Russia – Medical Devices 2019

Russia Intends to Limit Access for Medical Device Imports

Published: 28 February 2019

1. Business opportunities

Putin invests in public health care

President Vladimir Putin presented the national project “Health Care” before his re-election in 2018: this project aims to increase the life expectancy of the Russian population from 73 to 78 years, reduce the mortality rate from cardiovascular diseases by a third, and reduce the incidence of cancer by 10% by the end of 2024. To achieve these goals, around EUR 17 billion will be invested in the expansion and modernization of the health care system by 2024, in addition to general health expenditures of around EUR 40 billion per year.

Market access for foreign suppliers will become more difficult

The market for medical technology amounted to approximately EUR 3.8 billion in 2017. By 2020, the market volume will grow by 1.5-2.5% per year according to forecasts. Government procurement will account for 82%, i.e. around EUR 2.7 billion. According to management consultant KPMG, the private healthcare market alone is expected to grow by 20% to EUR 13 billion by 2020.

The Ministry of Industry wants to further restrict access to public tenders in the healthcare sector and plans to reduce the dependence on imports for 111 medical product groups by 2020. The list of devices that will no longer be imported will be expanded to include (among others): test tubes, composite filling materials, test strips for blood glucose meters, adhesive bandages, joint prostheses, tonometers for measuring intraocular pressure, concentrates for hemodialysis, air sterilizers, dry air thermostats and otorhinoscopes (view the list in Russian at http://static.government.ru/media/files/OftlqdeNRI4.pdf). It must be checked whether there are Russian equivalents for the proposed products.

In order to gain further access to government contracts – despite the tightening of import substitution policies – it is advisable for foreign manufacturers to set up local production facilities.

E-health is under construction

The market for telemedicine offers interesting business opportunities, which, according to mobile phone provider MTS, are expected to grow by 30% by 2023, to around EUR 900 million. The state holding company Rostech and the Centre for Medical Emergencies (“Saschita”) are working together to expand the infrastructure for online consultations and webinars. The Russian company Sun Com runs the telemedicine project “digital clinic,” which enables real-time communication between doctors via a messenger service.

 

Russia: Market for medical devices (in US$ millions)

2015 2016 2017 Change 2016-17 (%)
Local production 745.6 785.9 909.1 15.7
Imports 2,633.2 2,710.7 3,171.3 17.0
Exports 72 75 81 8.0
Market volume 3,641.7 3,654.4 4,379.1 19.8

Note: calculated using annual averages of the US$/ruble exchange rate according to the Russian Central Bank

Sources: Ministry of Industry, UN Comtrade

 

Manufacturers of medical technology are currently expanding their production capacities. Frerus, the Russian subsidiary of the German Fresenius Group, is building a dialysis filter-manufacturing plant in the Moscow region. Siemens Healthineers, together with Rostech, opened the first pilot centers for the production of laboratory diagnostics in the Samara and Kurgan regions at the end of 2018. The technology group has also signed a letter of intent with the government of the Irkutsk region to modernize medical facilities and supply innovative equipment. Siemens has agreed to introduce innovative solutions with the Medsi hospital chain (part of AFK-Sistema Holding).

Tashir Medica is investing approximately EUR 105 million to modernize the healthcare sector in the Republic of Komi. For this purpose, a surgical building will be built, a polyclinic modernized and an oncology center retrofitted. In addition, a perinatal center and rehabilitation centers for children are to be built. The Russian-Chinese company Snabpolymer Medizina is investing EUR 40 million to build a plant for the production of disposable syringes in the Nizhny Novgorod region by 2020 and intends to sign a special investment contract for this purpose. The US company Alcon and the local company NazOptika will begin production of intraocular lenses in Saint Petersburg by 2023.

 

Russia: Current investment projects in the medical technology sector

Project (Location) Investment (in EUR millions) Status Operator
Modernization of the National Medical Research Centre NIMZ (Tomsk region) 133.3 Planned commissioning 2023 Tomskij NIMZ, http://www.tnimc.ru
Construction of a hospital (Balashikha, Moscow region) 120.0 Construction starts 2019 Government of Moscow Oblast, http://www.mosreg.ru
Construction of an oncology center (Saratov region) 93.3 Memorandum of Understanding signed Government of Saratov Oblast, http://www.saratov.gov.ru
Construction of a center for nuclear medicine and proton therapy (Novosibirsk region) 93.3 Memorandum of Understanding signed Rusatom Healthcare (http://www.rosatom.ru), Medinvest (part of Pharmstandard, http://www.pharmstd.ru), builder: Schwabe Holding (part of Rostech, http://www.schwabe.ru)
Construction of a municipal clinic (Nizhnewartowsk, Tyumen region) 93.3 Under construction; completion 2020 Government of Tjumen Oblast, http://www.admtyumen.ru
Construction of a radiology department in the East-Siberian Oncology Centre (Irkutsk region) 68.0 Planned commissioning 2022 Rusatom Healthcare http://www.rosatom.ru
Construction of a center for PET diagnostics (Primorje region) 66.6 Planned commissioning 2022 Rostech, http://www.rostec.ru
Construction of hospital for infectious diseases (Perm region) 66.6 Planned commissioning 2021 Government of Perm Oblast, http://www.permkrai.ru
Construction of a multi-purpose medical center (Saint Petersburg) 66.6 Planned commissioning 2020 GK Matj i Ditja, http://www.mamadeti.ru
Construction of a Neurological Institute at the National Research Institute Almasow (Saint Petersburg) 65.3 Planned commissioning 2020 Engeokom, http://www.engeocom.ru

Source: own research

 

2. Local industry structure

Local manufacturers are being promoted

Russian medical technology producers play only a subordinate role in the domestic market. The approximately 400 domestic manufacturers accounted for just 21% of market volume in 2017, about EUR 1 billion. About half of the local companies also use imported components.

With its strategy to further develop the medical industry by 2030, the Ministry of Industry intends to increase production among Russian manufacturers by a factor of 3.5 compared to 2017, to achieve a tenfold increase in the export of Russian medical technology to US$ 1 billion, and to register at least 100 new medical products made in Russia per year.

In addition, the Ministry of Industry at the Ilizarov Research Institute in the Kurgan region is promoting the creation of a domestic cluster for the production of medical technology for orthopaedics and traumatology by 2020. Schwabe Holding (part of Rostech) plans to supply 20% of the Russian market for ultrasound equipment. The National Research Center (NMIZ) Meschalkin will invest 10 billion rubles by 2023 to develop medical equipment related to cardiovascular disease.

 

Russia: Leading medical device companies (sales in EUR millions, change in %*)

Company Sales 2017 Change 2016-17 (%) Website
MosProp 133.8 20.4 http://www.mprop.ru
GE Healthcare 108.6 0.4 http://www.gehealthcare.ru
Optik-Vision 51.2 8.1 http://www.ochkarik.ru
Elamed 42.7 -11.9 http://www.elamed.com
Elektron 28.0 49.8 http://www.electronxray.com
MTL 26.8 61.3 http://www.mtl.ru
Elta 23.5 17.1 http://www.eltaltd.ru

*based on annual average exchange rate of 1 EUR = 66.03 rubles (2017)

Source: http://www.Spark-Interfax.ru

 

Healthcare is becoming increasingly digital

The digitization of the Russian healthcare system is progressing rapidly. Since September 2018, there has been a uniform internet service provider for biomedical data. Completion of their database will take up to 5 years. Since 1 January 2019, electronic prescriptions have been permitted in certain cases. Schwabe Holding and Jusar+ will introduce a digital cancer-diagnostic system in regional oncology centers. Motorika, in conjunction with the mobile phone provider Wimpelkom, has developed a project for the remote control of arm prostheses.

 

3. Business practice

Competition is desired

“Parallel imports” of medical devices are currently permitted in Russia, i.e. medical technology can be imported from outside a manufacturer’s sales network. This practice should increase competition and lead to lower prices.

The regulations of the Eurasian Economic Commission of the EAWU require the registration and certification of all devices on the market that have not yet been certified according to the new rules of the common market for medical devices. This must be done by 31 December 2021. 200,000 devices are affected in Russia alone.

 

Russia: Imports of selected medical devices (in US$ millions)

HS Code Product group 2016 2017
9018.11-.20 Electrodiagnostics 286.1 287.2
9022 X-ray machines 245 431.1
8419.20 Sterilizers 35.3 33.1
8713 Wheelchairs 31.6 29.0
9018.41, .49 Dentistry 97.7 136.5
9018.31-.39 Syringes, needles, catheters etc. 302.7 322.3
9018.50 Ophthalmological instruments 76.7 91.1
9018.90 Other instruments and apparatus 853.7 900.8
9019, 9020 Therapy, respiration devices 200.2 223.6
9402 Medical furniture 46.9 55.5
9021 Orthopedics 534.8 661.1
Total 2,710.7 3,171.3

Source: UN Comtrade

 

4. Contacts
Name Website Comment
Ministry of Health (Minzdrav) http://www.rosminzdrav.ru Responsible for Health Policy
Ministry of Industry and Trade (Minpromtorg) http://www.minpromtorg.gov.ru Responsible for industrial policy, public tenders and import permits
National Association of Private Health Institutions and Clinics http://www.privatmed.ru Services Association
Association “1000 Beds Hospital” http://www.hospital-1000.ru Member association of over 50 hospitals
NTZ Meditex http://www.meditex.info Market research center for medical technology and pharmaceutical industry
Medical devices for professionals http://www.md-pro.ru Market research and consulting in the field of medical technology
Trade fair Zdrawoochranenije http://www.zdravo-expo.ru Annual, Moscow
Trade fair Zdorowyi obraz schisni http://www.health-expo.ru Annual, Moscow
Trade fair Dental Expo http://www.dental-expo.com Annual, Moscow, Ekaterinburg, Omsk, Voronezh, Volgograd, St. Petersburg, Ufa, Samara
Trade fair Stomatologija http://www.stomatology-expo.ru Annual, Saint-Petersburg