35.1
64.9
K
35.0
65.0
B l
34.4
65.6
A
34.0
66.0
G
33.4
66.6
U b
27.1
72.9
A
23.6
76.4
OTC
Rx
Fig. 9. Split of Rx and OTC drugs in CIS countries (%, USD), 2010
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
A — Alimentary tract and metabolismR — Respiratory systemC — Cardiovascular systemN — Central nervous systemJ — General anti-infectives systemicG — Genito-urinary system and sex hormonesM — Musculo-skeletal systemD — DermatologicalsL — Antineoplastic and immunomodulating agentsS — Sensory organsB — Blood and blood forming organsV — VariousH — Systemic hormonal preparations (excluding sex hormones)K — Hospital solutionsP — ParasitologyT — Diagnostic agents
A19.9
R15.1
C14.5N
10.2
J9.0
G8.0
M7.4
D5.4
L2.7
S2.6
B1.9
V1.3
H0.8
K0.7
P0.4
T0.1
Fig. 10. Split of ATC groups in CIS countries (%, USD), 2010
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
112 <113 ex-ussr pharma sector
overcomes crisis
cis and georgia pharma
market report
The split of ATC groups in the CIS and Georgia is represented in Fig. 10. The TOP10 ATC groups accounted for more than 90% of the total market in 2010.
In 2010, the drug consumption pattern (EphMRA ATC classification) of the CIS and Georgia underwent some changes as com-pared to 2009 (Table 6). In substantially all CIS nations, the biggest share of the out-of-pocket market is represented by drugs of Group A “Alimentary tract and metabolism” (except Uzbekistan and Armenia).
In Russia, drugs of Group J “General anti-infectives systemic” and Group L “An-tineoplastic and immunomodulating agents”, which showed negative growth (–13% and –11%, respectively), moved
one line downwards in the TOP10 rating and ranked 6th and 10th respectively in 2010 (Table 7). Ukraine demonstrated a 12% growth of the share of Group B “Blood and blood forming organs” that went up in the ranking from the 10th to the 9th line. The ranks of ATC groups in Azerbaijan did not change against 2009. In Kazakhstan, Group S “Sensory organs” has made its way to the TOP10 rating having ousted Group B “Blood and blood form-ing organs”. In Belarus, the 4th and the 5th lines in the ranking only were affected by changes. The Group J drugs lost 18% of the market and moved to the 5th line being surpassed by Group N “Central nervous system” whose share grew by 5%. Dra-
Table 6. TOP10 ATC groups in out-of-pocket sector of CIS countries and Georgia in dynamics (total sales, USD), 2009—2010
R
an
k
Russia Ukraine K azakhstan Belarus Azerbaijan Uzbekistan Georgia Moldova Armenia
2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010
1 A A A A A A A A A A A J A A A A C C
2 R R R R R R C C J J J A C C C C A A
3 C C C C C C R R C C C N J J J J J J
4 N N J J J J J N V V N C N N R R N N
5 J* G N N G G N J N N R R R R N N R R
6 G J M M N N M M R R K K M M G M M M
7 M M G G M M G G G G M M G G M G G G
8 D D D D D D D D M M G G D V D D D D
9 L S L B L L L L D D D B V D V V S S
10 S L B L B S S S L L B D S S L L L L
Share TOP10 (%)
95.4 95.8 93.3 94.4 93.9 93.9 94.4 94.2 90.3 90.1 92.8 93.2 92.5 92.9 93.4 93.0 93.5 93.4
*Position changes y/y are highlighted in blue.
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
The Russian
pharmaceutical
market
2010
results
matic changes took place in Uzbekistan. As of the end of 2010, Group J, which had demonstrated the maximum growth of the market share, pushed Group A down to the 2nd line. Cardiovascular drugs of Group
C showed negative growth (–13%) and ranked 4th having lost their previous 3rd line to the nervous system drugs. Group B drugs moved upwards from the 10th to the 9th line (share growth at 13%). In Georgia,
Table 7. Split of ATC groups in out-of-pocket markets of CIS countries and Georgia в 2010 (sales share, %, USD; share growth, %, 2010/2009)
ATC1 _ EphMRA Rus
sia
Ukr
aine
Kaz
akhs
tan
Bel
arus
Aze
rbaij
an
Uzb
ekis
tan
Geo
rgia
Mol
dova
Arm
enia
A — Alimentary tract and
metabolism 19.72 2.5 21.57 –1.8 20.55 1.4 19.15 2.0 18.06 13.2 17.31 –7.6 17.88 5.5 19.53 –1.2 14.61 0.9
R — Respiratory system 15.36 –0.7 16.90 –2.5 15.44 4.3 13.07 –8.6 7.59 4.4 8.36 –10.5 10.07 –5.8 12.44 2.9 9.92 –3.2
C — Cardiovascular
system 14.87 3.2 13.29 7.2 12.58 –7.6 18.68 5.9 11.20 –13.9 9.53 –12.5 15.34 4.9 12.67 –5.5 19.43 –3.3
N — Central nervous
system 10.49 0.0 9.35 7.5 9.22 1.0 10.21 4.5 9.24 –0.5 10.09 –3.0 11.47 –1.7 9.78 9.8 10.76 –4.8
J — General anti-
infectives systemic 8.16 –12.6 9.38 –8.3 10.93 –2.5 8.51 –18.2 15.43 1.6 21.38 27.7 12.80 –2.8 12.55 –4.9 14.14 8.8
G — Genito-urinary system
and sex hormones 8.43 –0.2 6.71 0.2 10.06 6.5 6.00 –3.2 5.95 –10.3 5.52 –3.3 6.14 3.5 8.01 –4.5 6.46 –0.5
M — Musculo-skeletal
system 7.45 8.4 7.79 3.8 6.42 6.3 7.81 9.1 5.32 –2.8 6.32 6.0 7.76 6.0 8.54 6.7 7.69 –4.2
D — Dermatologicals 5.70 4.9 4.92 3.1 4.51 4.5 4.63 0.2 4.26 0.3 4.16 –3.5 4.65 –2.6 4.76 –0.6 5.05 7.2
L — Antineoplastic and
immunomodulating agents 2.78 –11.0 2.22 –17.5 2.44 –22.6 3.08 1.1 3.74 2.6 1.52 –33.4 1.98 –16.2 2.14 14.3 2.26 –10.5
S — Sensory organs 2.83 11.1 1.97 –3.1 1.96 5.0 3.07 20.3 2.45 9.8 1.39 –5.7 2.23 –14.4 1.63 –8.3 3.11 17.3
B — Blood and blood
forming organs 1.70 –5.4 2.28 11.5 1.77 –10.6 2.11 25.8 2.99 –3.5 4.24 13.1 2.22 –7.4 2.00 39.1 2.03 7.8
V — Various 1.03 –9.4 0.34 21.1 1.52 4.3 1.59 –2.1 9.34 –2.8 1.87 3.5 4.65 –2.2 2.58 –13.9 1.62 –7.2
H — Systemic hormonal
preparations (excluding
sex hormones) 0.74 –6.2 0.88 1.6 1.10 –14.8 1.16 –9.7 1.25 –16.2 1.09 –8.7 1.25 –5.5 0.83 –13.6 1.26 0.6
K — Hospital solutions 0.33 –19.2 1.69 –0.2 0.95 0.6 0.26 5.8 2.30 14.2 6.33 –1.6 0.89 22.9 1.31 19.1 0.92 –8.9
P — Parasitology 0.40 –16.1 0.62 –18.9 0.55 17.0 0.66 –5.9 0.80 12.0 0.85 2.2 0.66 –4.7 1.20 –6.7 0.73 27.6
T — Diagnostic agents 0.02 –31.2 0.11 106.3 0.02 –26.3 0.03 –10.6 0.12 –30.4 0.04 –69.6 0.01 –2.5 0.04 23.7 0.02 –22.9
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
114 <115 ex-ussr pharma sector
overcomes crisis
cis and georgia pharma
market report
Group V “Various” and Group D “Der-matologicals” had the same sales shares (4.65%) as of the end of 2010. However, Group V demonstrated a higher growth of its share (-2.2%) year-on-year than Group D (-2.6%) and thereby ranked 8th. In Mol-dova, Group M “Musculo-skeletal system”, which showed a 7% share growth, ranked 6th having left drugs of Group G “Genito-urinary system and sex hormones” on the 7th line. In Armenia, Group C remained the leader both in 2010 and 2009, with no changes in other groups’ ranks.
Arbidol™ remained the sales leader within OTC segment in 2010 with a 2.3% share (Table 8). Arbidol is on the TOP10 list in Russia and Ukraine only, but its total sales
provided for its leadership in a composite rating over the two recent years (Table 9). Essentiale™ showed the maximum share growth (20%) among the TOP10 OTC drugs in 2010. The drug is on the TOP10 list in basically all CIS nations (except Azerbai-jan) and Georgia. Linex™ ranks 3rd in the composite rating with a 1.3% sales share, and is on the TOP10 list in Russia, Ukraine, Kazakhstan, Belarus, and Uzbekistan. Theraflu™ ranks 4th in the overall rating with a 1.2% share being #1 in the OTC seg-ments of Kazakhstan, Belarus, and Arme-nia and #4 in Russia. Nurofen™ is on the 5th line of the composite rating with a 1.1% sales share; this drug is among the TOP10 trademarks in Russia.
Table 8. TOP10 OTC trademarks in the CIS as a whole, 2010
R ank ТМ Sales, mn USD
Sales growth
(%, USD)
OTC segment share
(%, USD)
Sales share growth in
OTC segment (%, USD),
2010/2009
1 Arbidol 163.0 –17 2.3 –25
2 Essentiale 121.5 34 1.7 20
3 Linex 92.0 13 1.3 2
4 Theraflu 84.4 –1 1.2 –11
5 Nurofen 79.3 33 1.1 19
6 Pentalgin 72.6 14 1.0 2
7 Mezym forte 70.1 11 1.0 0
8 Vitrum 68.2 –3 1.0 –13
9 No-spa 68.1 16 1.0 4
10 Anaferon 67.1 –23 1.0 –30
TOP10 886.3 4 12.7 –7
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
The Russian
pharmaceutical
market
2010
results
The TOP10 OTC drug lists of the countries under coverage are characterized by significant variability and can differ substantially from the composite rating. This is due, first and foremost, to different pharma market sizes in specific countries as well as to the degree of market matu-rity and the state of infrastructure. The
political situation and socioeconomic indicators in each country are important, too. It should be taken into consideration that in December 2010 the Common Free Market Zone was officially established by the Russian Federation, Belarus, and Ka-zakhstan. This will have serious implica-tions, including, among other things, for
Table 9. TOP10 OTC trademarks in CIS countries and Georgia (%, USD), 2010
Ra
nk
Ru
ss
ia
Uk
ra
in
e
Ka
za
kh
st
an
Be
la
ru
s
Az
er
ba
ij
an
Uz
be
kis
ta
n
Ge
or
gia
Mo
ld
ov
a
Ar
me
nia
1
Arbidol 2.94
Codter-
pinum 1.83
Thera-
flu 2.12
Thera-
flu 1.34 Vitrum 1.02
Para-
cetamol 2.65 No-spa 2.05 Vitrum 2.06
Thera-
flu 3.05
2 Essen-
tiale 1.85
Essen-
tiale 1.32
Essen-
tiale 2.07
Essen-
tiale 1.29
Prosta-
mol uno 1.00 Trizyme 2.58 Tantum 2.04
Cocar-
nit 1.92
Cardio-
magnyl 2.14
3
Nurofen 1.38
Amizo-
num 1.03 Linex 1.88 Linex 1.24
Fastum
gel 0.99
Essen-
tiale 2.55 Lirica 2.03
Mezym
forte 1.87
Flucon-
azole 1.81
4
Linex 1.37 Linex 1.03 Creon 1.66 Arpetol 1.21
Woben-
zym 0.93 Pikovit 2.46
Citra-
mon 1.49 Otilin 1.58
Cocar-
nit 1.66
5 Pental-
gin 1.33 Mezym 0.98 Vitrum 1.60
Theraf-
lex 1.13
Mezym
forte 0.76
Mezym
forte 2.24 Valerian 1.25 No-spa 1.24 Valerian 1.43
6 Thera-
flu 1.31 No-spa 0.97
Mezym
forte 1.41
Cardio-
magnyl 1.11
Hepa-
Merz 0.74 Linex 2.03
Cocar-
nit 1.21
Magne
B6 1.22
Theraf-
lex 1.42
7
Mezym
forte 1.20
Caneph-
ron 0.90
Caneph-
ron N 1.28 Theravit 1.10 Mepril 0.73
Hepa-
Merz 1.88
Mezym
forte 1.14
Acti-
vated
char-
coal 1.19 Coldrex 1.32
8 Oscil-
lococ-
cinum 1.17 Karsil 0.85
Hylak
forte 1.22
Anafer-
on 0.98
Bromh-
exine 0.71 Coldrex 1.76
Cardio-
magnyl 1.09
Essen-
tiale 1.15
Calcium
D3 Ny-
comed 1.25
9 Anafer-
on 1.04 Arbidol 0.85 No-spa 1.18 Mezym 0.96
Myco-
syst 0.66
Prosta-
mol uno 1.52 Senade 1.04 Coldrex 1.11
Tempal-
gin 1.24
10
No-spa 1.00 Vitrum 0.81
Calcium
D3 Ny-
comed 1.12
Ascorbic
acid 0.94
Celesto-
derm 0.64
Espum-
isan 1.43
Multi
tabs 1.03
Espum-
isan 1.08
Essen-
tiale 1.20
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
116 <117 ex-ussr pharma sector
overcomes crisis
cis and georgia pharma
market report
the development of the pharma business. Several countries, both ex-USSR and oth-ers, have recently demonstrated interest in joining this zone.
As regards Rx drugs, Actovegin™ is the leader in terms of sales with a 1.7% share in its respective segment (Table 10). As of the end of 2010, the drug ranks 1st in Ukraine and Ka-zakhstan, exactly as in 2009 (Table 11). The 2nd line of the composite rating is occupied by Viagra™ that has a 1.3% sales share in the en-tire area under coverage. This is a trademark that firmly held the 2nd line in the composite rating both in 2010 and 2009 and ranked 1st among Rx drugs in Russia and 4th in Kazakh-stan. Concor™ demonstrates a significant sales growth (31%) in 2010 and continues to be #3 in the composite rating of Rx drugs
throughout the CIS and Georgia. Concor is among the TOP10 Rx drugs in Russia (3rd), Kazakhstan and Armenia (6th), Belarus (8th), and Georgia (10th). Enap™ had various ranks among TOP10 as of the end of 2010 in differ-ent countries: Russia — 7th (–3), Ukraine — 9th (no changes), Georgia — 2nd (+1), Moldova — 10th (–2), Armenia — 5th (–3). Sumamed™ that was #8 in the CIS composite rating ranked 9th (–3) among the TOP10 Rx drugs in Russia and 2nd in Kazakhstan (no change year-on-year).
The changes that occurred in 2010 in the Rx segment were not as dramatic as those in the OTC segment in each of the individual countries. Still, political and economic developments will significantly affect this segment, too.
Table 10. TOP10 Rx trademarks in the CIS as a whole, 2010
R ank ТМ Sales, mn USD
Sales growth
(%, USD)
R x segment share
(%, USD)
Sales share growth
in R x segment (%, USD),
2010/2009
1 Actovegin 128.7 22 1.7 9
2 Viagra 97.9 16 1.3 4
3 Concor 92.8 31 1.2 17
4 Enap 65.3 3 0.9 –8
5 Preductal 63.7 8 0.9 –4
6 Alflutop 62.5 31 0.8 17
7 Movalis 61.0 21 0.8 7
8 Sumamed 60.7 4 0.8 –7
9 Detralex 55.9 25 0.8 12
10 Heptral 55.0 9 0.7 –3
TOP10 743.4 17 10.0 4
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
The Russian
pharmaceutical
market
2010
results
Table 11. TOP10 ТМ in out-of-pocket sector of CIS countries, (%, USD), 2010
Ra
nk
Ru
ss
ia
Uk
ra
in
e
Ka
za
kh
st
an
Be
la
ru
s
Az
er
ba
ija
n
Uz
be
kis
ta
n
Ge
or
gia
Mo
ld
ov
a
Ar
me
nia
1 Viagra 1.78 Actovegin 2.07 Actovegin 3.17 Lisinopril 2.44 Diabetone 0.72
Ceftriax-
one 2.94 Nimesil 1.15 Diroton 1.39 Noliprel 2.36
2 Actovegin 1.66
Mildro-
nate 1.12 Sumamed 1.39 Enalapril 1.52 Amaryl 0.68 Infezol 2.54 Enap 1.06
Sodium
chloride 1.02
Ceftriax-
one 2.23
3 Concor 1.59
Sodium
chloride 1.07 Dufaston 1.34 Actovegin 1.23 Siofor 0.47
Sodium
chloride 2.28
Augmen-
tin 0.92 Ketanov 0.89
Augmen-
tin 2.13
4 Alflutop 1.08 Preductal 0.92 Viagra 1.12 Diabetone 1.21 Salofalk 0.47 Cefazolin 2.16
Utroges-
tan 0.79 Cavinton 0.87 Preductal 1.87
5 Detralex 1.05
Augmen-
tin 0.85 Cefazolin 1.12
Seretide
multidisk 1.15
Immuno-
globulin 0.45 Actovegin 2.13 Ampicide 0.71 Nimesil 0.86 Enap 1.76
6 Movalis 1.04 Ceraxon 0.69 Concor 1.05
Augmen-
tin 1.07 Actovegin 0.44 Ampicillin 1.84 Detralex 0.70 Mycosyst 0.86 Concor 1.73
7 Enap 0.99
Ceftriax-
one 0.69 Preductal 1.04 Diroton 0.99 Depakine 0.43
Cerebro-
lysin 1.60
Gluco-
vance 0.69
Augmen-
tin 0.84 Actovegin 1.70
8 Mexidol 0.94 Ketanov 0.66 Amoxiclav 1.03 Concor 0.96 Albumin 0.37
Oxamp
sodium 1.44 Azimac 0.67 Cefazolin 0.78 Nimesil 1.68
9 Sumamed 0.93 Enap 0.66 Ketonal 0.97 Egilok 0.94 Viferon 0.29 Glucose 1.42 Amaryl 0.63
Normo-
dipine 0.73
Prestar-
ium 1.45
10 Heptral 0.91
Thiotri-
azoline 0.62 Ceraxon 0.96 Preductal 0.92 Seretide 0.29 Cipro 1.22 Concor 0.63 Enap 0.73 Dufaston 1.29
Source: Pharmexpert — Monitoring of retail drug sales in CIS countries and Georgia
Conclusion: The recovery of the CIS national economies is
very much dependent on the improvement of the external
environment. Although the slowdown in the development of
the global economy is still possible, the pharma markets of
the CIS nations and Georgia progress dynamically. As of the
end of 2010, the CIS pharma market demonstrated growth
both in value (in USD and national currencies) and real
terms. Drug consumption per capita has grown due to the
improved living standards in all of the countries as well as
to growth and progress of the pharma sector. Imported drugs
are dominant on the ex-USSR markets, especially Rx drugs. In
general, the pharma markets of all the countries are moving
towards import substitution. The role of the government
policy regarding healthcare and the pharmaceutical industry
should be noted, since it facilitates a quick recovery in terms
of the economic growth rate and the development of the
pharma industry in all CIS nations. In addition, the nearest
future will bring the deepest changes in the pharma sector of
each of the countries which joined the Common Free Market
Zone, i.e. Russia, Belarus, and Kazakhstan.
118 <119
market
opinion as it is
XIII.
R AT ING OF MOST INFLU E N T I A L
SU BJECTS OF RUSSI A N PH A R M A
M A R K ET
The year 2010 was a success as a whole. The pharma market has restored after
the crisis; drug demand has stabilized; the government made a lot of ef-
forts for funding the drug coverage of the population.
It won’t be an exaggeration to state that the government was the main fac-
tor affecting the pharma industry throughout the year passed. The market
players have mastered living under tough price regulation, and the long
awaited law “On Drug Circulation in Russia” has been adopted. There have
been changes in the fiscal policy, too; e.g. the common social tax was sub-
stituted for insurance premiums, and starting from 2011 drugstores were
devoid of their right to preferences for unified imputed income tax.
It goes without saying however that there were other events important for
the market, e.g. anomalous summer heat has boosted higher sales of some
drugs; besides that, a number of pharma construction projects have been
launched, and companies were fairly active in terms of IPO, M&A etc.
All that said, it is worth noticing that the pharma community is conservative
in its preferences; that is why winners in specific nominations remain the
same for years irrespective of the fact whether they have been the newsmak-
ers or not. But this is the opinion of the market. Let’s take it as it is.
INFLUENCE
The Russian
pharmaceutical
market
2010
results
rating of most influential
subjects of russian pharma
market
Methods a nd gener a l
ch a r acter ist ic s of sa mple
It is rather difficult to evaluate the effect of each specific factor on such complex system as a pharmaceutical market. Besides, it is well known that, as a rule, it is events that do not lie on the surface and it is persons that are not necessarily public that affect any system to their utmost. Nonetheless, cumulative assessment of the processes ongoing on the market is very important as it provides for understanding of the allocation of forces and their contribution to the functioning of the pharma industry as a whole.
To carry out a complex evaluation of various stakeholders’ influence on Russia’s pharma market, at the end of 2010 — beginning of 2011 Pharmexpert Analytics and Consult-
ing conducted the next stage of a traditional Russian pharmaceutical market subjects’ influence rating project.
The research covered 35 largest Russian re-gions in all eight Federal districts. The cities were selected based on the number of popu-lation as well as the pharma market value in the respective regions (Fig. A).
The share of questionnaires per Federal district (FD) was calculated using the formula as follows:
Share of questionnaires per FD = Sample (1300 respondents) x FD’s share (%) in total per capita consumption in the out-of-pocket sector/100.
The sample has been calculated based on the targeted selection of respondents from six expert groups, viz. scientists; state
INFLUENCE
Central FD
Volga FD
Northwestern FD
Southern FD
Siberian FD
Urals FD
Far Eastern FD
North Caucasus FD
34
2211
9
9
65
4
Fig. A. Split of respondents by Federal districts, %
Source: Pharmexpert Analytics and Consulting
120 <121
employees; representatives of local and foreign manufacturers; representatives of distributors; drugstore directors/man-agers (Fig. B). The above target groups are characterized as experts as they have specialized information on the pharma market. The sample includes 1300 experts annually.
The experts determined five most influen-tial pharma market subjects in the fol-lowing nominations: Distributors; Local pharmaceutical manufacturers; Foreign pharmaceutical manufacturers; Drug-store chains; Medical and pharmaceutical universities; Most popular drug of the year (this nomination was further split into Rx and OTC drugs). Three most influential subjects were also selected in the follow-ing nominations: Businessmen, directors of commercial corporations; State officials, public figures, and scientists; Professional nonprofit unions & associations; Nonprofit partnerships and patient unions; Profes-sional doctor associations; Web-sites.
Questions in nominations Businessmen, direc-tors of commercial corporations & State officials, public figures, and scientists were open, i.e. provided for respondents’ answers in a free from. For other nominations the so-called “closed” questions provided for choosing from a list of answer options. For each question, the interviewer had a card with encoded choices of answers in an alphabetical order.
As the options of answers to the closed ques-tions were meant for interviewers only, the questions from the questionnaire were asked to the respondents in a free from and welcomed spontaneous answers. After that the interviewer assigned a code from the corresponding closed questions card; in case there was no matching op-tion the interviewer put an answer in a free form.
Data was collected by the interviewers without either pharmaceutical or medical educa-tion, which excludes a possibility of biased fill-outs.
market opinion as it is
rating of most
influential subjects
of russian pharma market
Drugstore directors/managers
Foreign pharmaceutical manufacturers
Local pharmaceutical manufacturers
Distributors
State employees
Scientists
46
18
14
10
75
Fig. B. Split of respondents by expert groups, %
Source: Pharmexpert Analytics and Consulting
The Russian
pharmaceutical
market
2010
results
The number of points in making the rankings was calculated using a standard method, viz. each 1st place corresponded to 7 points; each 2nd place was given 6 points; for 3rd, 4th, and 5th places, 5, 4, and 3 points were given, respectively. The total score was then calcu-lated, and the tables of the most influential subjects of the pharma market were drawn based on their rankings.
Before we come to discussing each nomina-tion in details, let us review the general characteristics of the results received, especially so that at this level it is already possible to find a number of significant regularities. In particular, comparison of the leaders in each nomination by the number of points (Fig. C) may testify to the influence of each group of stakehold-ers. The Local pharmaceutical manu-facturers nomination still leads by the number of points as a year ago, as it is the manufacturing sector that is the focus of attention both in terms of newsmaking and investor activities. Ambitious infra-structural projects have been declared
in this sector. These projects relate to construction of new plants involving both foreign corporations (such as Sanofi-Aventis, Novartis, AstraZeneca, Novo Nordisk etc.) and local companies (e.g. Biocad, Geropharm, R-Pharm etc.). The Distributors nomination that had been the leader by the number of points before 2008 ranks second as of 2010. On the one hand, wholesalers still play an important role in the market; on the other hand, distributors have turned into ac-tive participants of the Pharma industry development process. Apart from a clas-sical example of the distributor company Protek that owns the manufacturer Sotex аs well as the manufacturing units of SIA International and Biotec, the past year has brought to light R-Pharm activities in the manufacturing sector as well as many other examples.
The Businessmen, directors of commercial corporations nomination is again tradi-tionally low in this informal rating. The respondents are not well informed about
10001000
20002000
30003000
40004000
50005000
60006000
1000
2000
3000
4000
5000
6000Businessmen, directors
of commercial corporations
Local manufacturers
Distributors
Specialized universities
Most popular drugs
Professionaldoctor associations
Drugstore chainsWeb-sites
Professional and nonprofitassociations
State officialsand scientists
Foreignmanufacturers
Patient associations4423
3624
3606
3170
27802573
2183
2040
2015
629
1985
5612
Fig. C. Comparison of the leader in each nomination by the number of points
Source: Pharmexpert Analytics and Consulting
INFLUENCE
122 <123
this category and often respond in the manner “director of company X” obviously referring to successes of a specific com-pany. It is also due to this reason that the respondents continue mentioning those people who have not been influencing the market for a long time. In particular, this is true for Mr. Bryntsalov who has relocated his activities to Belarus pharma market. A similar situation is observed with profes-sional nonprofit unions & associations. ROSPHARMA has been leading in this nomination for years notwithstanding the fact that it has quit lobbying the retailer interests.
By comparing the number of participants in each nomination (Fig. D), it is possible to evaluate the degree of differentiation of each group of subjects. Here the Most pop-ular drug nomination predictably leads; the 2nd place is occupied by the Business-men, directors of commercial corporations nomination. Notwithstanding the fact that the wide professional public is not very well familiar with specific persons, the
respondents often mention a large number of regional-level subjects who, on the one hand, are better known to them and who, on the other hand, contribute to forming the influence vectors in specific Russia’s regions.
The gap in ranking points of the leader in each nomination with the immediate rival (Fig. E) provides for evaluating the compe-tition level in terms of newsmaking. This gap is smallest for foreign manufacturers because the image-making activity levels of large multinationals are basically the same. A similar situation is observed for profes-sional doctor associations and distributors. It is worth mentioning that a year ago there was a minimum gap among the distribu-tors. The fact that this gap has been grow-ing welcomes a conclusion that perception of the market leader by the information community has changed. Maximum gaps from the immediate rivals were observed for the most popular drugs and local manu-facturers. It should be noted that Arbidol was mentioned as the most popular drug
market opinion as it is
rating of most
influential subjects
of russian pharma market
Patient associations
100100
200200
300300
400400
500500
600600
100
200
400
500
600
300
Most popular drugsBusinessmen, directorsof commercial corporations
Drugstore chains
State officials and scientists
Specialized universities
Web-sitesLocal
manufacturers
Foreignmanufacturers
Distributors
Professional doctorassociations
Professional and nonprofitassociations
537
329
66
353
237
158
150143
141
101
79
70
Fig. D. Comparison of each nomination by the number of participants
Source: Pharmexpert Analytics and Consulting
The Russian
pharmaceutical
market
2010
results
whereas its manufacturer Pharmstandard has become the most influential local company. However, there is no such close
association between the other trademarks and their manufacturers.
Let’s look closer at each nomination.
Most popular drugs
20%20%
40%40%
60%60%
80%80%
20%
40%
60%
80%
100%100%100%
Foreignmanufacturers
Professional doctor associations
Distributors
Nonprofit and patientassociations
State officials and scientists
Web-sites
Specializeduniversities
Professional and nonprofitassociations
Businessmen, directorsof commercial corporations
Drugstore chains
Local manufacturers
96
72
92
86
82
75
75
58
58
56
33
22
Fig. E. Comparison of the leader in each nomination by gap in ranking points with immediate rival, %
Source: Pharmexpert Analytics and Consulting
INFLUENCE
124 <125
The most influen ti a l loc a l
ph a r m aceu tic a l m a nufact ur er
For the fourth year in a row, Pharmstandard leads the rating of the most influential local pharmaceutical manufacturers (Table 1). Evidently, the company occupies a unique place in the information space, having left behind not only all other Russian manufac-turers, but also, by a margin of double in terms of points, the largest of the foreign companies. A score that high can hardly be explained just by the company’s PR ac-tions or flu epidemic as the year before. In all likelihood, experts assess not just the company’s market positions of today, but also give credit to its plans for the future, in particular, the aggressive growth in the Rx sphere, including the collaboration with Lekko within the framework of the Generi-um project.
The second Russian pharma manufacturer in terms of size, STADA CIS, was runner-up just as the year before. Here, certainly, the company’s energetic actions in the market played its role, as well as the unique nature of the company: essentially, it is the only
example of foreign investment in the Rus-sian pharma industry on such a large scale coming true. That said, the industry expects a boom of investment activity on part of foreign capital in the nearest future. For the whole of 2010, quite a number of industry specific investors voiced their intentions to build production facilities of their own in Russia, with AstraZeneca, Novartis, Novo Nordisk, Sanofi-Aventis and some other international pharma corporations among them.
Rank three went to Akrikhin, with a signifi-cant gap from the forth position and breath-ing down STADA’s neck. Compared to last year’s rating, the company demonstrated quite a leap jumping from the seventh posi-tion to number three. This kind of pharma professionals’ assessment of Akrikhin’s business activity is certainly associated with the company’s strengthening positions in the market, the start of a large-scale invest-ment program of production moderniza-tion and expansion, and ambitious plans to expand the product portfolio. In particular, Akrikhin signed a number of agreements
Table 1. 10 most influential Russian pharmaceutical manufacturers
R ank, 2010 Local manufacturer No. of points
1 Pharmstandard 5 612
2 STADA CIS (Nizhpharm, Makiz-Pharma, Skopin-Pharm) 1 851
3 Akrikhin 1 605
4 Veropharm 849
5 Valenta (Otechestvennye Lekarstva) 763
6 Ozon 549
7 Vertex 479
8 Altayvitaminy 389
9 Sotex 251
10 Biotec 250
Source: Pharmexpert Analytics and Consulting
market opinion as it is
rating of most
influential subjects
of russian pharma market
The Russian
pharmaceutical
market
2010
results
with foreign corporations in 2010 on bring-ing “heavy-type” drugs (for treating oncol-ogy diseases and HIV infection/AIDS) to the Russian market.
Ozon posted a serious growth in the rating. The company produces a wide range of comparatively cheap generics, for which, evidently, there is a demand in the mar-ket. Notably, Ozon demonstrated one of the highest sales growth rates1 (in USD) in 2010, giving way only to such companies as Lekko and Biocad, whose sales surge was associated with the successful promotion of TMs Coagil VII and Ronbetal in the state purchases segment. The latter companies are not among the most influential as yet, but the success of the above trademarks is obvious and will not go unnoticed among the information community for sure, the more so that the companies are planning to launch other potential blockbusters onto the market.
The most influen ti a l for eign
ph a r m aceu tic a l m a nufact ur er
Despite the fact that the M&A acronym is not related directly to the pharma industry, it has become a lasting and prominent element in the lexicon of all experts and players of the Russian pharma market. The year 2010 has firmly implanted the acronym R&D (Research & Development) in the lexicon, supplanting the good ol’ NIOKR. Foreign companies based on Russian manufacturing sites are becoming participants of R&D-related activities. The trend was brought about by the same mighty whirlwind that made the pharma community talk about pharma clusters, innovations and GMP in the Russian pharma manufacturing, with all those processes involving foreign companies. The whirlwind was generated by the government that had grown absolutely convinced that the Russian healthcare
system had to move forward and be seriously improved.
Foreign pharma market players were looked upon by the government both as a potential threat and an opportunity for progress. The foreign pharma corporation are market players that can enrich the Russian pharma industry with innovative products, hi-tech processes and facilities conforming to the GMP requirements, all of which are prior-ity elements of the Pharma-2020 strategy. Therefore, foreign pharma companies are given an open-arm welcome in the Russian market. It should be noted that foreigners, when setting up joint ventures and build-ing their own plants in Russia, are not in for charity. Since no further market saturation is forecast in the developed countries, while fast economic growth enables the develop-ing country governments to increase their spending on social needs, most importantly education and healthcare, Russia’s market is a tasty morsel for foreign companies.
At the same time, understanding the dangers of foreign expansion with no state control and regulation, the same Pharma-2020 strategy declares commitment to the policy of import substitution, whereby the share of locally produced drugs on the domestic market should grow from 20% to 50% by 2020. According to provisional data, quite soon any product will be considered “local” if technologically meaningful components produced in the Russian Federation have been used to manufacture that product. Therefore, a good way to avoid the pro-local protectionist bias for foreign pharmaceuti-cal manufacturers would be to set up their production facilities in Russia.
The path of import substitution is not the only curse for foreign pharma corporations. In accordance with the Law on Drug Circulation adopted in 2010, an imported drug may receive state registration only after undergoing multi-center
1 Among ТОР20 companies.
126 <127 market opinion as it is
rating of most
influential subjects
of russian pharma market
clinical tests, with the second and third phases (most expensive) conducted, on a mandatory basis, in the territory of the Russian Federation. Why is it disadvantageous for foreign companies? Because it may take from two months to half a year to obtain a permit to make research in this country, plus two years on clinical tests proper, with aggregate expenses reaching 60 to 80 mn USD.
And another legislative surprise for foreign manufacturers in 2010: Minzdravsotsrazvitiya compiled a new list of strategically important drugs to be manufactured in Russia. If we take into account that the drugs on the list had no analogues before among local drugs and were produced, overwhelmingly, abroad, no wonder that it caused additional headache for some foreign corporations. According to preliminary expert estimates, should Russian companies establish the production of such drugs in this country, present day manufacturers could lose as much as 21.5 bn RUB.
The most influen ti a l distr ibu tor
The past year was rather difficult for pharma distributors: besides the effects of the eco-nomic crisis, the new drug markup regula-tion also significantly affected the wholesale pharma sector. All things considered, it was wholesale companies that suffered the most from the VED markup cap, with VED-listed drugs comprising up to 50% of the total mar-ket, or a full 100% of the turnover of quite a number of specialized distributors. The markup cap logically led to notable reduc-tion of secondary distribution by a number of large companies. Serious changes were taking place in the product mix and pricing policies of wholesale companies.
Industry experts again named Protek the most influential distributor of 2010 (Table 3). Notably, in spite of systemic problems in wholesale drug trade faced by the compa-nies last year, Protek grew aggressively: it made an IPO in spring; it also actively diversified its retail business.
Katren rose by one position in the current rating (compared to 2009). This distribu-
Table 2. 10 most influential foreign pharmaceutical manufacturers
R ank, 2010 Foreign manufacturer No. of points
1 Berlin-Chemie / Menarini 2 015
2 Novartis 1 930
3 Krka 1 868
4 Gedeon Richter 1 638
5 Pfizer 1 383
6 Nycomed 1 280
7 Bayer Healthcare 1 269
8 Sanofi-Aventis 1 133
9 Servier 702
10 Sandoz 647
Source: Pharmexpert Analytics and Consulting
The Russian
pharmaceutical
market
2010
results
tor has not only been increasing its sales significantly but has also been expanding in the CIS: it entered the Ukrainian market in 2008, and thereafter closed two more deals making it the owner of wholesale compa-nies in Kazakhstan and Belarus just in two years. Katren’s experience is all the more important in the light of such phenomenon as the common customs territory, which has united Russia, Kazakhstan and Belarus since 2010.
SIA International, which had been second the year before last, fell one position to number three with a minimal gap over the next best competitor. It is interesting that despite leadership in absolute figures (SIA Inter-national leads in terms of gross turnover among pharma wholesalers), a significant share of its turnover was in secondary distribution: thus the company’s business was less visible to the general public. That said, the distributor announced its intention to develop the production segment, which ought to be positively received by the busi-ness community.
Experts have not as yet responded to the active progress of R-Pharm’s production business: the company remained in the 9th position. Most likely, the reason is the distributor’s specialization, namely supply of high-cost drugs under state-funded programs. Of the rating newcomers, Pulse can be mentioned, which had never before made it to the top ten most influential distributors, but became number 10 in 2010. The company was aggressively developing the B2C busi-ness line (direct drug supplies); it enabled the wholesaler to retain stability in the period after the implementation of the VED markup cap.
The most influen ti a l drugstor e
ch a in
The past year abounded in various market regulatory actions, which led to tangible changes in chain retail. During the year, both chain and independent retailers made steps to growing their business, striving to increase revenues and profitability. Large chains and those being parts of larger
Table 3. 10 most influential distributors
R ank, 2010 Distributor No. of points
1 Protek CV 4 423
2 K atren NPK 3 795
3 SIA International Ltd 3 457
4 Rosta 1 832
5 Alliance Healthcare Rus (Apteka-Holding) 998
6 Oriola (Moron) 630
7 Shreya Corporation 315
8 Biotec Group 268
9 R-Pharm 204
10 Pulse 179
Source: Pharmexpert Analytics and Consulting
128 <129 market opinion as it is
rating of most
influential subjects
of russian pharma market
structures from other market sectors have been able to afford appreciable innovations. In particular, chains cultivated new trade formats, experimented with their product offering and even, post-crisis market envi-ronment notwithstanding, resumed their extensive growth buying up regional players and opening new outlets.
Chains that have been unable to launch large-scale investment projects developed primarily by using their internal resources: cut costs, increased turnover rate, reduced inventories etc. It is noteworthy that, by and large, it was medium-sized chains that set positive dynamics to the entire chain segment, ensuring significant sales growth rates and an increase in the market share of the chain segment as a whole.
It is interesting that in the influence rating (Table 4а) the companies are placed not at all in accordance with their market posi-tions (leaving the national level chains out). Given the difficulties encountered by drug-store chains during the past two years, the professional community seemed to associate
the influence level of each specific company not so much with their current performance indicators, but rather with their past perfor-mance. There were exceptions though: thus, Melodiya zdorovya rose from position 10 to position 4 in 2010, while the А5 chain made it to the ТОР10 for the first time. The both mentioned companies were actively opening new outlets and managed to signifi-cantly boost their sales. Among regional drugstore chains (Table 4b), those com-panies are in the lead that demonstrate an active civic stance (e.g. taking part in public and industry associations). The rating also reflected the growing popularity of chain discounters that found themselves in heavy demand under the crisis.
The year 2011 is expected to bring about sig-nificant changes in the drugstore retail sec-tor. The state fiscal policy regarding pharma retailers is being modified. One can assume that a considerable number of independent drugstores will be closed due to unprofit-ability as a result of the growing tax burden. In this connection, we are likely to witness
Table 4а. 10 most influential national and interregional* drugstore chains
R ank, 2010 Drugstore chain No. of points
1 Apteki 36.6 2 780
2 Rigla (including Zhivika and 03) 1 555
3 Vita 686
4 Melodiya zdorovya 626
5 Doctor Stoletov 577
6 Implozia 505
7 Pharmacor 359
8 Staryj lekar 280
9 R aduga 259
10 A5 258
*Chains presented in more than three Federal subjects.
Source: Pharmexpert Analytics and Consulting
The Russian
pharmaceutical
market
2010
results
growth of the chain retail market share that has demonstrated negative dynamics in the recent years.
The most influen ti a l
busine ssm a n/dir ector of
commerci a l cor por ation
In the rating of the most influential business leaders, the blocks of those “irreplaceable” and “replaceable” have taken a final shape. “Irreplaceable” persons occupy positions from 1 to 7 (Table 5). In 2010, the gap in rating points between the stable leader Mr. Rudinsky, SIA International CEO, and “person No. 2” considerably narrowed, with distributor company Katren CEO Leonid Konobeev as “No. 2” this time. In the most influential pharma distributors rating, Katren also moved to the second position overtaking the 2009 “silver medalist” SIA International. Katren has been demon-strating a steady and tangible sales growth in the past three years; it moved to the top category among national pharma distribu-tors in the 2010 cumulative distributor rat-ing, taking place right after Protek and SIA International.
The jump from the sixth to the third position of Pharmstandard CEO Igor Krylov is also worth noting. Pharmstandard sweeps ahead in a broad front, conquering new
markets and marketing new promising trademarks, with a result which is all but natural.
The almost mythical personality (for the Russian market) of Mr. Bryntsalov, owner of the name-sake company, is still in the rating. This is the brightest example that the Russians continue to mix up the notions of “influential” and “famous”, and especially “notorious”!
It would be interesting to look more closely at those who re-filled the top ten of the leaders in 2010 (meaning that three dropped out, and three others entered the top ten).
Igor Varlamov, who was at the helm of distribu-tor company Alliance Healthcare Russia for four years, switched tack in February 2011 and took charge of production com-pany Binnopharm. However, his entering the top ten most influential business leaders is reflection of his work in pharma distribu-tion. Given that the overwhelming majority of the Influence Rating respondents are drugstore chain managers, the reputation of Mr. Varlamov testifies to the fact that Al-liance Healthcare Russia is effective in its work with retailers.
Tatiana Munina, CEO and owner of the relatively small (20+ drugstores) Apteka Avicenna Drugstore Chain, is an example of an efficient owner of
Table 4b. 5 most influential regional* drugstore chains
R ank, 2010 Drugstore chain/region of operation No. of points
1 Apteka Avicenna (Irkutsk ) 493
2 Samson Pharma (Moscow) 329
3 Volgopharm (Volgograd region) 258
4 Zdorovie (Krasnodar territory) 240
5 Yukon (Yaroslavl region) 223
*Chains presented in one or two Federal subject.
Source: Pharmexpert Analytics and Consulting
130 <131 market opinion as it is
rating of most
influential subjects
of russian pharma market
the regional level. By the way, it was this very drugstore chain that became winner among the most influential regional chains in 2010. Drugstores of that chain operate in the city of Irkutsk and Novosibirsk region. Apteka Avicenna Drugstore Chain is member of the Drugstore Guild (Aptechnaya Gildiya), which indirectly testifies to the clearly defined course of the owners and top managers of the chain, and also to the intention to use the platform of the professional association to assert influence in the industry.
Positive results of business vertical integration can be seen from the example of notable personal publicity of Alexander Afanassiev, founder, owner and president of the Pharmacor Group. The group comprises the manufacturer Pharmacor Production and fairly large (over 400 outlets) Phar-macor Drugstore Chain functioning in St. Petersburg and the Northwestern Federal District.
To be fair, the number of points gained by the rating newcomers is not too big, which makes for the appearance of new influential persons in 2011.
The most influen ti a l state
offici a l / public f igur e /
scien tist
Minister for Healthcare and Social Develop-ment Tatiana Golikova remains at the lead of the top ten persons of nation-wide influence and prominence, who had the most influ-ence on the pharma industry in 2010 (Table 6). On the one hand, it is understandable, for the past year is memorable for its large-scale regulatory initiatives originating from the federal government. On the other hand, it is impossible to ignore the fact that Premier Putin not only kept the second position but also scored the same number of rating points as in 2009, while Minister Golikova shed about 1,000 rating points.
Head of Rospotrebnadzor Gennady On-ishchenko lost his place among the three
Table 5. 10 most influential businessmen
R ank, 2010 Businessman No. of points
1 Igor Rudinsky, CEO, SIA International 629
2 Leonid Konobeev, CEO, Katren 364
3 Igor Krylov,CEO, Pharmstandard 206
4 Vladimir Bryntsalov, owner, Bryntsalov-A 200
5 Vadim Yakunin, Chairman of Board, Protek Group 184
6 Alexey Molchanov, ex-CEO, Protek CV 171
7 Artem Bektemirov, CEO, Apteki 36.6 Drugstore Chain 142
8 Igor Varlamov, ex-CEO, Alliance Healthcare Russia; CEO Binnipharm since February 2011 121
9 Tatiana Munina , CEO and owner, Apteka Avicenna Drugstore Chain 115
10 Alexander Afanassiev, founder, owner and president, Pharmacor Group 82
Source: Pharmexpert Analytics and Consulting
The Russian
pharmaceutical
market
2010
results
leaders of the ranking to President Med-vedev. It seems that Rospotrebnadzor withdraws into the shadows when there is no threat of a pandemia. Well, so it should be in a civilized country.
Pandemia or not, there was another misfortune in Moscow region namely super-smog, with all residents of the region experiencing breathing problems. Therefore, Pulmon-ology Institute Director and, concur-rently, Chief Therapist of Russia Alexander Chuchalin’s appearance in the ranking is but natural. While understandably unable to withstand nature and human folly that caused peat to burn, he managed the situ-ation efficiently at his level — the level of a doctor with some authority.
TV presenter Elena Malysheva’s appearance in the ranking is no surprise: the 10 plus years on air in the field of healthcare explains the fact that Ms. Malysheva is firmly associated in the respondents’ minds with the body of people capable of influencing the situation in healthcare
in general and in the pharma industry in particular.
As to St. Petersburg Governor Valentina Matvienko’s association with the sphere of healthcare, it can be explained by the Gov-ernor’s custom to verify victorious reports of her subordinates (who, for example, may report that the problem of access to spe-cialty doctors has been completely resolved in St. Petersburg); she may very well dial up a polyclinic herself, incognito style, and try to book an appointment. When she is turned down for lack of appointment slips, she reasonably recommends her subor-dinates to rely on the facts of life and not some unconvincing reports.
What deserves noting is that Public Health-care Chamber Commission Chairman Leonid Roshal’s position significantly deteriorated compared to 2009. It suggests a grim thought that the public’s influence on the industry related to the health of that very public is deteriorating. A paradox? Hardly so!
Table 6. 10 most influential state officials, public figures/scientists
R ank, 2010 State official/public figure/scientist No. of points
1 Tatiana Golikova , Russia’s Health and Social Development Minister 2 096
2 Vladimir Putin, Russia’s Prime Minister 1 566
3 Dmitry Medvedev, Russia’s President 1 227
4 Gennady Onishchenko, Head, Russian Agency for Health and Consumer Rights (Rospotrebnadzor) 355
5 Elena Telnova, Vice-Head, Russian Healthcare Surveillance Agency (Roszdravnadzor) 248
6 Leo Boсkeria, Head, Bakoulev Center for Cardiovascular Surgery 112
7 Alexander Chuchalin, Director, Pulmonology Institute, Russia’s Chief Therapist 89
8 Leonid Roshal, Chairman, Public Chamber Commission on Healthcare 86
9 Elena Malysheva , TV presenter, health-related programs 61
10 Valentina Matvienko, Governor, St. Petersburg 55
Source: Pharmexpert Analytics and Consulting
132 <133 market opinion as it is
rating of most
influential subjects
of russian pharma market
The most influen ti a l
profe ssion a l nonprofit
a ssoci ation
There are no newcomers in the top ten in this nomination, compared to 2009. But there are meaningful rank swaps. On the one hand, the Association of Russian Pharma-ceutical Manufacturers’ influence sharply dropped: statistically speaking, it scored twice less points and moved four positions down (Table 7), which is strange given the strengthening government policy of import substitution, the appearance of the list of 57 drugs to be produced in Russia before 2015, and the Pharma—2020 strategy decreeing that local players shall have a 50% share of the domestic pharma market.
On the other hand, ROSMEDPROM’s “stock” skyrocketed from position 9 in 2009 to position 2 in 2010, with double as many points scored. And the winner is… ROSPHARMA!
In principle, nothing fatal here. But a question comes to mind: aren’t there too many profes-
sional organizations with “pharm” in the root of their name that intend to influence the in-dustry? Let’s say at once that the question does not apply to either AIPM or IMA: their activi-ties are expressly international by nature. We don’t mean RAFM and FARMASK, either. But we are ready to shake the hand of that analyti-cal shark that will be able to clearly explain the difference among the other six influential players.
The most influen ti a l nonprofit
pa rt ner ship/patien t a ssoci ation
This nomination is represented in the Influ-ence Rating for the second time after the first time in 2009, so there is some “history” already.
Oncology patient associations and nonprofit partnerships continue to dominate by number (3 out of 10). The leader is the same, namely the interregional public Movement Against Cancer (Table 8). At the same time, nonprofit partnership for assist-ing healthcare social program promotion
Table 7. 10 most influential professional nonprofit associations
R ank, 2010 Professional nonprofit association No. of points
1 Russian Pharmaceutical Association — ROSPHARMA 2 183
2
Russian Association of Manufacturers and Suppliers of Pharmaceuticals, Medical Products and
Equipment — ROSMEDPROM 1 273
3 Russian Association of Pharmacy Chains — R A AS 1 270
4 Association of Russian Pharmaceutical Manufacturers — ARFP 1 072
5 Russian Association of Pharmaceutical Marketing — R AFM 748
6 Russian Pharmaceutical League — RFL 512
7 Association for Pharmaceutical Organization Rights Protection — FARMASK 501
8 Union of Professional Pharmaceutical Organizations — SPFO 456
9 Association of International Pharmaceutical Manufacturers — AIPM 327
10 International Medical Association — IMA 275
Source: Pharmexpert Analytics and Consulting
The Russian
pharmaceutical
market
2010
results
“Equal Right to Life” scored significantly more — twice as many as 2009 — rating points, which enabled it to occupy the third position in the ranking (4th in 2009).
Among patient associations, just as a year ago, most active are those demonstrating better solidarity as a life-saving indication. Diabetes, rheumatologic disorders and renal disease considerably worsen the patients’ quality of life, and, in the absence of support from the state, often result in disability, including early disability. For people in the cancer risk group, or with a confirmed disease, early stage diag-nostics and timely and effective treatment are of vital importance.
It is these factors that explain the efforts, including information activities, on part of the movements and associations from the TOP10 of the rating.
The most influen ti a l
profe ssion a l doctor a ssoci ation
This nomination has also been present in the rating since 2009. Doctors, while not
direct participants of the pharma market, are one of the most important stakehold-ers, promoting the ideas of evidence based medicine and at the same time accumu-lating the experience of drug use. The amount of drugs prescribed, as before, depends not only on the effective work of medical representatives of pharma compa-nies, but also on personal preferences for this or that treatment scheme on part of doctors, given the absence of comprehen-sive treatment standards in the Russian medical practice.
The Russian Cardiologists Society became first (2nd in 2009) confirming the sad statis-tics that proves the leadership of cardiovas-cular diseases among the mortality factors. The Russian Association of Oncologists was one position up (Table 9). The unfortu-nate fact is that the workload for oncologists in Russia, as in the world at large, keeps growing.
All in all, the pattern of this nomination was unchanged from the previous year: the
Table 8. 10 most influential nonprofit partnerships and patient associations
R ank, 2010 Nonprofit partnership/patient association No. of points
1 Movement Against Cancer: interregional public movement 1 985
2 Russian Diabetes Association 1 618
3 Equal Right to Life: nonprofit partnership for assisting healthcare social program promotion 1 518
4 Association of Patients Living with HIV/AIDS 1 129
5 Gepatitu net: patient association 830
6 Nadezhda (Hope): rheumatologic association 589
7 Association of Patients with Hemophilia: interregional charitable public organization of the disabled 550
8 Right to Life: public organization of disabled patients with kidney diseases 538
9 Blago: Russian public organization of the disabled 534
10 Together Against Cancer: interregional public organization 486
Source: Pharmexpert Analytics and Consulting
134 <135 market opinion as it is
rating of most
influential subjects
of russian pharma market
TOP5 associations took the lead with a significant gap over the other five, but gaps within the fives are relatively small.
The most influen ti a l medic a l /
ph a r m aceu tic a l uni v er sit y
The rating of industry specific universities has a new “old” leader: Sechenov Medical Academy (Moscow) has turned university, but retained its reputation among respon-dents (Table 10). The scandal with court hearings involving former Academy rector Mikhail Paltsev ended, resulting in his resig-nation. The new rector, Petr Glybochko, was selected out of Russia’s President “Talent Pool”.
The second position is firmly held (for the second year in a row) by Pyatigorsk State Pharmaceutical Academy. In our opinion, the reason of that is that the Academy’s graduates work all over the country, contrib-uting to the Academy’s popularity. Several graduates are widely known in the pharma industry, which is also important.
Pavlov State Medical University (St. Peters-burg) significantly improved its rank, moving from number 5 to number 3, but scored less points than the year before.
Overall, the three leaders demonstrated a con-siderable slump in terms of rating points in 2010 compared to 2009, leading one to the idea that we may be in for a surprise next year, pleasant or unpleasant. A significant amount of points went to Pirogov State Medical University (Moscow), which made it to the TOP10 at last (straight to the 8th position).
St. Petersburg institutions continue to prevail in number (3 out of 10). Among regional institutions, of note is the success of Bur-denko State Medical Academy (Voronezh) — a surge from position 10 in 2009 to position 7 in 2010 with much more points scored.
The most popul a r w eb-site
Events were turbulent in the nomination of web-sites. It is enough to look at the two
Table 9. 10 most influential professional medical doctor associations
R ank, 2010 Professional medical doctor associations No. of points
1 Russian Cardiologists Society 1 694
2 Russian Association of Oncologists 1 558
3 Association of Family Doctors 1 156
4 Russian Union of Pediatricians 1 135
5 National Health League 1 027
6 Russian Association of Endocrinologists 525
7 Russian Association of Rheumatologists 486
8 Russian Neurologists Society 474
9 Russian Union of Obstetricians 439
10 Russian Association of Allergologists and Immunologists 428
Source: Pharmexpert Analytics and Consulting
The Russian
pharmaceutical
market
2010
results
first positions to understand how much the concept of electronic government has taken hold. The surge of legislative initiative and a flurry of regulatory activity of the govern-ment have made the sites of two federal agencies, Roszdravnadzor and Minzdrav-sotsrazvitiya, the undisputed leaders of the rating (Table 11). Roszdravnadzor’s site that won in the rating had been only number 8 the year before. Minzdrav-sotsrazvitiya was not in the top ten at all in 2009.
The sharp surge of web resources of the federal government is logical: while before, the pharma industry had to be guided, perhaps for decades, by imperfect but valid laws, in 2010 the government decided as it were to catch up with the situation in one dash. Mar-ket participants have to follow the drafts posted for public discussions and work with the adopted legal acts almost in real time now.
Of electronic business resources, of note is the 7th rank of Roche. The site is relatively new;
thus all the more gratifying is the fact that the respondents mentioned it fairly often, which testifies to its usefulness.
The most popul a r R x drug
Viagra (Pfizer), at long last, became the most popular Rx drug in 2010 (Table 12). For the last three years, this “regular customer” was runner-up, being outstripped each time by the so-called “hits of the year”. This time no sensations happened. Scoring about the same number of points as the year before (406 points in 2009), Viagra was named the winner of the Rx segment.
The former champion (antiviral drug Tami-flu), in turn, dropped to the fifth position. Trademarks Preductal and Enap (3rd and 4th in 2009, respectively) also lost ground but remained in the Influence Rating.
The only local drug in the rating, Ingavirin (Va-lenta), scored 222 points and skyrocketed to number 2 from number 8.
The number 183 has become happy for Nycomed this year. It is this amount of points that put
Table 10. 10 most influential medical and pharmaceutical universities/academies
R ank, 2010 University/academy No. of points
1 Sechenov State Medical University (Moscow) 1 850
2 Pyatigorsk State Pharmaceutical Academy (Pyatigorsk) 1 328
3 Pavlov State Medical University (St. Petersburg) 987
4 Perm State Pharmaceutical Academy (Perm) 901
5
St. Petersburg Chemical and Pharmaceutical Academy (St.
Petersburg) 793
6 Military Medical Academy (St. Petersburg) 743
7 Burdenko State Medical Academy (Voronezh) 705
8 Pirogov State Medical University (Moscow) 653
9 Samara State Medical University (Samara) 623
10 Tomsk State Medical University (Tomsk) 606
Source: Pharmexpert Analytics and Consulting
136 <137 market opinion as it is
rating of most
influential subjects
of russian pharma market
Table 11. 10 most popular web-sites
R ank, 2010 Web-site No. of points
1 roszdravnadzor.ru 2 573
2 minzdravsoc.ru 1 919
3 pharmvestnik.ru 1 633
4 pharmexpert.ru 1 037
5 protek.ru 816
6 remedium.ru 632
7 roche.ru 623
8 krka.ru 449
9 pharmindex.ru 406
10 nizhpharm.ru 370
Source: Pharmexpert Analytics and Consulting
Table 12. 10 most influential Rx drugs
R ank, 2010 R x drug/manufacturer No. of points
1 Viagra (Pfizer) 455
2 Ingavirin (Valenta) 222
3 Actovegin (Nycomed) 183
4 Concor (Nycomed)1
183
5 Tamiflu (Roche) 180
6 Preductal (Servier)2
173
7 Enap (Krka)3
160
8 Amoxiclav (Sandoz)4
157
9 Heptral (Abbott Laboratories) 154
10 Alflutop (Biotechnos S.A.) 138
1 Summarized points of Concor and Concor cor.2 Summarized points of Preductal and Preductal МВ.3 Summarized points of Enap, Enap H, Enap HL, Enap HL 20, and Enap R.4 Summarized points of Amoxiclav and Amoxiclav quick tab.
Source: Pharmexpert Analytics and Consulting
The Russian
pharmaceutical
market
2010
results
ТМ Actovegin to the top ten most popular brands and enabled ТМ Concor to significant-ly improve its position (7th in 2009).
The same figures, but in the other order — 138 — refer to the absolute newcomer of the ra-ting, ТМ Alflutop.
The most popul a r ОТС drug
Taking stock of the year 2010, we can draw a breath of relief: flu is in retreat! The symp-toms of retreat are as follows: the popularity of Oscillococcinum (Laboratoires Boiron) has gone down with the consumer. The drug took just the 5th place in the 2010 ranking, a degrade after the proud second in 2009. Grippferon (Firn M) dropped out of the TOP10 (Table 13).
But it would be premature to think that the consumers’ vigil with regard to the treacher-ous flu infection has weakened. By stocking up Arbidol (Pharmstandard) and secur-ing, thereby, its 1st position in the rating of popular OTC drugs, the consumer is waiting out the dangerous cold times. Seeing the slightest manifestation of cold, and not finding an Arbidol at hand, the consumer decides to take up the responsibility of treat-ing him(her)self and relieves the annoying symptoms with Theraflu (Novartis), which is 2nd in the popularity rating (evidently, the above fact has ensured its jump from position 5 to position 2).
Flu is flu, but liver requires timely care. Two pills three times a day — and the 3rd place is
Table 13. 10 most influential OTC drugs
R ank, 2010 OTC drug/manufacturer No. of points
1 Arbidol (Pharmstandard) 3 606
2 Theraflu (Novartis)1
777
3 Essentiale (Sanofi-Aventis)2
566
4 Mezym forte (Berlin-Chemie/Menarini)3
469
5 Oscillococcinum (Laboratoires Boiron) 441
6 No-spa (Sanofi-Aventis)4
408
7 Anaferon (MateriaMedica)5
381
8 Pentalgin (Pharmstandard)6
312
9 Linex (Sandoz) 262
10 Complivit (Pharmstandard)7
238
1 Summarized points of Theraflu, Theraflu extra, Theraflu lar, Theraflu extratab, Theraflu bro.2 Summarized points of Essentiale forte N and Essentiale N.3 Summarized points of Mezym forte and Mezym forte 10000.4 Summarized points of No-spa and No-spa forte.5 Summarized points of Anaferon and Anaferon for kids.6 Summarized points of Pentalgin-N, Pentalgin-ICN, Pentalgin plus, Pentalgin without codein.7 Summarized points of Complivit low sugar, Complivit calcium D3, Complivit active, Complivit ophthalmo, Complivit “Mom” for pregnant and nursing
mothers, Complivit antistress, Complivit for women 45+, Complivit diabetes, Complivit calcium D3 forte, Complivit trimetrum 1, Complivit trime-
trum 2, Complivit trimetrum 3, Complivit calcium D3 for kids.
Source: Pharmexpert Analytics and Consulting
138 <139 market opinion as it is
rating of most
influential subjects
of russian pharma market
firmly secured by Essentiale (Sanofi-Aven-tis). The fact that Essentiale has held the 2nd position for two straight years leads one to think that the population’s civic responsibil-ity as to their liver is growing… or that the marketing efforts with regard to the drug have been smart. Mezym (Berlin-Chemie/Menarini) retains the 4th position for two consecutive years among other popular OTC drugs, which is only logical: after improving his/her digestion with Mezym forte once, everybody will want to keep it to the level.
However, consumers seem to have had more headache in 2010 (as evidently other aches and pains). It is not for nothing that Pentalgin (Pharmstandard) became number 8.
But whatever asserted by evil tongues, life became better and quieter in Russia in 2010. Unnoticed, Afobazolum (Pharmstandard), the anti-anxiety and anti-stress medication, is gone disappearing from position 10 of the rating, replaced by Complivit, the good old vitamin and mineral complex by the same manufacturer.
The most succe ssful drug l aunch
(“Golden L aunch ”)
Every year, while preparing the Rating of the most influential subjects of the Russian pharma market, Pharmexpert analysts have been tracking the sales dynamics of trademarks that have been introduced into medical practice in Russia during the last five years. When the year 2010 ended, the analysts have realized the need for a special nomination, with relevant sub-nominations, to mark the most successful trademarks that have appeared on the market relatively recently.
The launch of a new product onto the market is not simple; it requires energetic actions and
mobilization of certain resources on part of the company, including financial (adver-tising and marketing costs). The launch is the first and extremely important phase in the trademark lifecycle, where all advan-tages and disadvantages of the product are materialized, and the nature of the launch sometimes defines its future fate. Among drugs launched after 2008, the highest sales growth rates were demonstrated by trademarks SNUP, a topical anticonges-tant used in ENT practice, Vaginorm С, an intravaginal antiseptic, Rezalut pro, a drug for treating liver diseases, including chronic hepatitis, and Ingavirin, an original antivi-ral drug.
Sub-nomination “The most successful
local drug launch”1
The Ingavirin trademark has been demonstrat-ing high growth rates: if in 2009 its share in Group J05 “Antiviral drugs, systemic” 2 was about 1%, in 2010 it grew by +118% (2.4% of the total sales of the group). The fact that it is an Rx drug had a considerable effect on the methods of promotion: beside releases in specialized medical publications, informa-tion on the drug was placed in health-related TV programs, circulated at scientific confer-ences, roundtable discussions etc. The swine flu epidemic contributed to its sales growth (Ingavirin is recommended by Minzdrav-sotsrazvitiya for the treatment of adult pa-tients with medium to severe flu forms caused by A/H1N1 virus; the drug is also used for treating ARVI of non-flu virus etiology; it is on the list of drugs effective against swine flu recommended by Rospotrebnadzor).
The most “fresh from the oven” launches, i.e. drugs launched in 2010, are also of great interest. We have been attracted by the LLO segment (including the segment thereof related to the beneficiary drug coverage
1 Aggregate sales in three years (2008—2010).
2 ATC classification (EphMR A).
The Russian
pharmaceutical
market
2010
results
based on regional lists, not intersecting with ONLS and VZN lists) as socially important and hard as to the launch of new drugs due to strict state regulation. Since the most meaningful contribution to the segment is made by oncology drugs, the following sub-nomination was born: “The most suc-cessful launch of 2010 in the oncology drug segment”.
Sub-nomination “The most successful
launch of 2010 in the oncology drug
segment”
The leadership in the Oncology segment, among hi-tech innovation drugs released onto the market in 2010 that retained high positive growth rates during the year, is held by Revlimid.
The new original drug Revlimid was regis-tered in Russia in 2009 for the treatment of multiple myeloma, the incurable disease of hematopoietic tissue. In 2010, the drug was introduced into practice of Russian hema-tologists.
Multiple myeloma was considered a hope-less disease: the average life expectancy
of patients was 1 to 2 years. The cause of malignant development of the disease lies in rapid increase in the number of tumor cells supplanting healthy plasma cells. It results in severe damage of the kidneys, bone tissue, and also in the development of severe infections. The situation is aggra-vated by rapidly developing resistance to traditional chemotherapy methods. Since they possess exclusively cytostatic effect, chemo drugs only decrease the quantity of tumor cells, but once chemotherapy is stopped the remaining cells begin to proliferate again, with the new tumor being resistant to all kinds of therapy. From 2006, Russian patients have had the opportunity to be treated with bortezomib. However, according to leading experts, more than 40% of patients are resistant to bortezomib. In Europe and the USA, along with bort-ezomib, lenalidomide (Revlimid) is used, which demonstrates a reliable superiority as to patients’ survival rate (according to randomized studies). Revlimid possesses double action being both cytostatic and immunomodulating agent. It suppresses the
Shar
e of
th
ree-
year
sal
esin
tot
al m
arke
t si
ze (
%)
0-50 000
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
50 000 100 000 150 000
0.20
Rezalut pro
Orsoten
Imunorix
Herbotone
Vaginorm С
Combilipen
Systane
SNUP
Lorista
Ingavirin
Fig. 1. TOP10 trademarks with biggest aggregate sales (USD) in three years (2008—2010)
Source: Pharmexpert — Monitoring of retail drug sales in Russia
140 <141 market opinion as it is
rating of most
influential subjects
of russian pharma market
tumor and blocks re-appearance thereof by means of mobilizing the patient’s immune system. Moreover, the favorable safety profile allows for lengthy treatment and makes it possible to prolong remission to the maximum.
Sub-nomination “Innovative product of
plant origin in high-cost drug segment
among launches of 2010”
In the segment of high-cost local trademarks, hepatoprotector of plant origin Ropren stands out. That innovative drug has no analogues both on the Russian market and globally.
Experts distinguish between two major groups of hepatoprotectors available for the Rus-sian consumer. Drugs of the 1st group pro-vide the cell with building material for the membrane; drugs of the 2nd group indirectly
stimulate the membrane regeneration pro-cess. Ropren may be classified as a new in principle, third, group: the drug is capable of regulating nerve and endocrine process-es, thus supporting regeneration not only on the cell level. The process takes place due to long-chain polyisoprenoid alcohols (polyprenols) present in the drug. Accord-ing to the latest data, polyprenols, assisted by CRB5A3 reductase, are transformed into transport lipids dolichols, which play a key role in the formation of glycoproteins sig-nificantly affecting the fluidity of synaptic membranes.
The drug’s high cost and the need for a pre-scription implicate the risk of compara-tively low sales in the out-of-pocket sector. However, the drug’s unique properties (the ability to provide clinical effect in shorter times compared to other hepatoprotectors)
Q22010
Q32010
Q42010
-200
-100
100
0
200
300
500
700
800
600
400
Revlimid
Camptera
Vincatera
Extavia
Bicalutamid
Sale
s gr
owth
rat
e (%
, USD
)
Fig. 2. TOP5 drugs of Group L “Antineoplastic and immunomodulating agents” in value terms (mn USD) among launches of imported LLO drugs, 2010
Source: Pharmexpert — Reimbursable drug distribution (LLO)
The Russian
pharmaceutical
market
2010
results
and the peculiarities of the distribution policy of Solagran Son, the company that manufactures and markets Ropren, have cre-ated prerequisites for the consolidation of strategic efforts to promote the drug in the hospital sector. This kind of policy enabled the company to achieve a high growth rate in the hospital purchase sector in less than 9 months of the drug’s actual presence on the market (+219% in value terms).
Interestingly, the Australian company Sola-gran Limited has Russian roots: the name
of Solagran was formed by combining the names of Russian scientists, the founders of forest biochemistry, F.T. Solodky and A.L. Agranat.
The works of those renowned scientists al-lowed, in the years of the Second World War, to create anti-burn and wound-healing drugs based on biologically active substanc-es isolated from fir-tree and pine needles, as well as a pine needle drink for the treatment of scurvy that saved the lives of many resi-dents of sieged Leningrad.
Rezalut pro Octolipen Heptor Phosphontiale Ropren
105, 8
Rezalut pro Octolipen Heptor h h i l
0
1
3
2
4
5
7
9
10
8
6
Sales (mn USD), 2010
Average sales growth rate, Q410 (%)
0
50
100
150
200
250234
2418
3120
%
%
Fig. 3. TOP5 hepatoprotectors — new to market in value terms, 2010
Source: Pharmexpert — Monitoring of retail drug sales in Russia
142 <143
rating of
investment
attractiveness
of russian
federal
subjects by
specific sectors
of regional
pharma markets
XIV.
The compilation methods for the Rating of investment attractiveness of Russian Fed-eral subjects are based on analyzing their economic and socio-demographic indica-tors as well as basic indicators of individual sectors of the regional pharma and medical services markets. Analysis included the fol-lowing stages:
1. Ranking the regions within the categories of the Economic, Socio-demographic, and Pharma & healthcare indicators.
2. Determining expert weight of each indicator in a specific category.
3. Forming the ranking within each category.4. Calculating cumulative rank of each Federal
subject based on weighted ranks in each respective category.
The analysis was based on 20101 data according to the indicators in Table 1.
The resultant rating of the investment attrac-tiveness of the Federal subjects (split by re-gions) in the perspective of different pharma market sectors is presented in Table 2.
methods
Table 1. Basic categories and indicators used for evaluating investment attractiveness of Russian Federal subjects
# Category Indicator
1. Economic indicators
Average employee nominal monthly salary
Cash income per capita
Consumer spending
2. Socio-demographic indicators
Population, total
Population, urban
Population, unemployed
3. Pharma and healthcare indicators
Out-of-pocket market size
Hospital market size
Beneficiary drug coverage market size (7 Nosologies + ONLS)
1 Except for the number of doctors as official data for this catetogy
is available as of 2009 only.
The Russian
pharmaceutical
market
2010
results
As a result of ranking the investment attractive-ness of the Federal subjects, ТОР5 regions were determined in ten nominations as follows:
1. Highest salary.2. Highest cash income per capita.3. Highest consumer spending.
4. Largest population.5. Largest urban population.6. Smallest share of unemployed population.7. Largest out-of-pocket market.8. Largest hospital market.9. Largest beneficiary drug coverage market.10. Largest number of doctors.
144 <145
TOP5 r egions:
Highe st sa l a ry
1. Chukotka autonomous district2. Moscow3. Tyumen region4. Sakhalin region5. Magadan region
TOP5 r egions: Highe st c a sh
income per c a pita
1. Moscow2. Chukotka autonomous district3. Sakhalin region4. Tyumen region5. St. Petersburg
TOP5 r egions: Highe st consumer
spending
1. Chukotka autonomous district2. Kamchatka territory3. Sakhalin region4. Magadan region5. Moscow
TOP5 r egions: L a rge st
popul ation
1. Moscow2. Moscow region3. Krasnodar territory4. St. Petersburg5. Sverdlovsk region
TOP5 r egions: L a rge st ur ba n
popul ation
1. Moscow2. Moscow region3. St. Petersburg4. Sverdlovsk region5. Rostov region
TOP5 r egions: Sm a lle st sh a r e of
unemploy ed popul ation
1. St. Petersburg2. Moscow3. Leningrad region4. Moscow region5. Lipetsk region
TOP5 r egions: L a rge st ou t- of-
pocket m a r ket
1. Moscow2. St. Petersburg3. Moscow region4. Sverdlovsk region5. Krasnodar territory
TOP5 r egions: L a rge st hospita l
m a r ket
1. Moscow2. St. Petersburg3. Moscow region4. Rostov region5. Republic of Tatarstan
TOP5 r egions: L a rgest beneficia ry
drug cover age ma r ket
1. Moscow2. Moscow region3. St. Petersburg4. Krasnodar territory5. Sverdlovsk region
TOP5 r egions: L a rge st number of
doctor s
1. Moscow2. St. Petersburg3. Moscow region4. Krasnodar territory5. Sverdlovsk region
Source: Rosstat
Calculations: Pharmexpert
rating of investment
attractiveness of russian
federal subjects by specific
sectors of regional pharma
markets
The Russian
pharmaceutical
market
2010
results
Table 2. Rating of investment attractiveness of Russian Federal subjects (by pharma market sectors), 2010
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s
1 Moscow 2 1 5 2 1 1 2 1 1 1 1 1 1
2 St. Petersburg 9 5 17 10 4 3 1 2 2 2 3 2 2
3 Moscow region 11 10 15 12 2 2 4 3 3 3 2 3 3
4
Tyumen region (incl.
Khanty-Mansiyskiy
and Yamalo-Nenetskiy
autonomous districts) 3 4 9 6 10 9 7 6 11 29 10 6 12
5 Sverdlovsk region 22 13 28 16 5 4 36 8 4 6 5 5 4
6 Krasnodar territory 39 23 25 26 3 8 11 4 5 7 4 4 5
7 Samara region 40 14 22 23 12 11 33 12 6 16 13 11 10
8 Novosibirsk region 25 26 30 24 17 15 25 13 10 9 8 12 9
9 Rostov region 48 34 33 34 6 5 14 5 13 4 7 9 8
10 Krasnoyarsk territory 14 21 19 15 14 14 47 22 25 13 11 13 13
11 Nizhniy Novgorod region 33 24 42 29 11 10 9 7 12 43 14 10 17
12 Chelyabinsk region 31 20 57 31 9 6 40 11 8 8 15 15 11
13 Republic of Tatarstan 35 17 73 40 8 7 30 9 9 5 9 8 6
14 Republic of Bashkortostan 38 19 64 38 7 12 46 16 7 12 6 7 7
15 Perm territory 34 16 24 21 18 17 52 29 23 20 12 14 15
16 Irkutsk region 20 41 36 27 21 18 39 23 16 19 18 20 16
17 Primorie territory 16 18 10 14 26 22 51 31 19 14 33 25 23
18 Leningrad region 17 39 20 22 27 28 3 14 20 62 21 39 32
19 Volgograd region 56 38 43 46 19 16 28 15 17 27 19 17 18
20 Khabarovsk territory 12 12 7 9 34 30 67 45 24 35 22 28 26
21 Kemerovo region 29 33 80 49 16 13 45 20 18 18 16 16 14
22 Tula region 43 28 48 37 28 26 15 17 44 17 23 43 31
23 Voronezh region 50 55 27 43 23 21 29 19 14 33 25 21 25
24
Archangel region (incl.
Nenetskiy autonomous
district) 13 15 13 13 41 38 50 44 32 58 27 33 35
25 Omsk region 37 40 66 50 25 23 26 21 22 21 24 23 22
26 Stavropol territory 58 58 26 48 15 20 48 27 26 10 28 19 19
27 Belgorod region 44 22 72 47 29 34 19 25 29 28 26 37 27
28 Orenburg region 46 57 75 62 24 27 20 18 27 11 20 26 20
29 Saratov region 51 67 78 70 20 19 13 10 15 23 30 18 21
30 Tver region 45 51 32 41 33 33 17 28 45 47 34 31 37
31 Murmansk region 7 8 8 8 61 45 54 58 38 39 46 52 42
32 Lipetsk region 47 27 60 45 43 44 5 30 39 25 39 48 36
33 Republic of Sakha (Yakutia) 8 9 6 7 54 55 61 62 47 34 51 45 44
34 Sakhalin region 4 3 3 3 70 69 8 50 59 48 64 67 61
35 Vologda region 23 53 23 28 42 41 58 47 43 42 31 54 39
36 Kaluga region 32 31 50 33 51 43 6 32 54 38 42 56 51
37 Tomsk region 18 35 29 25 49 48 55 55 49 31 55 30 38
38 Yaroslavl region 42 46 41 42 39 32 56 43 35 41 40 29 34
39 Republic of Daghestan 80 29 62 59 13 24 73 36 31 24 41 24 28
40 Kaliningrad region 27 25 18 17 55 50 38 48 66 66 45 62 62
*Based on three categories of indices, viz, economic, socio-demographic, and pharma & healthcare.
146 <147
Cu
mu
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tiv
e r
an
k*
, 2
010
Fe
de
ra
l s
ub
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ct
R ank, economic indicators R ank, socio-demographic
indicators
R ank, pharma and healthcare indicators
Av
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e e
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41 Smolensk region 52 32 39 39 52 51 23 40 41 52 53 41 49
42 Kirov region 63 59 46 57 35 35 57 42 30 15 44 34 29
43 Komi Republic 10 11 11 11 57 52 59 61 67 54 47 53 57
44 Ryazan region 68 61 35 55 44 42 18 34 42 57 38 35 40
45 Penza region 53 56 65 60 32 37 12 24 36 69 32 44 46
46 Vladimir region 49 65 34 53 31 29 41 33 46 49 36 49 45
47 Ulyanovsk region 64 69 74 72 36 36 10 26 28 30 35 50 33
48 Udmurt Republic 55 62 67 65 30 31 49 37 33 22 43 27 30
49 Amur region 15 42 14 18 60 57 69 68 50 36 50 46 47
50 Transbaikal territory 24 49 45 36 46 49 66 59 34 56 48 36 41
51 Buryat Republic 28 44 31 30 53 56 42 54 48 46 54 57 54
52 Altai territory 76 74 63 76 22 25 75 38 21 32 17 22 24
53 Kursk region 62 45 55 54 45 47 34 41 40 59 49 38 48
54 Kamchatka territory 6 6 2 4 74 71 65 74 64 50 73 73 68
55 Astrakhan region 41 48 58 52 50 53 37 46 51 44 62 32 50
56 Republic of Karelia 21 30 21 19 67 61 62 69 58 70 56 60 63
57 Magadan region 5 7 4 5 79 76 53 72 73 75 79 78 76
58 Tambov region 72 50 53 61 47 54 24 39 60 40 52 59 55
59 Bryansk region 73 54 61 68 37 39 31 35 37 73 37 51 53
60 Novgorod region 36 36 40 32 68 66 22 57 74 61 67 65 69
61
Chukotka autonomous
district 1 2 1 1 80 80 74 79 79 77 80 80 80
62
Evreyskaya autononous
region 19 43 12 20 78 78 21 64 72 78 77 79 78
63 Ivanovo region 66 75 44 66 48 40 60 51 61 63 29 42 52
64 Republic of Khakassia 26 52 37 35 69 70 43 66 76 55 72 70 70
65 Chuvash Republic 69 72 69 75 40 46 63 53 52 26 57 40 43
66 Kostroma region 57 68 54 63 66 64 16 49 56 65 63 66 65
67 Kurgan region 65 47 56 58 56 58 68 65 53 60 60 64 60
68 Oryol region 67 63 77 73 62 59 27 52 63 51 59 63 59
69 Pskov region 60 60 47 56 65 62 44 63 75 67 65 69 71
70 Chechen Republic 59 79 51 69 38 67 80 67 55 37 66 61 56
71 Republic of Mordovia 74 71 70 78 59 60 35 56 57 53 58 55 58
72
Republic of Northern
Ossetia — Alania 75 37 71 64 63 65 72 71 65 72 68 47 67
73 Altai Republic 54 64 16 44 77 79 78 80 80 79 78 77 79
74 Tyva Republic 30 76 38 51 75 75 77 77 78 74 76 75 75
75 Republic of Mariy El 71 77 76 79 64 68 32 60 68 45 69 68 66
76 Republic of Adygeya 70 66 49 67 72 72 64 73 69 76 71 71 73
77 Kabardino-Balkar Republic 77 73 79 80 58 63 70 70 62 64 61 58 64
78
Karachai-Cherkess
Republic 79 70 52 71 71 73 71 75 70 71 75 72 74
79 Ingush Republic 61 80 68 74 73 74 79 76 71 68 70 76 72
80 Kalmyk Republic 78 78 59 77 76 77 76 78 77 80 74 74 77
rating of investment
attractiveness of russian
federal subjects by specific
sectors of regional pharma
markets
Source: Rosstat
Calculations: Pharmexpert
The Russian
pharmaceutical
market
2010
results
148 <149
paradox
of movement
XV.
The Russian
pharmaceutical
market
2010
results
At the same time, the price control effect was observed not only in stabilization of drug prices but also in deeper structural changes in the market. Changes in the distribution system were incited; there were changes in the retail margin level for the drugstore product range not subject to price control;
and finally, some medications withdrew from the market (however, these were rela-tively few).
The necessity to control drug prices arises, in essence, due to specifics of the drug consumption structure in Russia. The out-of-pocket segment makes the biggest contribution to Russia’s pharma market size as a whole. In fact, consumers pay out of their pockets for more than 75% of all drugs purchased (Fig. 1), which drastically distinguishes this market from those of most developed countries.
Presently, the Russian healthcare system differs a lot from the model developed by Acade-mician N.A. Semashko. It is also far from the principles of healthcare organization in other countries, e.g. the so-called Bismarck Model (based on the insurance mechanism of reimbursement for medical services costs; used in Germany) and Beveridge Model (based on the co-payment system; used, in particular, in Great Britain).
The issue of the drug price control has taken
an important place in the Russian informa-
tion space right after the beginning of the
economic crisis. The issue was r aised by ev-
eryone: by the state leaders, officials of
various r anks, businessmen, and consumers.
The control mechanism was launched in April
2010, and just a few months later officials
reported on the successes in the sphere of
drug price stabilization. Indeed, since April
2010 the prices have been decreasing: it is re-
corded by Rosstat and it is also confirmed by
Pharmexpert analysts.
price dynamics
in the russian
pharmaceutical market
Hospital market
Beneficiary drug coverage
Out-of-pocket market
2006
1500
2500
6 700
2007
1580
2000
9 000
2008
1700
3000
11 600
2009
1300
2600
11 800
2010*
1500
2800
13 300
Fig. 1. Russia’s pharma market structure, 2006—2010
*Preliminary data.
Source: Pharmexpert — Monitoring of drugstore drug sales, hospital procurement and reimbursable distribution (LLO): Russia
150 <151 paradox of movement
price dynamics in the russian
pharmaceutical market
Under current expenditure pattern for drug coverage in Russia any drug price fluctuations are rather sensitive for consumers. The idea of control over retail drug markups is not in the least new: it appeared long before the events of 1st of April 2010. De jure, drug price control has existed in Russia since December 1992, when the RF Government Order No 970 dd 11.12.1992 “On Procedure of Drug and Medi-cal Device Pricing and On Providing Mea-sures for Social Protection of the Population” limited the profitability ceiling for drug selling enterprises including drugstores. Somewhat later, in March 1999, another step was taken, as a result of which the retail drug markup control system has basically taken its present-day shape. At that time the RF Government Order No 347 dd 29.03.1999 “On State Control Measures for Drug Prices” established “the procedure of state registration of manufac-turer sales price and setting wholesale and retail markups on manufacturer sales prices for VED-listed drugs and medical devices”.
De facto, price control did not come into action either in 1992 (since it did not provide for registration of manufacturer prices) or in 1999 (since manufacturers were not in a hurry to voluntarily register prices).
On average, for the past 5 years despite the fact that the VED list has been revised several times, the share of drugs on that list made about one third of the out-of-pocket market in value terms. In the market as a whole, taking into account the hospital and benefi-ciary drug coverage sectors, the VED share approached 50%. It is worth noticing that starting from 2010, after the new VED retail markup regulation came into force the mar-ket share of the VED-listed medications has considerably decreased (Fig. 2), which can be partially explained by a rebound effect: in response to the VED markup cap non-VED markups started growing thus leading to this segment’s share growth.
Noticeable changes in the out-of-pocket market structure also occurred in respect to price
Non-VED
VED
2006
2007
2008
2009
2010
34.165.9
34.965.1
33.266.8
65.5 34.5
65.7 34.3
Fig. 2. Structure of Russia’s out-of-pocket drug market split for VED/non-VED, 2006—2010
Source: Pharmexpert — Monitoring of retail drug sales in Russia
The Russian
pharmaceutical
market
2010
results
segmentation. In the period when the retail drug markup regulation was coming into force (starting from Q210) the share of drugs priced at 2-7 USD grew consider-ably (Fig. 3). At the same time, a trend of decreasing the share of drugs selling at 7 to 15 USD was observed: evidently, some drugs have slipped to a lower price segment as a result of the markup cap. There was also an appreciable decrease in the share of costliest drugs: it diminished from 4.33% in Q110 to 3.64% in Q210. At the same time, the downward trend of this group’s share persisted through the end of 2010. Peak sales in the 2-7 USD price segment fell on Q310 when this segment’s share reached 37.17%. This fact, in turn, is hardly linked with the effect of drug markup regulation. Most probably, this influx can be explained
by anomalous weather conditions in Central Russia, which stimulated the demand for some drugs that were not season-specific at large. In particular, there was a considerable sales growth for antitussives to treat cold-re-lated diseases resulting from extensive use of conditioners.
Average drug prices reached their maximum by March 2010 (Fig. 4): at that time, in the out-of-pocket market, the average per pack price was 3.28 USD. As of March, price per pack of imported drugs was 6.73 USD, that of local drugs was 1.32 USD. Right after the new markup cap regulation came into force, the average price decrease turned out to be minimal. Evidently, market players were not in a hurry to implement the new regulation. Active state control was required. As a result of multiple checks made by Roszdravnad-
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
>50 USD
25-50 USD
15-25 USD
7-15 USD
2-7 USD
<2 USD
Q1
11.4711 47
7.507.504.01
25.54
38.61
12.90
Q2
12.6912.69
9.979.975.48
29.46
30.42
12.00
Q3
12.7312.73
9.469.465.20
29.17
31.67
11.80
Q4
11.3811.38
9.559.554.63
32.30
31.27
10.90
Q1
11.8911.89
9.299.294.33
30.92
32.22
11.40
Q2
13.1013.10
10.9810.983.64
27.13
33.87
11.30
Q3
11.7111.71
9.419.413.26
26.95
37.17
11.50
Q4
12.1312 13
9.359.353.31
28.22
36.19
10.80
Fig. 3. Price segmentation dynamics of Russia’s out-of-pocket drug market, 2009—2010 (q/q)
Source: Pharmexpert — Monitoring of retail drug sales in Russia
152 <153
Imported
Market average
Local
6.39 6.256.73 6.74
6.27 6.106.42 6.20 6.136.24 6.09
5.72
USD
1
0
2
3
4
5
6
7
MayJan Feb Mar Apr Jun Jul Aug Sep Oct Nov Dec
3.08 3.04 3.28 3.25 3.10 3.093.06 2.87 3.122.82 2.81 2.94
1.22 1.23 1.32 1.27 1.25 1.271.16 1.07 1.291.02 1.05 1.24
Fig. 4. Average price dynamics (USD) in Russia’s out-of-pocket drug market, January — December 2010
Source: Pharmexpert — Monitoring of retail drug sales in Russia
paradox of movement
price dynamics in the russian
pharmaceutical market
zor in May, average prices started to steadily go down. At the same time, it is necessary to point out that by the end of the year the price cuts were compensated by price growth. There were several reasons for that: firstly, prices were going up for non-VED drugs that were not subject to regulation; secondly, market players sought to com-pensate their costs selling more expensive analogs of drugs within the same INN. It is not a secret that for a number of generics price fluctuations can be dozens and even hundreds percent. Cheaper products could be left sitting at wholesaler warehouses; drugstores started recommending high-cost drugs more frequently (if not in the first place). It is indicative that in December 2010, average prices for local drugs matched April prices; average prices for imported drugs indeed went down to 6.1 USD vs. the beginning of the year.
It is worth noticing that the change in the aver-age price index cannot be viewed as a direct evidence of either effectiveness or non-ef-fectiveness of the markup cap regulation, as
this index may overlap with changes in con-sumer preferences and consumption struc-ture, as it happened, for example, in the period of anomalous summer heat. Quite different conclusions can be drawn when analyzing the dynamics of retail markups on basic drugstore product range (Fig. 5). The markup rate for basic drugstore products was relatively stable throughout the whole crisis year of 2009. There were no major changes in the drugstore pricing policy, including right after the markup cap regula-tion came into force. In Q210, there was a considerable cut on drug markups, both VED and non-VED. At the same time, we also recorded a certain increase in markups for dietary supplements and cosmetics. But truly revolutionary changes occurred only in Q310 after entering into force of the RF Government Order No 694 dd 08.09.2010 that prohibited Russian Federal subjects to control maximum wholesale and retail price markups for non-VED. The 3rd quarter was marked by a sharp increase of prices for non-VED as well as dietary supplements
The Russian
pharmaceutical
market
2010
results
and cosmetics. Though the reaction of the drugstore business was a bit slow (possibly, market players were reluctant to be overly active right after the markup cap regulation came into force), still there was a reaction. Businesses cannot operate at a loss; the costs involved in price stabilization for drugs subject to price control were compensated by way of price increase for the rest of the product range. By the way, in Q410, possibly not without Roszdravnadzor participation, the VED retail markup reached its historic low for the past 8 years: 25.8%.
In order to assess the realistic price level move-ment it is necessary to use the price index which is, in fact, the inflation rate indica-tor. The price index (in particular, we used Laspeyres index for our calculations) is calculated as the ratio of consumer expen-ditures for purchasing drug set at current prices to those for purchasing the same drug set in the reference period.
Despite a fairly significant increase of non-VED
markup and considerable inflation rates, the drug price index in the Russian market as a whole demonstrated a steady down-trend throughout the year (Fig. 6). This was recorded by both Rosstat and indepen-dent experts. In particular, the price index calculation made by Pharmexpert analysts was basically identical to that officially published by Rosstat. Moreover, it turned out that in reality prices were decreasing more intensively than it was recorded by Rosstat. It can be explained by the specif-ics of the price monitoring methods used by the official agency. Thus, for example, only 17 drugs are mentioned in Rosstat methodological comments to the price index calculations (which, as a matter of fact, have not changed since 2006). The calculations made by Pharmexpert include all stock list represented in the pharma market.
Price cuts were observed both in rubles and US dollars, though whereas in December 2010 the price cuts, according to Rosstat, were
VED
Non-VED
Dietary supplements
Cosmetics
30.1 30.2 30.3 29.9 29.7 30.2
36.9 37.1
29.2 29.7 30.2 30.0 29.6 29.9
35.7 35.9
28.8 29.3 29.6 29.1 29.0 28.8
35.1 35.4
28.5 28.9 29.4 28.8 28.4 28.028.3
25.825
20
30
35
40%
Q12010
Q12009
Q22009
Q32009
Q42009
Q22010
Q32010
Q42010
Fig. 5. Retail markup dynamics (%) for basic drugstore product groups, 2009—2010 (q/q)
Source: Pharmexpert — Drugs, dietary supplements & cosmetics/Monitoring of retail sales: Russia
154 <155
approx. 2%, then in April 2009 prices grew by more than 30%. Thus, in fact, we’ve seen not so much a price decrease but rather their stabilization.
There is another fundamental problem in the Russian pharma market, which, coupled with considerable population expendi-tures for drug purchases, welcomes drug price control. This problem is related to the high level of market dependence from imports.
In the market as a whole, the share of local drugs, as of late 2010, was 22% (Fig. 7). In the out-of-pocket market, the share of local drugs was a bit higher — some 25%, but, firstly, so far there is no evident upward trend for the local drug share, and secondly, drug manufacturing in Russia is largely based on imported APIs; the equipment and consumables are for the most part imported from abroad as well. Pharmaceutical plants are mainly constructed by foreign engineer-ing companies. Thus, even if pharmaceuti-
cal manufacturing is localized in Russia, a vast proportion of payments to counter-agents has to be made in foreign currency, which leads to drastic changes in drug prices every time there is an exchange rate fluctuation. This could be observed during the economic crisis at the end of 2008 — be-ginning of 2009.
To be fair, it should be mentioned that the situation started somewhat changing in 2010. Local products have appeared in the high-cost drug auctions. The success of TM Ronbetal (Biocad) and Coagil VII (Lekko) was widely discussed last year. In the out-of-pocket market, local products lead the sales in the anti-flu drug segment; it was specifi-cally obvious during the flu epidemics at the end of 2009. But the system-based prob-lems remain; in particular, starting from December 31, 2010, the preferences for local drugs, envisaged by the Order of Russia’s Ministry of Economic Development No 427 dd 05.12.2008, have expired.
Drug price index, Pharmexpert, RUB
Drug price index, Pharmexpert, USD
Drug price index, Rosstat, RUB
1.163 1.1611.126
1.072
0.8540.881
0.966
0.898
0.867
0.875 0.882
0.874
1.073
0.978 0.9600.932
0.913 0.907
0.918 0.902
0.894
0.850 0.846
0.8750.9
0.8
1.0
1.1
1.2
MayJan Feb Mar Apr Jun Jul Aug Sep Oct Nov Dec
Fig. 6. Laspeyres drug price index, Russia’s out-of-pocket drug market, 2010 (m/m)
Source: Pharmexpert — Monitoring of retail drug sales in Russia
paradox of movement
price dynamics in the russian
pharmaceutical market
The Russian
pharmaceutical
market
2010
results
Local
Imported
2006
21.2
78.8
2007
22.2
77.8
2008
20.3
79.7
2009
21.4
78.6
2010
22.0
78.0
Fig. 7. Russia’s pharma market split for imported/local drugs in value terms (%), 2006—2010
Source: Pharmexpert — Monitoring of retail drug sales in Russia
Conclusion: The results of the past year show that the
government is in the position to efficiently control drug
prices, although regulation tools are limited. It is evident
that in the long run an efficient pricing control is only
possible if local drug and API production is developing at a
fast rate, but so far it is a distant prospect.
Strict legislative regulation of the drug price markup is
in general a very risky step fraught with withdrawal of
specific manufacturers from the market. Nevertheless, in
2010 the state set the «bearish» trend in the market, which
has stabilized general drug price dynamics. Evidently, this
fact has two faces. On the one hand, we observed the rebound
effect: a decrease of VED prices caused an increase of prices
in other products groups (dietary supplements, cosmetics
etc.), i. e. price decrease is still compensated by consumers
out of their pockets. On the other hand, pharmaceutical
companies can effectively play on the wave of downward
trend, stimulating demand for their products and decreasing
selling prices. Currently, many companies operating in the
price range «above the average» are striving to recollect the
rules of price elasticity of demand.
156 <157
natural
selection
XVI.
The Russian
pharmaceutical
market
2010
results
The year past has also seen “flu panic” (it was not as manifest as the year before; none-theless, it has affected drug sales) among consumers as two antiviral trademarks (Tamiflu and Ingavirin) as well as a flu and
cold drug manufacturer (Laboratory ANVI (ex-Antiviral NPO ZAO)) has been selected the Month’s Best. There was also growth in very specific market segments: e.g. in March 2010, an erectile dysfunction drug manufac-turer (TM Zydena, Dong-A Pharmaceutical Co. Ltd. ) and a monophasic oral contra-ceptive agent (Yaz) were nominated for the Month’s Best. Among well-expected or forecasted winners in summer and autumn, there were an antifungal agent (Loceryl) and a lice spray (Paranit). The import sub-stitution trend has grown well-manifest as local players have been increasingly often selected the Month’s Best (e.g. Nearmedic, Moskhimpharmpreparaty, Biotics MNPK, Laboratory ANVI).
For a few years running, Pharmexpert has taken
the liberty (and responsibility, of course) to se-
lect the best pharmaceutical manufacturers and
trademarks and give them awards in the form of
publications in INPHARMACIA Monthly Analyti-
cal Reports. In 2010, INPHARMACIA Month’s Best
section was extended to “Lives of Remarkable
Drugs” in order to include new launches as well
as unique or innovative products that cannot
find their way to the Month’s Best merely based
on their sales or growth dynamics.
month’s best companies
and trademarks —
pharmexpert selected
Out-of-pocket
Nearmedic Tamiflu
Dong-APharmaceutical
Co. Ltd.Yaz
Sanofi-Aventis Concor
Biotics MNPK Ingavirin
Moskhimpharm-preparaty
Loceryl
LaboratoryANVI
Ropren Lives of Remarkable Drugs
Omega Pharma Paranit Parasitology
Import
ShireHuman GeneticTherapies Inc.
Yondelis
Stragen Extavia
GenfaMedica S.A. Ambrobene
Stateprocurement
Eli Lilly Spiriva
Fig. 1. Month’s Best corporations/ trademarks covered in INPHARMACIA 2010 split for pharma market sectors
Source: Pharmexpert Analytics and Consulting
158 <159 natural selection
month’s best companies
and trademarks —
pharmexpert selected
Table 1. Companies covered as Month’s Best (INPHARMACIA), 2010
Company Main TMs Coverage month
Company’s market
share (%, USD)
Share growth
(%), 2010/2009 Main sales sector
Main sector
share (%, USD)
Laboratory ANVI
Antigrippin
Citramon
Mukaltin
October
— November 0.22 7 out-of-pocket 99.87
Biotics MNPK
Glycine
Biotredin
Limontar June 0.11 49 out-of-pocket 98.81
Genfa Medica S.A.
Abitaxel
Oxatera
Camptera December 0.25 7 hospital 61.63
Dong-A Pharmaceutical
Co. Ltd. Zydena March 0.02 246 out-of-pocket 100.00
Laboratories
Pharmygiene-SCAT
Spregal
Para-Plus
A-Par September 0.07 –14 out-of-pocket 99.83
Moskhimpharmpreparaty
Salbutamol
Alloholum
Enterodes August 0.39 21 out-of-pocket 91.80
Nearmedic Plus K agocel1
February 0.06 3 out-of-pocket 99.12
Sanofi-Aventis
Essentiale
No-spa
Lantus May 5.15 8 out-of-pocket 77.67
Stragen Pharma Paclitera July 0.00 –
beneficiary drug
coverage 100.00
Shire Human Genetic
Therapies Inc. Elaprase April 0.08 136
beneficiary drug
coverage 100.00
Eli Lilly
Cialis
Humulin
Humalog January 0.78 –10
beneficiary drug
coverage 45.24
Source: Pharmexpert Analytics and Consulting
1 K agocel is included in 2011 VED list as well as drugstore minimum product range.
Table 2. Trademarks covered as Month’s Best (INPHARMACIA), 2010
Trademark Corporation
TM’s market share
(%, USD) Share
growth (%),
2010/2009
Average
price/unit
(USD)
Corpora-
tion’s mar-
ket share (%,
USD)
ТМ’s import
share
(%, USD)2010 2009
Ambrobene
Ratiopharm GMBH/Teva
Pharmaceutical Industries Ltd 0.14 0.14 1 3 3.11 0.22
Yaz Bayer Healthcare 0.10 0.02 415 26 3.41 0.10
Ingavirin* Valenta 0.05 0.03 62 14 0.77 –
Yondelis Baxter AG 0.05 0.001 7770 4233 0.48 0.01
Concor Nycomed 0.62 0.53 17 9 2.94 0.79
Loceryl Galderma Laboratories 0.11 0.05 123 52 0.19 0.12
Paranit Richard Bittner GMBH 0.01 0.003 205 23 0.24 n/a
Ropren Solagran Son 0.001 0.00 – 183 0.04 –
Spiriva Boehringer Ingelheim 0.11 0.11 –3 78 1.71 1.71
Tamiflu Roche 0.04 0.14 –75 44 2.68 2.68
Extavia Novartis 0.17 0.00 – 947 6.61 6.61
*Local TMs are specially marked.
Source: Pharmexpert Analytics and Consulting
The Russian
pharmaceutical
market
2010
results
Project director
Tatiana Kublitskaya
Writers and analysts
Nikolay Bespalov,
Irina Katasonova,
Tatiana Kublitskaya,
Maria Milovanova,
Inna Sidorova,
Zoya Tsarikova,
Olga Zasypkina,
Ekaterina Zaychenko
www.pharmexpert.ru
Head of the Publishing group
Elena Dotsenko