Approximately 500 producers of pharmaceuticals
Russia’s pharmaceutical industry is ramping up production: between January and November of 2018, the sector produced medications worth the equivalent of 4 billion EUR, an increase of 1.1% compared to the same period last year. Of the approximately 500 producers, foreign companies are the leaders with a market share of 70%.
The pharmaceutical company with the highest sales in 2018 was Bayer AG. In December 2018 Merck began producing anti-diabetic medications at its cooperation partner Nanolek, in the Kirov region.
Russia: Top five pharmaceutical manufacturers without foreign participation
|Company||Location||Sales 2016 (in millions of EUR)||Sales 2017 (in millions of EUR)||Website|
|Farmstandart-Ufavita||Republic of Bashkortostan||222.6||262.4||http://www.farmstd.ru|
Source: Business Database SPARK-Interfax
New investment projects are beginning
Both Russian and foreign pharmaceutical companies are expanding their existing capacities and are building new plants, bringing interesting business opportunities for providers of manufacturing equipment as well as analysis and laboratory technology. For example, pharmaceutical manufacturer Pharmasintez has signed a contract with German company Bausch+Ströbel to deliver a production line for biopreparations at its St. Petersburg plant. Also, Russian biotechnology firm Biocad is planning to open a center for pre-clinical research here.
Pharmstandard and the Janssen Pharmaceutical Companies of Johnson & Johnson signed an agreement to jointly produce medicines for treating tuberculosis in the Republic of Bashkortostan. The company Radiosvjas plans to produce cancer drugs in the Krasnoyarsk region.
Russia: Current projects in the pharmaceutical industry
|Project type||Location||Investment (in millions of EUR)||Planned commissioning||Project operator|
|Pharmaceutical plant||Ussolje-Sibirskoje, Irkutsk Oblast||135.0||2021||Pharmasyntez, https://pharmasyntez.com|
|Pharmaceutical plant||Moscow||90.0||2022||Rusatom Healthcare (part of Rosatom), http://rusatomhc.ru, R-Pharm, http://r-pharm.com/ru|
|Biopharmaceuticals plant||Ryazan Oblast||66.0||2025||Oktafarma-Farmimex, http://octapharmaru.com|
|Pharmaceutical plant||Leningrad Oblast||44.0||2021||Geropharm, http://geropharm.ru|
|Pharmaceutical plant||Saint-Petersburg||42.5||Start of construction: 2019||Immuno-Gem, https://www.immunogem.ru|
|Pharmaceutical plant||Kaluga Oblast||40.0||2020||Novamedika, https://novamedica.com|
|Pharmaceutical plant||Kaluga Oblast||10.5||2020||MiraxBioPharma, http://www.mbpharma.ru|
|Pharmaceutical plant||Kursk Oblast||8.7||2021||Zee Laboratories (India), https://zeelab.co.in|
Source: GMI research
Local pharmaceutical producers win support
The Ministry of Industry wishes to promote domestic pharmaceutical manufacturers with the “Strategy for the Development of the Pharmaceutical Industry 2030,” which is to be adopted in mid-2019. This gives local producers preference in government procurement, particularly for the production of vital drugs and active substances. Exports of medicines are expected to increase fivefold over the next five years, to up to 3.5 billion EUR.
In addition, the government desires to boost pharmaceutical biotechnology. In 2019, the production value of corresponding preparations is expected to reach 13.6 billion rubles (182 million EUR). For 2020, 14.8 billion rubles and a 50% reduction in imports are envisioned. The export of biotechnological preparations should increase fourfold by 2025. Also, the Ministry of Industry is seeking to substitute imports of morphine and opiates by local production.
Despite all its efforts, however, Russia remains dependent on imports. Between January and October 2018, imports of drugs increased by 3.2% to a value of 427.1 billion rubles. The government aims to persuade foreign manufacturers to establish local production facilities. A corresponding special-investment contract can even grant them the status of sole supplier of medicines in public tenders. France’s Sanofi and British-Swedish firm AstraZeneca have already entered into corresponding agreements.
Regulatory changes alienate foreign manufacturers
Several cases of non-compliance with intellectual property rights and patents are being followed closely in the boardrooms of international corporations. In one case, Bayer was unable to halt the generic manufacture of Sorafenib by Nativa, even though Bayer holds the patent for it until 2026.
However, in November 2018 the German pharmaceuticals group achieved a partial success: the Intellectual Property Court dismissed the arbitration court’s decision in favor of Nativa, and so the case must be reopened. The government is also addressing the problem – the Ministry of Health wishes to strengthen the protection of intellectual property and is planning a corresponding law.
In addition, new normative regulations are changing the conditions of competition and could discourage foreign companies from investing in Russia. In the future, the government intends to grant licenses for the production of generic drugs without the consent of the patent holder. This is intended to boost generics production intended for export. Also, as of June 18, 2018, the registration period of patents for biologically active additives (BAA) was limited to five years.
From 2021 on, the Federal Anti-monopoly Service (FAS) intends to permit imports of drugs without the consent of the patent holder for five years (parallel imports). This measure should lead to falling prices. Currently, only patent holders and authorized dealers are allowed to import. In order to reduce the cost of procurement, the Ministry of Health wishes to increase the proportion of cheaper substitute drugs from the current 16% to up to 80% by 2021. For that purpose, reference prices will be gradually introduced starting in 2019.
Mandatory labelling of medicines starting in 2020
Starting 1 January 2020, all drugs must be labelled in Russia. As early as 1 July 2019, manufacturers of medicines for serious hereditary diseases will have to register in the labelling system. After a three-month test phase, the circulation of these drugs will be monitored beginning 1 October 2019. The aim is to protect consumers from counterfeit products, and also to control prices.
All hospitals and pharmacies will be connected to the central system for monitoring the circulation of medicines in order to control the labelling obligation. This system was transferred to the national system for marking and tracking goods, “Tschestny SNAK” (Honest SIGN), on 1 November 2018. The operator is the Center for the Development of Promising Technologies (https://www.crpt.ru), which belongs to the business conglomerate of oligarch Alisher Usmanow. Currently, pilot projects for voluntary labelling with 2D barcodes on the packaging are being implemented.