Russia Pharmaceutical Market Overview Pharma companies target Russia

despite the challenges it presents

The Russian pharmaceutical market generated $10.1 billion in sales in 2009, growing by
14.5% between 2008 and 2009. Key growth drivers include a preference for foreign
drugs rather than domestically manufactured products. The government has also
designated healthcare a strategic priority for the countrys future development which is
expected to stimulate Russias pharmaceutical market.

Scope

*Overview of socioeconomic and demographic trends, healthcare system, regulation,

pricing and reimbursement and intellectual property in Russia

*Assesses the size of the Russian pharmaceutical market by prescribing setting, therapy
area, leading brands and by leading companies

*Examines the Russian generics and biosimilars landscape in terms of regulatory issues,
level of penetration, key players and degree of brand erosion

*Quantifies the R&D and manufacturing infrastructure for the leading pharmaceutical
companies, including key metrics and domestic M&A analysis

Highlights

Private health expenditure accounts for one third of all healthcare costs of which 82%%
is met by out-of-pocket costs due to insufficient availability of healthcare services and
medicines through the public healthcare system, as well as the widespread informal
payments for healthcare services.

Registration of drugs in the Russian Federation remains a cumbersome and lengthy

procedure which lacks clarity and transparency and is subject to frequent change.
Cultural and language barriers present further obstacles to foreign companies "going it
alone".

The generics industry is complex and fragmented, dominated by a small number of

international generics manufacturers. Generics produced by these companies enjoy
preferential uptake driven by their perceived superiority to domestically manufactured
generics, with Russians choosing to pay higher prices for guaranteed quality.

Reasons to Purchase

*Evaluate the evolving regulatory landscape and the impact of pricing and
reimbursement controls on market access in Russia

*Quantify the size and growth of the prescription pharmaceutical market in Russia,
analyzing key therapy areas, brands and companies

*Assess drivers and resistors of generic and biosimilars uptake in Russia

Table of Contents :
ABOUT DATAMONITOR HEALTHCARE 2
About the Healthcare Strategic Analysis Team 2
Geographic specific reports: 2
Global issue reports: 2
1. Executive Summary 3
Introduction 3
Strategic scoping and focus 4
Key Findings 5
Russia - Socio-demographic and economic analysis 5
Socio-demographic trends 5
Socio-economic trends 6
Russia - Healthcare system and drug regulatory analysis 8
Healthcare expenditure 8
Healthcare insurance 9
Regulatory issues 10
Pricing and reimbursement issues 11
Russia - Prescription pharmaceutical sales analysis 13
Pharmaceutical market size 13
Leading therapy areas 13
Leading pharmaceutical brands 13
Leading pharmaceutical companies 13
Russia - Drug expiry analysis 15
Generics market 15
Brand erosion post patent expiry 15
Biosimilars market 15
Russia - Drug Industry Infrastructure analysis 17
Pharmaceutical industry infrastructure overview 17
Related reports 19
Upcoming related reports 19
Table of Contents 20
2. Russia - Socio-demographic and economic analysis 21
Russia - Key findings 21
Socio-demographic trends 21
Socio-economic trends 21
Russia - Demographic trends 23
Population in Russia expected to decline rapidly 24
Population growth rate in Russia remains low due to low birth rates 24
Proportion of elderly people will remain lower than in all other markets 27
Life expectancy in Russia is poor and will remain so 27
Russia - Disease burden in Russia 29
Cardiovascular diseases and injuries are the leading cause of death and account for the
highest disease burden in Russia 31
High level of preventable deaths in Russia 31
HIV/AIDS presents a worrying trend in Russia 32
Russia - Political climate 33
The political climate in Russia has undergone recent changes 33
Russia remains a centralized country with power centered on Moscow 33
Russia - Economic climate 34
Economy - recovery post-recession is slow but will gain momentum from 2010 34
Economic growth is impacted by income inequality in Russia 35
Russia - Business environment 37
Although impediments to investing in Russia remain, the government is prioritizing
healthcare 37
The recession has impacted unemployment levels 37
Russia has a uniform tax rate 38
Pharmaceuticals are subject to a reduced VAT rate of 10% 38
Corruption significantly impedes foreign investment in Russia 39
Local knowledge is critical for business success 39
3. Russia - Healthcare system and drug regulatory analysis 40
Russia - Key findings 40
Healthcare expenditure 40
Healthcare insurance 40
Regulatory issues 41
Pricing and reimbursement issues 41
Russia - Healthcare expenditure 43
Russia - Healthcare System 45
Key bodies regulating the healthcare system 45
Ministry of Health and Social Development (MOH) 46
Parallel healthcare system 46
The Federal and Territorial Mandatory Health Insurance Fund 46
Additional experts and coordinating bodies 46
Primary versus hospital healthcare in Russia 47
In efficiencies in the primary care system lead to over-referral, over-hospitalization and
over treatment 47
Significant disparities exist in the distribution of physicians and healthcare facilities 47
Access to healthcare is especially problematic for the poor population... 48
...but healthcare modernization plans are in place 49
Project Zdorovie is focused on developing healthcare in Russia 49
Local governments draft modernization plans for regions 49
...but the government 2020 healthcare plan is aimed at improving healthcare 50
Russia - Health insurance 51
Mandatory health insurance was introduced in 1991 but has done little to improve
healthcare 51
The healthcare system is funded by formal and informal means 52
Guaranteed Package Program does not necessarily guarantee access to medicines 53
Reformed mandatory medical insurance system is intended to give patients more choice
55
Private health insurance 55
Voluntary Health Insurance is in high demand 55
Concerns raised over privatization of a number of public hospitals 56
Russia - Regulatory issues 57
Drug approval and regulatory processes - registration of drugs in Russia is considered a
cumbersome process 57
The high number of registered drugs indicates inadequate control of the registration
process 57
There are two regulatory bodies involved in the licensing of medicines in Russia 57
New Federal Law on Circulation of Medicines attracts criticism 58
Regulation process now less costly but time taken to register a drug is increasing 58
Russias manufacturing facilities will need to align with international GMP standards 59
Domestic clinical trials were to be required as a registration prerequisite under the new
law 59
New law lacks orphan drug clause 59
Additional new provisions 60
Russia - Intellectual property environment 61
There are two ways of obtaining patent protection in Russia 61
Enforceability of patent laws is still weak and data exclusivity remains an unresolved
issue 61
Drug counterfeiting is an ongoing problem but there are few recent developments 62
Drug importation - new law streamlines import procedures 63
Russia - Pricing and reimbursement 64
Russia is looking to its Essential Drug List to contain costs 64
Pricing issues - the government is increasing its controls 66
New Essential Drug List compiled in 2009 66
Mandatory state registration of maximum prices replaces voluntary system 66
Reimbursement issues - introduction of the federal reimbursement system DLO was a
major change 68
Supply and deficit problems have historically hampered the DLOs success 69
DLO was modernized again and split into two procurement branches 70
Centralized program covers seven expensive-to-treat diseases 70
ONLS program covers remaining drugs 70
Oncology drugs had the highest sales volume in the DLO 71
Ongoing issues regarding the DLO program 71
4. Russia - Pharmaceutical sales analysis 72
Russia - Key findings 72
Pharmaceutical market size 72
Leading therapy areas 72
Leading pharmaceutical brands 72
Leading pharmaceutical companies 72
Russia - Pharmaceutical market size 74
Russia - Leading therapy areas 76
Central nervous system drugs hold the largest share of the Russian market value 78
Infectious disease drugs exhibited the strongest annual sales growth (2008-09) 78
Hematology drugs showed the fastest growth in terms of sales CAGR (2005-09) 79
Russia - Leading pharmaceutical brands 80
Velcade was the top selling brand in Russia 82
Octavi exhibited the strongest sales CAGR of the top 20 brands, but faces competition
from its follow-on product 83
Glivecs gold-standard position drives uptake 83
Russia - Leading pharmaceutical companies 84
The leading international companies offer both innovative therapies and generic products
85
Domestic companies offer largely generic and consumer healthcare products 88
Pharmstandard 89
Valenta 89
Biosyntez 90
5. Russia - Drug expiry analysis 91
Russia - Key findings 91
Generics market 91
Brand erosion post patent expiry 91
Biosimilars market 91
Russia - Generics market dynamics 93
Russia generics volume uptake 94
Russia generics value uptake 95
Russia generics market size 96
Russia - Generics drivers and resistors 97
Despite universal health insurance, significant out-of-pocket costs limit access to generics
99
The new pharmaceutical bill will lead to enforced pricing and preferential listing of
domestically manufactured generics 100
Domestic GMP standards are poor, but are set to improve 100
Lack of adequate pharmacovigilance puts patients at risk and reduces trust 101
Patients prefer branded generics 101
Russia - Key generics players 102
International funds invest in Pharmstandard 103
ratiopharm acquisition gives Teva a leading role in Russia 103
Stada sees high growth levels in the Russian market 103
Novartis holds a strong position in Russia through Sandoz, Lek and Hexal 103
Zentiva continues to shine in the Russian market for Sanofi-Aventis 104
Ranbaxy fails in its attempt to enter the Russian market 104
Opportunities for the generics industry 105
Russia - Small molecule brand erosion 106
Overview of drugs analyzed 106
Mean level of brand erosion in Russia 107
Brand erosion in the Russian retail and hospital setting 109
Brand erosion by therapy area in Russia 111
Brand erosion by drug formulation in Russia 113
Russia - Biosimilars market dynamics 115
Drivers and resistors to biosimilar uptake in Russia - development costs and lack of
regulation is attractive to biosimilar manufacturers 115
Biosimilars available in Russia 117
Biosimilar filgrastim 118
Opportunities for the biosimilar industry 120
Biosimilars in development internationally 122
Russia presents challenges for monoclonal antibody manufacturers 123
6. Russia - Pharmaceutical industry infrastructure analysis 125
Russia - Key findings 125
Russia - Pharmaceutical infrastructure overview 126
The new pharmaceutical bill will lead to enforced pricing and preferential listing of
domestically manufactured generics 126
Domestic GMP standards are poor, but are set to improve 126
Russia is becoming a hotspot for clinical trials 128
Russia - key company infrastructure 130
Novartis 131
Sanofi-Aventis 134
Johnson & Johnson 137
Roche 140
Pharmstandard 143
Bayer Schering 146
Servier 149
Teva 152
Merck & Co. 155
Gedeon Richter 158
Gedeon Richter boosts its Russian presence 160
7. Russia - Bibliography 161
Russia - Executive summary 161
Publications and online articles 161
Datamonitor reports and products 162
Russia - Socio-demographic and economic analysis 162
Publications and online articles 162
Publications and online articles 165
Russia - Healthcare systems and regulations 165
Publications and online articles 165
Datamonitor products 170
Russia - Prescription pharmaceutical sales analysis 170
Publications and online articles 170
Datamonitor reports and products 170
Russia - Drug expiry analysis 170
Publications and online articles 170
Datamonitor reports and products 173
Russia - Pharmaceutical industry infrastructure analysis 174
Publications and online articles 174
Appendix 177
Exchange rates used in this report 177
Russia brand erosion - additional data and analysis 178
Brand erosion - methodology 180
Datamonitor prescription pharmaceutical definition and therapy area classification 183
About Datamonitor 184
About Datamonitor Healthcare 184
Datamonitor consulting 184
Disclaimer 186

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