Pharmexpert 2010 Eng

the russian pharmaceutical market 2010 results
The Russian pharmaceutical market
2010 results
<3
ontents
I. Summing up: Pharmexpert main achievements, 2010 II. Macroeconomics: Russia and Federal subjects
81
X. Hospital market has recovered after crisis Report on Russias hospital drug purchase market XI. Local companies strengthen positions in high-cost segment Report on beneficiary drug coverage market in Russia XII. Ex-USSR pharma sector overcomes crisis CIS and Georgia pharma market report XIII. Market opinion as it is Rating of most influential subjects of Russian pharma market XIV. Rating of investment attractiveness of Russian Federal subjects by specific sectors of regional pharma markets XV. Paradox of movement Price dynamics in the Russian pharmaceutical market XVI. Natural selection Months Best companies and trademarks Pharmexpert Selected
91 15 III. Weather forecast for Russias pharma Results of Russias pharma market development in 2010 and forecast for 2011 IV. Summary of most important events in Russias pharma market V. Imports reached pre-crisis level in value terms Drug import to Russia VI. Industrialization in a separate industry Pharmaceutical industry development in Russia VII. Time of unrealized apprehensions and realized predictions Cumulative rating of Russian pharmaceutical distributors VIII. Artificial natural selection Rating of Russian drugstore chains IX. Out-of-pocket pharma market has grown. Really Report on out-of-pocket sector of Russias pharma market 101
25
29
119
37
143
45
149
157
59
71
2010 results
<5
I.
summing up
2010 results
summing up: pharmexpert main achievements, 2010

As Pharmexpert CEO Nikolay Demidov put it, the year 2010 was marked by an accelerated corporate growth and the development of new projects. Lets look closer at the events that made the companys operational background quite positive.
Ne w a n a ly t ic a l data b a se s l au nc h e d
Brick: Monitoring of retail sales in Russias key cities (monthly). Seven Russiaa largest cities, i.e. Moscow, St. Petersburg, Ekaterinburg, Nizhniy Novgorod, Novosibirsk, Perm, and Krasnodar, were broken down into 79 bricks (territories based on Russias zip codes). Such breakdown provides for a unique level of sales data details and makes it possible to analyze pharmaceutical, homeopathic, and supplement sales by districts and areas of Russias key cities. Monitoring of supplement sales in drugstores, 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.
Th e e x i s t i ng a n a ly t ic a l data b a se s op t i m i ze d
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 Moldova; Monitoring of hospital drug purchasing in Moldova; Monitoring of retail drug sales in Pridnestrovie. For Ukraine, analytical databases were provided in 2010 by Morion; Pharmexpert signed a license agreement with this company in 2009. Technological changes implemented: An allocated high-speed Internet channel was put in operation exclusively for Pharmexpert customers; High reliability and productivity server equipment has been purchased and installed 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 commercial database management software by a world famous provider, which boosts report generation rate as well as provides for uploading data into MS Excel 2010 having more that 1 million lines. It has become more convenient to generate reports combining a variety of databases, e.g. on the CIS.
L au nc h e s of n e w a n a ly t ic a l data b a se s f rom Q111 prov i de d 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.
Th e r a nge of m a r k e t i ng r e se a rc h i n ph a r m a a n d a l l i e d m a r k e t s su b s ta n t i a l ly w i de n e d
In 2010, Pharmexpert made a number of integrated marketing researches using sociological methods. This type of research is characterized by data collection employ-
<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.
Th e n u m be r of c us t om e r s h a s grow n. O nc e aga i n
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 companys analytical databases. The number of customers has grown for basically all drug sales and purchasing audits in the countries where Pharmexpert operates.
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 purchasing/Medical equipment and devices: Russia (from Q111). Medical Information Systems. Starting from 2011, Pharmexpert provides implementation and maintenance services for modern customer relation and process management systems (CRM/HRM/SRM) as well as customer support and consulting services for corporate change management. Systematization and updating of your customer databases will be provided following your subscription for the Syndicate Database Service.
A pa rt n e r sh i p agr e e m e n t sign e d
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).
Ne w f u nc t ion s i n t h e e x i s t i ng busi n e s se s c r e at e d
The Mathematical Modeling and Forecasting Group was set up in Pharmexpert Analytical Research and Consulting Department. The new group has developed and implemented the Methods of Building Dynamic Market Forecasting Models providing for making forecasts based on historic data and current changes of multifactor model factors. Some of Russias pharma market players have already benefited from this model that is unique for this market.
A n i n t e r n at ion a l c on f e r e nc e ho s t e d
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
2010 results
distributor companies and drugstore chains as well as managers of marketing departments of pharmaceutical companies operating in Belarus. Alexey Pryakhin, Pharmexperts new country manager for Republic of Belarus, was introduced to the business community.
consultants speaking to CEOs and CFOs of pharmaceutical and medical companies. Pharmexpert intends to build up its influence in the investment consulting field.
I N PH A R M AC I A P h a r m a A n a ly t ic a l Mon t hly r e de signe d

Pharmexperts 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.
Th e pr ac t ic e of c us t om e r wor k shop s a n d c on f e r e nc e s c on t i n u e d
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
Tr a di t ion s of gi v i ng bi rt h t o e x pe rt s m a i n ta i n e d
In 2010, Pharmexpert staff and family members gave birth to five new potential experts, including one expert granddaughter.
<9
II.
macroeconomics: russia and federal subjects
2010 results
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.
Table 1. Macroeconomic indices of Russian pharma market, 2010
February
January
Index M acroeconomic indices Commodity and services index for basic economic activities*, % m-on-m vs. 2009 Tr ansportation turnover, % m-on-m vs. 2009 Fixed capital investment, % m-on-m vs. 2009 Retail tr ade turnover, % m-on-m vs. 2009 Consumer price index, % m-on-m vs. 2009 Drug consumer price index, % m-on-m vs. 2009 Medical services consumer price index, % m-on-m vs. 2009 Basic inflation r ate, % vs. December 2009 Real cash income, % m-on-m vs. 2009 Total unemployment (ILO methodology), % vs. economically active population Commodity import***, % m-on-m vs. 2009 RUB:USD exchange r ate as of the end of month (rubles for 1 USD) RUB:EUR exchange r ate as of the end of month (rubles for 1 EUR) Source: Rosstat, CB of RF Supply char acteristics Pharma market supply, wholesale prices, mn USD Imports, wholesale prices, mn USD Local manufacture without exports, wholesale prices, mn USD M arket sector char acteristics (without auctions) Drug sales (without auctions), consumer prices, mn USD Imported drug sales (without auctions), consumer prices, mn USD Local drug sales (without auctions), consumer prices, mn USD Out-of-pocket market, retail prices, mn USD Hospital market, wholesale prices, mn USD Beneficiary drug cover age (LLO) market, state register prices*, mn USD Aver age price per unit, wholesale prices, USD (including LLO/high-cost) Aver age price per unit, retail prices, USD (including LLO/high-cost)
104.10 112.20 91.70 100.50 108.02 113.92 113.65 100.50 115.40 9.20 108.00 30.43 42.46
104.10 109.80 92.50 101.30 107.18 107.56 112.22 101.00 104.70 8.60 115.40 29.95 40.80
106.40 112.70 100.40 103.40 106.47 101.62 111.93 101.50 104.60 8.60 129.70 29.36 39.70
3 000 2 130 870
4 600 3 600 1 100 3 420 230 950 3.27 3.92
* Calculated based on the data on change of physical volume of agricultural production, mining, processing industries, power, gas, and water generation and distribution, construction, transportation, retail and wholesale trade. ** Pharmexpert expert estimation. *** Based on payment balance methodology (as of 11.03.2011). Source: Pharmexpert
M arch
10
<11
macroeconomics: russia and feder al subjects
September
November
December
October
August
107.70 115.60 101.70 104.70 106.04 97.32 110.62 101.70 105.70 8.20 130.10 29.29 38.70
108.70 114.20 105.60 105.40 105.97 96.12 109.88 101.80 101.70 7.30 140.50 30.50 37.63
107.10 109.30 108.30 106.00 105.75 95.88 109.34 102.00 103.60 6.80 127.60 31.20 38.19
103.10 101.10 99.50 106.80 105.47 96.32 108.95 102.40 106.80 7.00 132.80 30.19 39.47
102.40 101.40 108.10 106.60 106.05 96.84 108.99 103.10 105.00 6.90 153.70 30.66 39.03
101.30 102.50 107.80 104.80 106.97 97.32 108.80 104.30 101.40 6.60 133.90 30.40 41.35
103.20 104.60 110.60 103.00 107.50 97.86 108.65 105.10 100.20 6.80 127.00 30.78 42.73
104.50 103.30 108.00 99.00 108.06 98.22 108.41 105.80 103.10 6.70 126.30 31.31 41.57
105.50 99.50 113.30 119.00 108.78 98.11 108.35 106.60 102.00 7.20 124.30 30.48 40.33
104.70 106.90 106.00 104.40 106.86 99.76** 109.98** 102.98** 104.10 7.49** 129.50 30.48 40.33
3 410 2 530 880
4 360 3 510 850
3 850 2 600 1 250
14 620 10 770 3850
4 400 3 400 1 000 3 250 350 800 3.13 3.76
4 080 3 100 1 000 3 090 390 600 2.75 3.40
4 520 3 300 1 100 3 540 530 450 2.76 3.46
17 600 13 400 4 200 13 300 1 500 2 800 2.98 3.63
Total
A pril
June
M ay
July
2010 results
Table 2. Macroeconomic indices of Russian pharma market split for Federal subjects, 2010
Beneficiary drug cover age (LLO) m arket, mn USD (supply prices) Center of Feder al subject Out-of-pocket m arket, mn USD (consumer prices) Pharm a m arket, total, mn USD (consumer prices)
Russian Feder ation Centr al Feder al District Belgorod region Bryansk region Ivanovo region K aluga region Kostrom a region Kursk region Lipetsk region Moscow region Oryol region Ryazan region Smolensk region Tambov region Tula region T ver region Vladimir region Voronezh region Yaroslavl region Moscow (cit y) Northwestern Feder al District Komi R epublic R epublic of K arelia Archangel region (incl. Nenetskiy autonomous district) K aliningr ad region Leningr ad region Murm ansk region Novgorod region Pskov region Vologda region St. Petersburg Southern Feder al District R epublic of A dygeya Maikop K alm yk R epublic K r asnodar territory Elista Kr asnodar Sykty vkar Petrozavodsk Belgorod Bryansk Ivanovo K aluga Kostroma Kursk Lipetsk Oryol Ryazan Smolensk Tambov Tula Tver Vladimir Voronezh Yaroslavl
142 914 136 38 456 865 1 532 497 1 275 224 1 061 087 1 009 869 666 306 1 125 071 1 171 331 7 104 036 785 820 1 151 955 982 831 1 090 102 1 550 279 1 350 244 1 442 042 2 335 218 1 271 023 11 551 930 13 593 512 899 668 644 239
17 600.00 6 193.37 166.46 121.62 65.18 82.18 62.71 110.58 127.00 946.49 49.97 112.87 108.77 59.88 134.07 111.41 109.03 289.14 131.79 3 404.21 1 897.67 45.17 61.93
123.15 161.05 108.62 95.37 61.43 81.38 94.11 98.29 108.42 133.23 63.59 97.98 110.67 54.93 86.48 82.51 75.61 123.82 103.69 294.69 139.60 50.21 96.13
13 300.00 4 496.70 124.26 96.98 34.74 53.54 48.55 87.27 89.65 752.49 30.11 85.66 86.77 35.23 82.65 80.90 80.24 248.82 102.87 2 375.96 1 455.54 20.08 43.92
93.06 116.93 81.08 76.05 32.74 53.02 72.86 77.57 76.53 105.92 38.31 74.36 88.28 32.32 53.31 59.91 55.65 106.55 80.93 205.68 107.08 22.32 68.18
2 800.00 1 048.65 29.04 22.22 26.16 20.76 10.45 18.50 21.75 140.27 13.97 21.94 16.11 16.81 31.85 24.01 22.70 29.82 21.44 560.85 312.47 19.58 14.93
1 500.00 648.02 13.16 2.41 4.28 7.89 3.71 4.81 15.60 53.73 5.89 5.26 5.89 7.83 19.57 6.51 6.09 10.50 7.48 467.40 129.66 5.51 3.08
Archangel K aliningr ad Murmansk Great Novgorod Pskov Vologda
1 225 310 941 424 1 714 403 794 785 632 823 671 300 1 201 040 4 868 520 13 853 722 440 327 288 885 5 229 177
142.72 46.61 228.91 121.37 26.32 24.66 116.00 1 083.39 1 306.19 27.44 16.14 523.82
116.48 49.51 133.52 152.71 41.60 36.74 96.58 222.53 94.28 62.33 55.87 100.17
110.13 22.96 191.18 93.42 12.42 11.24 84.08 866.10 979.75 18.39 10.41 396.58
89.88 24.39 111.51 117.54 19.63 16.74 70.00 177.90 70.72 41.76 36.03 75.84
27.34 20.15 33.41 20.10 9.15 10.11 24.82 132.89 220.75 7.09 5.03 91.25
5.24 3.50 4.32 7.84 4.76 3.32 7.11 84.40 105.69 1.97 0.70 35.99
Hospital m arket, mn USD (wholesale prices)
Total drug consumption per capita, USD
Drug consumption per capita, out-of-pocket m arket, mn USD
Population (as of 01.01.2011)
Federal subject
12
<13
macroeconomics: russia and feder al subjects
Beneficiary drug cover age (LLO) m arket, mn USD (supply prices)
Center of Feder al subject
Out-of-pocket m arket, mn USD (consumer prices)
Pharm a m arket, total, mn USD (consumer prices)
Astr akhan region Rostov region Volgogr ad region North Caucasian Feder al District R epublic of Daghestan Chechen R epublic Ingush R epublic K abardino-Balk ar R epublic K ar achai-Cherkess R epublic R epublic of Northern Ossetia Alania
Astr akhan Rostov Volgogr ad
1 010 407 4 276 426 2 608 500 9 507 004
81.74 381.07 275.97 575.01 156.66 70.85 28.45 48.74 25.33
80.90 89.11 105.80 60.48 52.54 55.56 68.56 56.69 52.98
64.29 265.28 224.80 424.11 119.74 53.36 17.39 32.95 17.88
63.63 62.03 86.18 44.61 40.16 41.85 41.90 38.33 37.40
10.73 68.77 37.87 91.14 21.30 9.60 7.83 11.73 4.67
6.72 47.02 13.30 59.75 15.62 7.89 3.24 4.06 2.78
Makhachkala Grozny Magas Nalchik Cherkessk
2 981 374 1 275 219 414 992 859 655 478 059
Vladikavkaz
712 378 2 785 327 29 880 413 4 071 895 1 250 498 695 380 833 327 3 787 355 1 521 731 2 634 123 1 338 711 3 307 613 2 031 340 1 383 998 3 215 440 2 519 149 1 289 853 12 089 111
35.61 209.38 3 214.16 458.71 84.96 34.47 63.93 443.83 145.35 249.14 161.99 324.20 212.61 127.31 463.33 283.54 160.79 1 565.32 435.59 75.10 671.08
49.99 75.17 107.57 112.65 67.94 49.58 76.71 117.19 95.51 94.58 121.01 98.02 104.66 91.99 144.10 112.55 124.66 129.48 125.24 82.63 156.16
24.13 158.65 2 514.31 367.62 56.88 19.78 44.01 334.71 108.83 177.80 121.70 268.43 154.97 99.62 392.64 241.95 125.38 1 241.95 357.78 56.45 552.83
33.88 56.96 84.15 90.28 45.48 28.44 52.81 88.38 71.52 67.50 90.91 81.16 76.29 71.98 122.11 96.04 97.20 102.73 102.87 62.11 128.64
9.02 27.00 471.10 69.88 14.68 8.02 14.16 62.88 20.41 53.92 20.30 48.69 33.96 24.52 50.92 25.83 22.94 201.57 47.21 13.84 82.10
2.46 23.72 228.76 21.21 13.41 6.68 5.76 46.24 16.11 17.42 19.99 7.08 23.68 3.18 19.77 15.76 12.47 121.80 30.59 4.81 36.15
Stavropol territory Stavropol Volga Feder al District R epublic of Bashkortostan Ufa Chuvash R epublic Cheboksary
R epublic of M ariy El Yoshkar-Ola R epublic of Mordovia Sar ansk R epublic of Tatarstan K azan Udmurt R epublic Perm territory K irov region Nizhniy Novgorod region Orenburg region Penza region Sam ar a region Sar atov region Ulyanovsk region Ur als Feder al District Chelyabinsk region Kurgan region Sverdlovsk region T yumen region (incl. K hant yM ansiyskiy and Yam alo-Nenetskiy autonomous districts) Izhevsk Perm Kirov Nizhniy Novgorod Orenburg Penza Samar a Sar atov Ulyanovsk
Chelyabinsk Kurgan Ekaterinburg
3 478 037 908 838 4 297 510
Tyumen
3 404 726
345.82
101.57
274.89
80.74
58.41
12.52
Federal subject
2010 results
Beneficiary drug cover age (LLO) m arket, mn USD (supply prices)
Center of Feder al subject
Out-of-pocket m arket, mn USD (consumer prices)
Pharm a m arket, total, mn USD (consumer prices)
Siberian Feder al District A ltai R epublic Buryat R epublic R epublic of K hak assia T y va R epublic A ltai territory K r asnoyarsk territory Tr ansbaik al territory Irkutsk region K emerovo region Novosibirsk region Omsk region Tomsk region Far Eastern Feder al District R epublic of Sakha (Yakutia) K amchatk a territory K habarovsk territory Primorie territory A mur region M agadan region Sakhalin region Evreysk aya autononous region Chukotk a autonomous district Calculations: Pharmexpert
19 249 798 Gorno-Altaisk 206 557 Ulan-Ude Abakan Kyzyl Barnaul Kr asnoyarsk Chita Irkutsk Kemerovo Novosibirsk Omsk Tomsk 972 175 532 202 308 160 2 416 982 2 829 125 1 105 659 2 427 900 2 761 601 2 666 407 1 976 345 1 046 685 6 283 711 Yakutsk 958 021 PetropavlovskK amchatskiy 321 344 Khabarovsk Vladivostok 1 343 289 1 953 474
2 042.22 8.51 93.35 22.28 12.40 240.95 244.15 132.93 293.94 278.02 391.81 226.28 97.61 806.07 107.25 40.13 213.53 246.72 95.40 18.98 57.62 19.84
106.09 41.18 96.02 41.86 40.24 99.69 86.30 120.22 121.07 100.67 146.94 114.49 93.26 128.28 111.94 124.87 158.96 126.30 115.25 121.26 116.02 112.55
1 561.37 4.06 71.30 10.42 6.08 187.97 166.43 108.72 238.07 216.91 302.87 178.12 70.42 626.28 80.09 28.20 171.50 201.94 69.07 14.25 41.04 15.92
81.11 19.67 73.34 19.57 19.72 77.77 58.83 98.33 98.06 78.55 113.59 90.13 67.28 99.67 83.60 87.76 127.67 103.38 83.44 91.04 82.63 90.32
339.72 3.68 15.38 6.41 4.26 41.22 57.01 18.93 38.26 42.91 64.73 31.57 15.36 114.60 16.88 5.87 32.55 24.44 17.20 2.69 10.25 4.15
141.12 0.77 6.67 5.45 2.06 11.76 20.71 5.27 17.61 18.20 24.20 16.59 11.83 65.20 10.27 6.06 9.48 20.34 9.13 2.04 6.33 0.77
Blagoveshchensk 827 761 Magadan YuzhnoSakhalinsk Birobijan 156 494 496 665 176 313
Anadyr
50 350
5.61
111.37
4.26
84.65
0.57
0.77
Federal subject
14
<15
III.
weather forecast for russias pharma
2010 results
results of russias pharma market development in 2010 and forecast for 2011
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 Development (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.
M a i n e c onom ic i n dic at or s of 2010
The consumer confidence index grew steadily during 20092010 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 situation improved: the consumer confidence
Table 1. Some macroeconomic indicators according to Mineconomrazvitiya forecast and report data (preliminary), 2010
Indicator
R eport
R ecovery from crisis Mineconomr azvitiya forecast. 2009 inertia fast 2010 protr acted 2010
Expert estim ates
2008 Oil prices (Ur als. USD/bbl) Real GDP growth r ate (%) Nominal GDP (bn RUB) Feder al budget revenues (% of GDP) Feder al budget surplus / deficit (-) (% GDP) Export (bn USD) Import (bn USD) CPI growth r ate (%)
1
2009
2010
2010
94.4
60.7
65.0
80.0
40.0
75.0
5.6 41 265
7.9 39 016
4.3 44 142
5.5 45 024
4.1 40 965
4.1 44 491
22.4
18.8
17.0
17.7
15.8
17.4
4.0 471.6 291.9 13.3
6.54 303.3 192.7 8.8
5.4 321.0 235.0 7.4
4.26 360.0 253.0 8.3
8.34 245.0 169.0 8.4
4.0 378.0 241.0 8.8
Source: Russias Ministry of Economic Development, Goskomstat
index gained 3.5 percentage points (reaching -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).
CPI Consumer Price Index.
16
<17
weather forecast for russias pharma results of russias pharma market development in 2010 and forecast for 2011
Fig. 1. Consumer Confidence Index and Expected Change Index in Russia, Q108 Q410
% 15 10 5 0 -5 -10 -15 -20 -25 -30 -35 -40 Q1 2008 0 8
8 5 1 -1 -4 -10 -20 -27 -35 -32 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 -25 -7 -11 10 -5 -10 -15 -19 -20
-2
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Consumer Confidence Index Expected Change Index Source: Goskomstat
Fig. 2. Unemployment, real disposable income of population and Consumer Price Index in pre-crisis, crisis, and post-crisis periods, 20072010
9 113.3 113 3 8 7 Unemployment, % 6 6.1 5 112.0 1.9 1 111.9
8.4 7.5
116 114 112
108.8 6.3
108.8
110 108 Growth, %
104.3 104. 4 3 2 1 0 2007 Unemployment, % Real disposable income (y-on-y, %) CPI (December, y-on-y, %) 2008 2009 2010 102.3 102.1
106 104 102 100 98 96 94
Source: Goskomstat
2010 results
H e a lt hc a r e a n d s o c i a l se c t or i n 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), 200920101

Consolidated budgets of Indicator Feder al budget 2010 Healthcare expenditures, total* Share of healthcare expenditures in state total expenditures (%) In-patient care Out-patient care Day patient care in all types of facilities Emergency care Sanatoria care Blood and components donation, processing, stor age, and safety provision Sanitary and epidemiological welfare 9.92 23.96 0.40 0.36 10.32 24.32 4.73 4.27 7.90 6.76 0.20 0.17 12.83 11.20 0.43 23.43 0.15 22.30 1.87 50.16 10.25 1.53 45.89 9.61 0.11 0.43 0.13 0.20 0.54 0.15 1.98 51.02 33.81 1.73 46.57 32.06 2.42 128.69 34.20 2.69 130.46 38.70 8.21 281.65 97.90 8.42 279.70 90.20 4.66 2.31 20.88 5.43 4.07 21.61 4.72 412.65 152.98 4.92 414.24 150.51 201.40 219.84 450.13 434.04 24.07 26.75 675.59 680.63 2009 Feder al subjects 2010 2009 Budgets of territorial br anches of state funds 2010 2009 Total 2010 2009
* 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
January through November.
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 beneficiaries 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% yearon-year. At the same time, the number of beneficiaries entitled to high-cost therapies 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 modernization of healthcare in Russias Federal subjects starting from 2011 (each region developing a modernization program of its own). The program provides for the improvement of the material and technological infrastructure of healthcare institutions, implementation of modern information technologies and healthcare standards as well as improvement of quality and availability of healthcare services in general. Unified approaches to healthcare and Federal Healthcare Standards were adopted. The law On mandatory health insurance 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-clinical 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 categories increased by 13.4%. As per one recipient, spending reached 757 RUB/month (668 RUB in 2009). There were 100,000 people in 2010 with diseases requiring highcost 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 medication must be delivered to the drugstore within five days. The rules of importing to Russia of drugs to be used for medical indications were simplified. 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%, respectively, which is notably higher than in 2009 (Fig. 3).
Source: Ministry of Healthcare and Social Development of the Russian Feder ation.
2010 results
Fig. 3. Drug manufacture and import, Russian Federation, 20092010
Drug manufacture 350 300 249.13 250 Bn RUB 200
Drug import 330.3 280.3 + 18% + 13% 20 15 10 5 Growth, %
150 105.8 100 -8% 50 0 2008 2009 2010* 2008 2009 2010* * Estimate Source: Russias Ministry of Economic Development; Pharmexpert Drug import to Russia + 13% -5 -10 97.1 110.1 0
Rus si a n ph a r m a m a r k e t i n 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 lowcost 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 factors of the growing drug demand. Combined with the general economic recovery after the 20082009 crisis, it resulted in a
significant market growth in real terms. In the beneficiary drug coverage sector: decrease of the number of the ONLS (essential drug coverage) program participants, 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 supplied for the 7VZN program due to price control and heavier purchases of cheaper local medications.
20
<21
Fig. 4. Russian pharma market growth dynamics, 20082010
1.5 1.7 3.0 1.58 Sales, bn USD 2.0 1.3 2.6 2.9
9.0
11.6
11.8
13.3
2007 Hospital purchases Beneficiary supplies (LLO) Retail sales
2008
2009
2010
Source: Pharmexpert Monitoring of drugstore+hospital drug procurement and reimbursable distribution (LLO): Russia
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, immunosuppressive and diagnostic agents etc.), resulting 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 market 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.
Rus si a n ph a r m a m a r k e t de v e lopm e n t for e c a s t 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 (67%), 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,
2010 results
Table 3. Expected indicators of Russias economic development in 2011
Indicator
2009 (report)
2010 (estim ate)
2011 (forecast)
Aver age oil price (Ur als. 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
Agricultur al 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
Source: Russias Ministry of Economic Development
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 purchasing high-cost drugs under the 7 High-Cost Nosologies Program; 41.3 bn RUB will be allocated for purchases under the essential 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, according to the estimates of Russias 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 expect 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
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 Blood and components donation, processing, stor age, and safety provision
31.7
27.0
5.9
6.2
Sanitary and epidemiological welfare
11.7
12.7
*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 planning period of 2012 and 2013 1
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 asset 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 58%) and 2) higher retail markups (by 46%). 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 1113%. 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, effective, costlier drugs in the overall supplies will rise. In total, the Russian pharma market is expected to grow by 1521% (Fig. 5).
Adopted by the State Duma of Russias Feder al Council on 24.11.2010.
2010 results
Fig. 5. Russias pharma market growth indicators (USD, end-user prices), 2011
35 30 25 21 Growth, % 20 15 10 5 0 -5 2007 Optimistic Realistic Pessimistic 2008 -3 2009 2010 2011 13 17 7 15 5 20 29
Source: Pharmexpert
24
<25
IV.
summary of most important events in russias pharma market
2010 results
SIA International purchases 25 % of stocks of Apteki 36.6 Drugstore Chain for $ 3050 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 construction. Investment: USD 40 mn
Samson-Med announces construction of a plant in St. Petersburg pharma cluster. Investment: USD 3050 mn
january february
Oriola-KD purchases remaining 25 % of stocks of Foreti Oy (managing company 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
march april
State regulation of maximum drug selling price markups for retail and wholesale companies comes in force pursuant to Russias 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 1416 mn
may june
Sanofi-Aventis launches its manufacture in city of Oryol on Bioton Vostoks site purchased in late 2009 for USD 40 mn Nycomed launches construction of a plant for manufacturing sterile solutions and solid drugs in Yaroslavl region. Investment: USD 100 mn
Expert estimation.
26
<27
summary of most important events in russias pharma market
The list of strategically important drugs to start being manufactured locally before 2015 was approved pursuant to Russias Government Order # 1141-z Novo Nordisk purchases a site for an insulin plant construction in Kaluga region. Investment: USD 80100 mn Diod raises ca. 300 mn RUB following its IPO
Federal Law # 61-FZ On Drug Circulation 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 announce a strategic partnership that will result in manufacturing Novartis Pharma multiple sclerosis drugs at R-Pharms site Vertex launches construction of a new plant in St. Petersburg as a result of its extended portfolio. Investment: USD 3040 mn Russias 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 preventing 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. Petersburg 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 august
Pursuant to Russias 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; Minzdravsotsrazvitiya will be in charge of drug registration
september october
Akrikhin signs agreements with Emcure Pharmaceuticals Ltd and Celon Pharma Ltd to include antiHIV / AIDS drugs in its portfolio Minzdravsotsrazvitiya order # 805-n approves a new list of minimum admissible drug range for medical aid Russias Government Order # 1660-r approves Federal Target Program for Russias Pharma Industry Development till 2020 focused on supporting local manufacturers and import substitution. Investment: USD 5 675 mn
november december
Novartis announces a plant construction in St. Petersburg pharma cluster. Total 5-year investment: USD 500 mn R-Pharm and Hemogenomics Institute make a research agreement for developing technologies for manufacturing import substituting APIs. Total investment: USD 17 mn Pharmasintez and Naprod Life Sciences ally for a cancer generics plant construction in St. Petersburg. Investment: USD 55 mn
2010 results
28
<29
V.
imports reached pre-crisis level in value terms
2010 results
drug import to russia

Drug imports to Russia in 2010 totaled 2.0 bn units (10.8 bn USD; Fig. 1). Imports grew yearon-year 25% in USD, 29% in EUR, and 17% in RUB. The sector growth in real terms was 8%.
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 demand 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 shipments in 2009 caused by the economic crisis affected the OTC segment most of all.
Fig. 1. Drug import to Russia, 20082010
12.0 10.0 8.0 6.0 4.0 2.0 0.0 2008 a) In value terms 2009 10.0 8.9
+ 25% 11%
2.5 21% + 8%
2.0
Bn units
Bn USD
1.5
1.0 2.4 0.5 1.9 2.0
10.8
0.0 2010 2008 b) In real terms 2009 2010
Source: Pharmexpert Drug import to Russia
Hereinafter, without Customs Warehousing data.
30
<31
imports reached pre-crisis level in value terms drug import to russia
Fig. 2. Split of different currencies in structure of payments for drug imports to Russia, 20092010
120 100 80 60 28.4 40 20 46.0 0 2009 Import share, EUR Import share, USD Import share, RUB Import share, other currencies Exchange rate EUR:RUB Exchange rate USD:RUB
Source: Pharmexpert Drug import to Russia; CB of RF
60 0.6 25.0 0.2 51.4 50 40 30 13.9 20 10 34.5 50 2010
Fig. 3. Split of Rx and OTC drugs in total imports to Russia, 20092010
In value terms
In real terms
76.3
72.8
48.0
Currency exchange rate to RUB
Import share, %
47.0
23.7
27.2
52.0
53.0
2009 OTC Rx
2010
2009
2010
2010 results
Fig. 4. Split of 1st level ATC groups1 in total drug imports to Russia, 20092010
20 18 16
Import share, %
40 29 22 17 12 3 11 3 2 10 0 10 12 8 18 A L R C J N M G 15 12 12 16 20 30 B D S H K T V P 10
Share growth, %
31 30 20
14 12 10 8 6 4 2 0
Share growth, 2010/2009 Group share growth, 2010 A Alimentary tract and metabolism L Antineoplastic and immunomodulating agents R Respiratory system C Cardiovascular system J General anti-infectives systemic N Nervous system M Musculo-skeletal system G Genito-urinary system and sex hormones B Blood and blood forming organs D Dermatologicals S Sensory organs H Systemic hormonal preparations, excl. sex hormones K Hospital solutions T Diagnostic agents V Various P Parasitology
Therefore, we observe a manifest recovery of demand for imported drugs in 2010. Traditionally, Group A Alimentary tract and metabolism accounted for the largest import 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 demonstrated 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-
Hereinafter, ATC EphMR A classification.
32
<33
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 trademark 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. 25 trademarks by imports to Russia, 2010

M ain pharm a m arket sales channel 1 Share in total imports, (%, USD) 2010 Glivec Essentiale M abther a Concor Nurofen L antus K aletr a A lflutop Pegasys Octanate No-spa Sum amed Linex Seretide Mezym forte A moxiclav Combivir Actovegin Humulin Copa xone Tropicamide Movalis Mildronate Heptr al Viagr a 7 Nosologies Out-of-pocket 7 Nosologies Out-of-pocket Out-of-pocket ONLS Out-of-pocket Out-of-pocket ONLS 7 Nosologies Out-of-pocket Out-of-pocket Out-of-pocket ONLS Out-of-pocket Out-of-pocket Hospital Out-of-pocket ONLS 7 Nosologies Out-of-pocket Out-of-pocket Out-of-pocket Out-of-pocket Out-of-pocket 1.69 1.06 1.00 0.84 0.82 0.70 0.68 0.68 0.66 0.63 0.63 0.62 0.62 0.59 0.56 0.54 0.53 0.52 0.52 0.52 0.51 0.51 0.48 0.48 0.47 16.86 2009 1.48 0.74 1.10 0.61 0.30 0.70 0.45 0.45 0.68 1.73 0.54 0.45 0.38 0.64 0.46 0.36 0.39 0.49 0.59 0.90 0.22 0.56 0.44 0.75 0.82 16.23 14 44 10 39 178 1 53 50 3 63 17 38 63 9 21 49 35 6 11 43 131 9 10 36 43 Share grow th (%, USD), 2010/2009
R ank 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2009 3 10 4 15 71 11 32 29 12 2 22 30 43 14 27 44 38 24 17 5 96 20 33 8 7
Tr adem ark
TOP25, total Source: Pharmexpert Drug import to Russia
The main sales channel accounts for more than 70% of any given TM
in total sales in Russia as of 2010.
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. Growing 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 demonstrated by Astellas Pharma Inc (183%). Aventis Pharma ZAO, the Russian representative office of Sanofi-Aventis, ranks first among the importers (6.6% of total imports in value terms; Table 4). The former leaders 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. 10 trademarks first imported to Russia in 2010

Rank among newcomers, 2010 1
Trademark Extavia
Corporation Novartis Teva Pharmaceutical Industries Ltd GSK Lupin L abor atories Ltd
INN interferon beta-1b
OTC / Rx Rx
2 nd level ATC group L03
Total imports share (%, USD) 0.412
2 3 4
Genfa xon Poliorix R ifapex
interferon beta-1a poliomyelitis vaccine rifapentin per itone al dialysis solutions panitumumab lir aglutide temozolomide romiplostim levoflox acin
Rx Rx Rx
L03 J07 J04
0.177 0.066 0.055
5 6 7 8 9 10 TOP10, total
CA PD/DPCA Vectibix Victose Temomid Nplate R emedia
Fresenius AG Amgen Europe B.V. Novo Nordisk Jodas Expoim Pvt. Ltd Amgen Europe B.V. Simpex Pharma Pvt. Ltd
Rx Rx Rx Rx Rx Rx
K06 L01 A10 L01 B02 J01
0.052 0.052 0.050 0.038 0.031 0.029 0.962
34
<35
The biggest share growth among the importers was demonstrated by the Russian representative 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. 25 corporations by total drug imports share in Russia, 2010

Share grow th (%. USD). 2010/2009
R ank 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2009 1 2 5 9 6 3 10 13 7 8 14 12 18 11 15 20 4 19 40 21 22 28 38 33 16
Corpor ation
Total imports share (%. USD) 2010 2009 6.94 6.60 3.95 3.32 3.89 4.48 3.27 2.38 3.77 3.59 2.35 2.90 2.14 2.96 2.34 1.64 4.26 1.86 0.53 1.63 1.38 0.72 0.55 0.62 2.18 70.25
Sanofi-Aventis Novartis Berlin-Chemie / Menarini GSK Abbott Roche Teva Pharm aceutical Industries Ltd Nycomed Merck Sharp and Dohme Gedeon R ichter Astr aZeneca Boehringer Ingelheim Pfizer Bayer Healthcare K rk a Dr. R eddys Janssen-CIL AG Novo Nordisk Astellas Pharm a Inc Egis Eli Lilly Ropharm R eckitt Benckiser Healthcare Actavis Octapharm a AG
7.94 7.82 4.76 3.97 3.93 3.93 3.83 3.21 2.95 2.87 2.69 2.67 2.29 2.27 2.08 1.73 1.64 1.63 1.51 1.42 1.30 1.23 1.23 1.07 1.04 71.01
14 18 21 19 1 12 17 35 22 20 15 8 7 23 11 6 61 12 183 13 6 72 122 72 52
2010 results
Table 4. 25 importers by drug imports to Russia, 2010

Share grow th (USD, %), 2010/2009
R ank 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2009 3 1 2 5 6 10 19 11 12 21 8 9 4 13 18 28 24 7 17 15 25 23 39 29 53
Importer
Share in total imports (USD, %) 2010 2009 5.50 6.71 6.66 3.39 2.99 2.51 2.03 2.49 2.41 1.93 2.86 2.62 3.51 2.35 2.11 1.20 1.80 2.91 2.16 2.25 1.63 1.85 0.53 1.17 0.34 65.91
Aventis Pharm a ZAO Protek C V ZAO SI A International Ltd ZAO Novartis Pharm a ZAO R-Pharm ZAO Gla xoSmithK line Tr ading Lek ZAO Galena Pharm a OOO Nycomed Distribution Center TOO Berlin Pharm a ZAO Rosta ZAO Orfe ZAO K atren NPK ZAO Astr aZeneca Pharm aceuticals Pfizer Bayer ZAO Solvay Pharm a OOO Pharm aceutical Import. Export Johnson&Johnson Inc
6.58 5.55 5.19 4.32 4.05 3.55 3.45 3.38 3.17 3.12 3.05 2.82 2.76 2.69 2.34 2.33 2.17 2.15 1.99
20 17 22 28 35 42 70 36 32 62 6 8 21 15 11 94 21 26 8 20 6 12 186 10 269
Alliance Healthcare (Apteka Holding ZAO) 1.79 Dr. R eddys L abor atories OOO Novo Nordisk Astellas Pharm a ZAO K rk a Pharm a OOO Lilly Pharm a 1.73 1.63 1.53 1.29 1.26 73.89
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 precrisis 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.
36
<37
VI.
industrialization in a separate industry
2010 results
pharmaceutical industry development in russia

The past year can be well regarded as a certain milestone in the evolution of Russias pharma manufacturers. Firstly, drug production demonstrated an unprecedented growth: local factory output amounted to 4.19 bn USD in 2010 surpassing that of 2009 by 39% (Fig. 1). Secondly, the domestic pharma industry secured a longawaited financial foundation for its development 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 provides 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.
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 production 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 according to purchases for the nosological group of
Fig. 1. Russias pharmaceutical manufacturing dynamics, 20012010
4.5 4.0 3.5

bn USD
39.3 30.0 19.8 18.9 21.5 23.1 14.9
50 % 40
25.1
30 20 10 0 0.6 -10 -20
3.0 2.5 2.0 1.5 1.0 0.5 0
-17.4 1.09 2001 0.90 2002 1.07 2003 1.30 2004 1.69 2005 2.08 2006 2.39 2007 2.99 2008 3.01 2009 4.19 2010
-30 -40
Industrial output, bn USD Growth y/y, %

Source: Russias Ministry of Industry and Trade (Minpromtorg)
38
<39
industrialization in a separ ate industry pharmaceutical industry development in russia
Hemophilia; Ronbetal (Biocad) accounted for almost 10% of the multiple sclerosis budget; 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 (PharmSintez) 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 government purchases. Such restrictions can be imposed for many formal reasons: availability 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 legislation are being made, the hopes are with the companies perseverance in fighting for their rights. Still, in the middle of last year Russias Government approved, by its Order #1141-r dated 06.07.2010, a list of 57 strategically
Table 1. 10 2nd level groups (EphMRA) by production size in Russia in value and real terms, 2010
Share, total drug production in Russia (%) R ank 1 2 3 4 5 6 7 8 9 10 group J01 Systemic antibacterial J05 Antivir als for systemic use J07 Vaccines L01 Antineoplastics In value terms 7.05 6.39 5.94 5.07 In real terms 12.80 1.40 1.41 0.09 2.23 0.85 6.06 12.47 5.04 4.60
N06 Psychoanaleptics excluding anti-obesit y prepar ations 4.63 L03 Immunostimulating agents K01 Intr avenous solutions N02 Analgesics D08 Antiseptics and disinfectants R05 Cough and cold prepar ations 4.19 3.56 3.42 3.04 3.01
Source: Pharmexpert Drug manufacture in Russia
2010 results
important drugs; their manufacturing facilities 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 substituting 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 Modernization and Technological Development of Russias Economy under the auspices of Russias 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 Presidents Commission but also innovative products. Pharmstandard leads Russias pharma market by production size (Table 2). It mostly deals with OTC drugs; however, this manufacturer has been actively building its Rx portfolio 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. Innonafactor (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 investors have been actively building their own production base in the territory of the Russian 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 particular, in April 2011, AstraZeneca started construction of its own facility; construction of Nycomed and Berlin-Chemies facilities have been underway for some time; Novartis has made a decision to start construction of a production facility and, more interestingly, an R&D center. Field-specific investors also consider an acquisition of the existing 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
Table 2. 20 corporations by production size in Russia in value and real terms, 2010
Share, total drug production in Russia (%) R ank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 M anufacturer Pharmstandard STA DA CIS Valenta Microgen NPO Veropharm ZAO Pharm-Center Sotex A krikhin K rk a RUS Biotec OOO Petrova x Pharm RosBio Ozon Gedeon R ichter RUS Biocad Moskhimpharmprepar at y Escom Polysan A bolmed A ltay vitaminy ZAO In value terms 14.95 5.14 4.94 4.50 4.07 3.79 2.98 2.96 2.83 2.70 2.04 1.98 1.70 1.69 1.67 1.66 1.59 1.42 1.33 1.27 In real terms 14.26 2.74 2.34 1.94 1.21 10.25 0.43 1.12 0.60 8.54 0.37 0.69 3.41 0.34 0.09 3.86 2.66 0.22 0.31 1.49
Source: Pharmexpert Drug manufacture in Russia
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. construction of facilities proper, as about the lack of
competitive products that can be successfully 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 preparation, but essentially testifying to the fact that Russian companies have not succeeded in creating truly significant brands. Only Arbidol was able to compete with Sodium chloride in terms of production value in 2010. That said, one should acknowledge that the TM rating has changed considerably over the
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 innovations 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-production 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 mentioned 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. 20 trademarks by production size in Russia in value and real terms, 2010
Share, total drug production in Russia (%) R ank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Tr adem ark A rbidol Sodium chloride Grippol Pentalgin Chlorhexidine Grippol plus Complivit Viferon Mydocalm Ethyl alcohol Terpincodum Glucose Phenotropil Imova x Ronbetal Cefazolin Coagil V II Phenazepam A mixin Immunoglobulin Source: Pharmexpert Drug manufacture in Russia In value terms 3.61 2.48 1.81 1.46 1.31 1.24 1.11 0.96 0.91 0.87 0.86 0.82 0.81 0.81 0.79 0.76 0.76 0.75 0.75 0.73 In real terms 0.76 4.28 0.56 0.80 0.39 0.31 0.39 0.27 0.17 0.50 0.18 1.58 0.04 0.13 0.01 2.52 0.0004 0.29 0.05 0.08
42
<43
The efforts made to market innovative drugs provide for expecting growth of the pharma industrys export potential, too. The share of exports in 2010 was just 7% of the total drug output in Russia. It is understandable as most CIS countries (effectively, the main export markets for Russias 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 regard 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 manufacturing 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 suppliers 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 innovative 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 fluctuations 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 industrialization period in the USSR of the 1930s come to mind. At that time, the Soviet Union accomplished a truly unprecedented breakthrough, which transformed an agrarian country into a major industrial power. Many industrial and infrastructural facilities form the foundation of the Russian economy up to this time.
2010 results
Conclusion: Today, the countrys 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 Russias 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
VII.
time of unrealized apprehensions and realized predictions

C U M U L AT I V E R AT I NG OF RUSSI A N PH A R M AC E U T IC A L DIST R I BU TOR S
The past year brought about many changes associated with state initiatives in the sphere of pharmaceutical market regulation. The post-crisis environment 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 distribution 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.
distributors
2010 results
distributors
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 ranking 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 companies that have been given an expert evaluation.
C r i t e r i a for s t r e a m l i n i ng di s t r i bu t or s by r at i ng c at e g or i e 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 companys certified warehouses are located (F1 and F2 categories). The sales dynamic index is calculated
Table A. Threshold indices for categories F1-F3
Index
F1: National distributors
F2: Interregional distributors
F3: R egional distributors
Subcategory, category Gross sales, mn RUB, on aver age per month for period under study Number of affiliates / br anches Number of feder al districts where company has certified warehouses
F1-
F1-B
F1-C
F2-A
F2-B
F2-C
F3-A
F3-B
F3-C
6000
3000
1500
600
300
200
120
80
80
15-20
6-7
46
<47
time of unrealized apprehensions and realized predictions cumulative r ating of russian pharmaceutical distributors
monthly according to the sales information provided by distributors. The index characterizing the distributor sales dynamics in the period since the years beginning is published once a quarter.
R a n k i ng c om pa n i e s i n si d e F1- F3 c at e g or i e 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 dynamic indices of a company activity has
its own weight and affects the aggregate indexs value. The companys rank is calculated in for stages: 1. The companys indices values are ranked relative to maximum indices in the category. 2. The companys 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 category according to the aggregate index.
Table B. Weights of indices used to determine monthly ranks of companies included into Cumulative Rating of Russian Pharmaceutical Distributors
Weight, % (for determining Index group r anks inside category) F1-F2 Economic indices Sales, mn RUB Direct sales (in value) to drugstores and hospitals Number of br anches/subsidiaries/representative offices Product r ange, number of items on the pricelist Number of customers (drugstores, hospitals, and clinics) Str ategic development indices (including dynamic indices) Number of Feder al Districts where the companys certified warehouses are located Sales dynamics : (in value) 1st of Pharmacia Product r ange dynamics (2) Dynamics of the number of br anches/subsidiaries/representative offices Customer number dynamics (drugstores, hospitals, and clinics) Aggregate index
1 2 (3) (1)
F3
50 10 5 5 2
65 10 1 5 2
10 10 2 1 5 100
10 2 5 100
Month-on-month to previous year. 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.
2010 results
distributors
To s t e p away f rom t h e fa l l
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 influences, 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 companys 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. Well 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 companys 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 difficult 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 circulation. 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 zdorovya 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 dynamics 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 purchasing, and stock replenishment policies have undergone significant changes. Over the past year, interregional distributors also demonstrated different approaches, not necessarily 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
48
<49
drugs with the highest profit potential. Incidentally, during the economic crisis it enabled the company to retain a stable growth rate against the background of not always optimistic trends among its wholesaler peers.
D i s t r i bu t or s bu nc h i n t o c lus t e r s
The development of pharma industry, particularly 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 creating new jobs and larger tax revenues, outside the scope of this review. The trend of pharmaceutical manufacturing development has been laid down by the Pharma2020 Strategy, which had stimulated significant changes in the field even before it was formally approved. 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 Russias 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 created 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 business unit, and more often than not production is focused on generic drugs. Synergy is achieved in that case due to logistic capabilities 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 distributors product range. Moreover, significant resources need to be invested in promotion; otherwise wholesalers customer will refuse to sell the goods. In the second case, the production facility is used as a contract manufacturing site, where trademarks of a partner company foreign more often than not are produced. In this case, promotion costs can be reduced but royalty has to be paid out of profits. The most interesting from the profit perspective 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 Pharma2020 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 pharmaceutical 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 commercialization 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 investor 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
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 companys owner and founder Alexei Repik has announced the companys 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 product range, perhaps drugs supplied in the framework of the so-called 7 nosologies
(VZN) program. Potential contract manufacturing 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 ventures initiated by distributors are not the last in the pipeline. We may forecast that within the next two or three years, other large wholesalers will give a serious thought to production. Typically, such projects are connected with pharma clusters, which makes it possible to conclude that the production format discussed herein is highly relevant.
Fig. 1. Growth of gross and direct sales of pharmaceuticals and parapharmaceuticals by Russian distributors (RUB, USD, and EUR), 2010/2009
% 35 30 25 20 15 10 5 0 -5 -10 -15 30.11 23.80 18.38 14.46 19.70 25.80
-4.38 Gross sales (RUB) Direct sales (RUB) Exchange rate fluctuation, USD:RUB Gross sales (USD) Direct sales (USD) -9.01 Exchange rate fluctuation, EUR:RUB Gross sales (EUR) Direct sales (EUR)
Source: Pharmexpert Analytics and Consulting 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of companies under monitoring; Central Bank of Russian Federation
50
<51
Fig. 2. Long-term growth of pharmaceutical distributor gross sales, 20082010
% 70 60 50 40 30 20 10 -0 -10 -20 Q1 2008 Q2 2008 Q3 2008 -13.0 Q4 2008 Q1 2009 Q2 2009 11.0 25.0 13.0 -13.6 -18.7 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 30.1 19.8 18.9 -23.0 33.0 24.0 17.0 5.1 8.1 -4.5 16.9 10.0 9.7 17.0 22.7 25.6 28.4 34.3
Sales growth y/y (%, USD) Sales growth y/y (%, RUB)
Source: Pharmexpert Analytics and Consulting 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of companies under monitoring
Fig. 3. Long-term growth of pharmaceutical distributor direct sales (to drugstores as well as in-patient and out-patient clinics), 20082010
% 50 40 30 20 10 0 -10 -20 -30
45.3
44.2
44.8
45.0 32.6 28.0
42.1
27.0
30.1
30.8 32.0 7.0 7.6 2.0
19.4 24.4 12.0
35.9
-10.0 -23.0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009
-7.4
-5.7
-6.6
-28.3 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010
Sales growth y/y (%, USD) Sales growth y/y (%, RUB)
2010 results
Fig. 4. Distributor sales split for imported/local products in value terms (%), 2010
37 63
Imported Local
Fig. 5. Distributor sales structure (in value) split for categories (%), 2010
56
33
National
62
26
Interregional
48
35
10
Regional
0% Rx OTC
20%
40%
60%
80%
100%
Parapharmaceuticals Medical devices
52
<53
Table 1. 25 importing distributors, 2010
R ank
Imports grow th
importing distributors 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2009 1 2 4 6 3 5 7 8 11 12 10 13 14 9 21 16 17 20 18 26 24 23 19 34 15 importers 2010 2 3 5 11 13 18 20 30 35 36 37 39 40 42 52 55 60 61 72 87 91 95 100 101 125 2009 1 2 6 8 4 7 15 27 34 35 33 44 50 31 93 54 64 84 75 102 96 95 83 161 52 Protek CV ZAO SIA International Ltd ZAO R-Pharm ZAO Rosta ZAO K atren NPK ZAO Pharmaceutical Import. Export Alliance Healthcare Rus (Apteka Holding ZAO) Oriola (Moron) Euroservice ZAO National Distributor Company ZAO Pharmstore OOO Pulse Medipal-Onco OOO Biotec Imperia Pharma ZAO Irvin-2 OOO Intermedservice ZAO Medintorg ZAO Baltimore FAK ZAO Dominanta Service ZAO Akonit MFF Pharmcomplect OOO Baltic Security Service OOO Uralpharmcenter AOZT Shreya Corporation AO Importing distributor Imports share*, % 2010 5.55 5.19 4.05 3.05 2.76 2.15 1.79 1.08 0.68 0.63 0.59 0.54 0.52 0.51 0.30 0.25 0.24 0.23 0.15 0.07 0.06 0.06 0.05 0.05 0.03 2009 6.71 6.66 2.99 2.86 3.51 2.91 2.25 1.23 0.80 0.65 0.82 0.47 0.39 0.99 0.09 0.33 0.23 0.12 0.14 0.07 0.08 0.08 0.12 0.02 0.34
(%, USD), 2010/2009
4.89 1.22 71.47 35.01 0.45 6.29 1.04 10.71 7.75 22.70 9.42 45.57 68.53 35.12 337.79 3.21 30.32 149.45 30.64 34.08 3.47 8.58 41.79 279.37 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 companys 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)
2010 results
Table 2. Cumulative rating of pharmaceutical distributors, 2010
R ank
2010 intercategory within category
9 months 2010 intercategory within category
H110 intercategory within category
Q110 intercategory within category
2009 intercategory
2008 intercategory
Corpor ation
Category F1: National F1A 1 1 1 1 2 2 2 2 3 3 3 3 F1-B 4 1 4 1 5 2 5 2 F1- 6 1 6 1 Category F2: Interregional F2-A 7 1 7 1 8 2 8 2 9 3 9 3 10 4 10 4 11 5 11 5 12 6 13 7 13 7 14 8 14 8 12 6 15 9 15 9 F2-B 16 1 16 1 17 2 18 3 18 3 17 2 19 4 19 4 20 5 21 6 21 6 22 7 22 7 20 5 23 8 23 8 24 9 24 9 F2- 25 1 26 2 26 2 25 1 27 3 27 3 Category F3: R egional F3-A 28 1 28 1 29 2 30 3 30 3 29 2 31 4 31 4 32 5 32 5 33 6 33 6 34 7 34 7 F3-B 35 1 35 1 36 2 36 2 37 3 37 3 38 4 38 4 39 5 39 5 40 6 40 6 F3-C 41 1 41 1 42 2 42 2 43 3 44 4 44 4 43 3
1 2 3 4 5 6
1 2 3 1 2 1
1 2 3 4 5 6
1 2 1 2 3 1
1 2 3 4 5 6
1 2 3 4 5 6
Protek C V ZAO SI A International Ltd K atren NPK ZAO Rosta Alliance Healthcare Rus (Apteka Holding ZAO) Biotec Group
7 8 9 30 12 11 13 10 14 15 19 16 17 18 21 20 22 23 25 24 26
1 2 3 4 6 5 7 4 8 1 5 2 3 4 7 6 8 9 2 1 3
7 9 8 30 11 10 12 # 13 14 16 17 18 15 20 19 21 22 24 23 25
1 3 2 5 5 4 6 # 7 1 3 4 5 2 7 6 8 9 2 1 3
7 10 8 28 11 9 12 # 13 15 18 19 16 14 20 17 21 22 24 23 25
7 8 14 30 15 16 11 # 20 13 32 19 17 18 25 24 22 9 26 29
R-Pharm Oriola (Moron)** Pulse Imperia Pharm a Euroservice A konit MFF Shreya Corpor ation** Irvin-2 Pharmstore** BSS Pharmcomplect Baltimore FA K Pharmimex Group** Intermedservice Godovalov Profit-Med Pharm acev t Genesis** Lekrus Nadezhda Pharm Severo-Zapad
27 34 28 29 32 31 33 39 35 36 38 37 40 41 43 44 42
1 8 2 3 6 5 7 5 1 2 4 3 6 1 3 4 2
26 32 27 28 29 31 35 36 34 33 41 38 37 39 40 43 42
1 7 2 3 4 6 3 4 2 1 3 6 5 1 2 5 4
27 # 29 32 33 31 38 30 35 34 37 26 36 40 39 42 41
31 # 33 35 36 27 43 48 39 38 40 28 41 47 46 52 51
Volgopharm+ Vitta Company Agroresursy Medexport Lipetskpharm acia+ Parm a Medical** Pharm-SK D Medical Leasing Consulting Geopharm Pharm acia**+ Solvex-Olbi Avikon-Med Bolear Medservice-R egion Vostok Pharm Donskoy hospital Cortes-Pharm (Cortes Tr avel)
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.
54
<55
Dynamic sales index*, %
HQ location
2010/2009
9 months 2010 / 9 months 2009
H110 / H109
Q110 / Q109
2009/2008
Change of intercategory r ank vs. 9 months 2010
Moscow Moscow Novosibirsk region Moscow Moscow Moscow
9 6 11 9 35 15
13 16 18 18 44 20
11 27 21 18 44 20
6 43 11 21 35 17
22 0.4 38 49 88 11
~ ~ ~ ~ ~ ~
Moscow Moscow Moscow region St. Petersburg Moscow St. Petersburg Moscow Moscow region Moscow St. Petersburg Nizhniy Novgorod region Moscow Moscow Moscow Perm Moscow Rostov region St. Petersburg Moscow Moscow St. Petersburg
28 7 36 15 4 5 13 14 12 13 27 26 0 11 19 24 9 # 47 14 6
27 15 40 12 1 2 16 26 15 19 32 33 0 4 21 18 10 # 38 15 5
12 18 35 0 1 1 16 39 15 11 28 49 0 5 12 10 2 17 22 18 12
19 3 18 # 5 2 16 15 0 29 31 0 0 3 0 14 # 11 19 2
40 8 54 43 35 57 7 21 3 54 14 25 31 37 65 5 69 57 23 22
~ ~ ~ ~ ~ +1 +1 -2 ~ ~ +1 -1 ~ ~ ~ ~ ~ ~ +1 -1 ~
Volgogr ad region Moscow Novosibirsk region Omsk region Lipetsk region Moscow Samar a Moscow Moscow Ekaterinburg Moscow Moscow Moscow Chelyabinsk region Rostov region Rostov-on-Don Moscow
0 17 15 18 0 0 19 23 24 2 14 19 1 2 3 23 29
4 21 17 19 4 0 23 39 33 4 19 23 0 2 5 28 2
5 21 15 24 8 0 32 11 19 2 70 33 1 3 13 37 2
1 8 9 28 24 # 5 17 0 3 25 54 7 4 25 50 13
25 # 21 41 14 # 26 172 22 28 2 27 26 8 15 1 42
~ +1 -1 -1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ +1 1
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
2010 results
Table 3. 25 distributors by gross sales*, 2010
R ank 9 months 2010 1 2 3 4 2010 2 1 3 4 H110 2 1 3 4 Q110 2 1 3 4 2009 2 1 3 4 2008 2 1 3 4
Distributor
R elative gross sales**
SI A International Ltd Protek C V K atren NPK Rosta Alliance Healthcare Rus
1.000 0.983 0.725 0.636
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
5 6 7 8 9 10 12 11 14 13 15 17 18 16 19 26 20 21 22 25 23
5 6 7 8 9 11 12 10 15 13 16 19 20 18 22 17 21 24 25 17 23
5 6 7 8 9 23 11 n/a 13 10 14 18 20 16 21 15 19 24 22 15 17
5 6 8 7 9 22 10 n/a 16 12 15 19 18 14 21 13 20 23 24 13 17
5 6 8 9 13 n/a 15 n/a 14 17 18 24 25 16 n/a 11 21 22 20 25 16
(A ptek a Holding ZAO) R-Pharm Oriola (Moron)*** Biotec Pulse Imperia Pharm a Euroservice Irvin-2 BSS A konit Pharmimex*** Pharmcomplect Profit-Med Intermedservice Baltimore Shreya Corpor ation*** Volgopharm Godovalov Nadezhda Pharm Lekrus Pharm acev t
0.515 0.358 0.229 0.131 0.130 0.128 0.080 0.077 0.070 0.068 0.062 0.059 0.059 0.057 0.053 0.048 0.046 0.042 0.038 0.037 0.035
*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
56
<57
Table 4. 10 distributors by gross DRUG sales*, 2010

R ank 1 2 3 4 5 6 7 8 9 10 Distributor SI A International Ltd Protek C V K atren NPK Rosta A lliance Healthcare Rus (A ptek a Holding ZAO) R-Pharm Oriola (Moron)*** Pulse Biotec Imperia Pharm a R elative gross drug sales** 1.000 0.973 0.684 0.672 0.532 0.394 0.206 0.143 0.117 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. 10 distributors by direct DRUG sales*, 2010

R ank 1 2 3 4 5 6 7 8 9 10 Distributor Protek C V Rosta K atren NPK SI A International Ltd A lliance Healthcare Rus (A ptek a Holding ZAO) R-Pharm Oriola (Moron)*** Biotec Pulse Imperia Pharm a R elative direct drug sales** 1.000 0.737 0.719 0.716 0.535 0.246 0.190 0.121 0.112 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. 10 distributors by secondary sales*, 2010

R ank 1 2 3 4 5 6 7 8 9 10 Distributor SI A International Ltd R-Pharm Protek C V A lliance Healthcare Rus (A ptek a Holding ZAO) K atren NPK Oriola (Moron)*** Pulse Irvin-2 Pharmcomplect Rosta R elative secondary sales** 1.000 0.433 0.285 0.176 0.172 0.120 0.110 0.099 0.085 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
2010 results
Table 7. 10 distributors by direct DRUG supply share (including reimbursable drug coverage), 2010
R ank 1 2 3 4 5 6 7 8 9 10
Distributor Protek C V Rosta K atren NPK SI A International Ltd A lliance Healthcare Rus (A ptek a Holding ZAO) R-Pharm Oriola (Moron)* Biotec Pulse Imperia Pharm a
Direct drug supply share, % 19.06 14.04 13.72 13.65 10.19 4.68 3.63 2.31 2.14 1.93
*Expert estimation. Source: Pharmexpert Analytics and Consulting 1st of Pharmacia cumulative rating of pharmaceutical distributors; based on data of companies under monitoring
Conclusion: There are a great many ways for a wholesale company to develop. What is important is that in the existing market environment, pharma distributors are not just entities with sufficient financial resources to make investments, 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 regulatory changes, has not brought about any dramatic consequences for the industry. To a degree, 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 Russian economy.
58
<59
VIII.
artificial natural selection

R AT I NG OF RUSSI A N DRUG STOR E C H A I NS
The past year may be called positive for the retail pharma sector. As compared 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 recovery 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 sector as a whole.
pharmacy chains
2010 results
pharmacy chains
rating of russian drugstore chains: compilation methods

Table A. Basic threshold indices
Index Category, subcategory Aver age sales value per quarter, mn RUB Number of feder al districts where drugstore chain oper ates (as of end of reporting period) 6 3 2000 500 300 100 50 <50 1 2 3-A 3-B 3- C 3-D 1: National 2: Interregional 3: R egional
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 drugstores cumulative rank (Table B).
Th e c om pa n y s r a n k i s c a lc u l at e d ac c or di ng t o t h e fol low i ng pro c e du r e:

1. The companys indices are ranked relative to maximum values. 2. The companys relative indices are calculated as ranked indices multiplied by the weights (Tables A and B). 3. A cumulative index is calculated as a sum of the companys relative indices. 4. The companies are ranked in accordance with their cumulative indices.
60
<61
artificial natur al selection r ating of russian drugstore chains
Table B. Weights of indices used to calculate drugstore chains rank, %

Group of indices Subcategory Financial and economic Sales (in value) Specific turnover (per 1 outlet) Str ategic development Number of Feder al subjects where drugstore chain oper ates Regional cover age (number of regions where drugstore chain oper ates) Number of outlets Sales growth Number of purchases (receipts) Floor area 5 5 5 5 5 5 5 5 5 5 5 5 10 10 10 10 10 10 10 15 10 20 10 20 10 20 10 10 10 5 50 5 50 5 45 5 40 5 40 5 40 1: National 1 50 45 2: Interregional 3: R egional 2 50 45 3-A 55 50 3-B 60 55 3-C 60 55 3-D 60 55
2010 results
pharmacy chains
A n a s s ort m e n t of for m s
Due to great social importance of the pharma market, the government paid a lot of attention last year both to the industry as a whole and the retail sector in particular. Unfortunately, the impact of legislative initiatives on the retail sector was not always positive. Thus, the goal of price registration of VEDlisted 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 parapharmaceuticals. 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 offering 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 parapharmaceuticals that may be sold at a drugstore has also been greatly restricted. Therefore, in spite of drugstores having been reclassified from social sphere to trade institutions, 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 circumstances 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 5 Retail Group, which allowed the 5 drugstore chain to open retail outlets under lease agreements in its supermarkets for ten year stints. In return, 5 received an option to buy 100% of the chain stock. There is a possibility that drugstore chains will start cooperating with some other social infrastructure facilities for the purpose of getting favorable lease terms or increasing customer traffic of drugstore outlets. This is exemplified 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 blocking stake in the newly established company. 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 retail pharma sector did not just cut their costs but resorted to various methods of streamlining 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 December 2010. The retailer has revealed its plans of aggressive growth in the capital cities (Moscow and St. Petersburg). Incidentally, the Pervaya pomoshch drugstores in Ekaterinburg were bought up by
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 acquired by Klassika earlier. National pharma retailer Rigla also increased its presence in St. Petersburg after the acquisition of Panacea 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 toughening 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 Riglas growth vectors include, among others, 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 drugstore 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 n d U I I T 1 : 10 di f f e r e nc e 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 expenses 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,
Unified imputed income ta x.
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 business 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 players. 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 representing 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 relevant. Such arrangements could produce an aggregate economic effect by summing up the retail and wholesale margins. A reduction 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 ones 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 directions 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
Fig. 1. 5 largest interregional drugstore chains, 2010
700 -1 600 500 400 663 300 105, 8 200 + 13% 100 -9 9 0 Implozia* Raduga Pharmacor* Doctor St l t t Stoletov Biotec Bi 502 402 396 -6 6 358 -2 -3
0 -1 -2 -3 -4 -5 -6 -7 -8 -9 -10
As of 2010, the category of the National drugstore chains includes Apteki 36.6 (989 drugstores) and Rigla (645 drugstores). Number of outlets, 2010 Number of outlets growth (%), 2010/2009 * Including franchising drugstores. Source: Pharmexpert Analytics and Consulting 1st of Pharmacia rating of drugstore chains; based on data of companies under monitoring
Fig. 2. 5 largest regional drugstore chains, 2010
600 500
62
70 60 50
400 300 500 200 100 0 Mosoblpharmacia osoblpharmacia 5 Gubernskie aptek bernskie apteki Pharmland Apteka Nevis* 425 280 6 11
40 30 20 10 0 -8 -6 199 191 -10 -20
Number of outlets, 2010 Number of outlets growth (%), 2010/2009 * Including franchising drugstores. Source: Pharmexpert Analytics and Consulting 1st of Pharmacia rating of drugstore chains; based on data of companies under monitoring
2010 results
Fig. 3. Comparison of total turnover growth in various drugstore chain categories (%), 2010/2009
70 60 50 40 30 20 10 0 -1 -10 -20 -13 National 1 Pharmaceuticals Parapharmaceuticals Reimbursable drugs (LLO) Source: Pharmexpert Analytics and Consulting 1st of Pharmacia rating of drugstore chains; based on data of companies under monitoring Interregional 2 Regional 3- Regional 3- Regional 3- Regional 3-D 0 3 -3 12 6 2 29 59
10
10
Fig. 4. Drugstore chain sales structure split for pharmaceuticals / parapharmaceuticals / reimbursable drugs (LLO) (%; calculated by sales in value terms), 2010 and 2009
2010
29.5
70.5 National
2009
32.2
67.8
2010
22.4
70.9
6.7 Interregional
2009
23.7
70.1
6.2
2010
22.0
65.2
12.9 Regional
2009
23.5
67.5
9.0
0%
20% Parapharmaceuticals Pharmaceuticals
40%
60%
80%
100%
Reimbursable drugs (LLO) Source: Pharmexpert Analytics and Consulting 1st of Pharmacia rating of drugstore chains; based on data of companies under monitoring
66
<67
Fig. 5. Top players aggregate market share change in pharma retail sector, 2010/2009
34.32 20.08 18.92 13.77 9.50 9.03 13.19 23.09
TOP5
TOP10 Market share (%), 2009 Market share (%), 2010
TOP20
TOP40
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 National: 1 1 2
Drugstore chain
HQ location
Number of outlets
Cumulative score
A pteki 36.6 R igla (including Zhivik a and 0 3)
Moscow Moscow
989 645
0.79 0.79
Interregional: 2 1 2 3 4 5 6 7 8 9 Implozia*
a nd
**
Samar a St. Petersburg St. Petersburg Izhevsk Novosibirsk Moscow Moscow Samar a St. Petersburg
663 402 502 259 253 396 358 309 207
0.73 0.71 0.65 0.55 0.51 0.45 0.40 0.40 0.36
Pharm acor R aduga Pharm aimpex Melodiya zdorov ya Doctor Stoletov Biotec Vita** Zdorov ye lyudi
*Including franchising drugstores. **Expert estimation. Source: Pharmexpert Analytics and Consulting 1st of Pharmacia rating of drugstore chains; based on data of companies under monitoring
2010 results
Table 2. Cumulative rating of regional drugstore chains, 2010 (for rating participants)
Rank Regional: 3- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Regional: 3- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Regional: 3- Regional 3-D Nizhniy Novgorod Drugstore Chain** Pharmacia Zdorovie Apteki Lekrus** Apteka IFK Zdorovyj gorod Vitapharm Moya apteka Apteka Avicenna Evalar Zdrava DOMpharma Novaya bolnitsa Bonum Gorodskaya apteka Nizhniy Novgorod Ekaterinburg Kr asnodar territory Moscow Moscow Voronezh Samar a region Novosibirsk region Irkutsk Biysk Omsk Kolomna Ekaterinburg Sar atov Stavropol 64 100 25 33 22 32 74 51 23 17 27 23 36 40 22 0.63 0.62 0.57 0.56 0.55 0.51 0.49 0.47 0.43 0.34 0.33 0.29 0.28 0.27 0.27 Mosoblpharmacia A5 Pervaya pomoshch Gubernskie apteki Pharmland Staryj lekar* Apteka Nevis* Samson Pharma Severo-Zapad Holding Drugstore Chain Peterburgskie apteki Lipetskpharmacia Hexal Novaya apteka Kazanskie apteki** Pharmacia Pharmacon Bryanskpharmacia Kurganpharmacia Moscow region Moscow St. Petersburg Kr asnoyarsk Ufa Moscow St. Petersburg Moscow St. Petersburg St. Petersburg Lipetsk Moscow Khabarovsk K azan Tyumen Izhevsk Bryansk Kurgan 500 425 152 280 199 184 191 16 116 92 132 44 75 51 149 102 142 140 0.70 0.57 0.37 0.36 0.36 0.35 0.33 0.33 0.26 0.18 0.18 0.17 0.17 0.16 0.16 0.16 0.15 0.15 Drugstore chain HQ location Number of outlets Cumulative score
68
<69
Table 3. 25 of drugstore chains by sales (value), 2010
Sales index (relative to leader) sales R ank, total sales 1 Drugstore chain A pteki 36.6 R igla (including 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Zhivik a and 0 3)** Pharm acor** Mosoblpharm acia Implozia* R aduga Stolichnye apteki* Pharm aimpex A5 Doctor Stoletov Vita* Biotec Staryj lek ar** Pervaya pomoshch Samson Pharm a Pharmland Gubernskie apteki Zdorov ye lyudi Melodiya zdorov ya K lassik a* A ptek a Nevis** Hex al Peterburgskie 23 24 25 apteki Lipetskpharm acia Pharm acia St. Petersburg Lipetsk Tyumen 0.123 0.122 0.108 0.139 0.138 0.079 0.088 0.006 0.170
a nd
HQ location Moscow
total 1.000
pharm aceuticals 1.000
par apharm aceuticals 1.000
Moscow St. Petersburg Moscow region Samar a St. Petersburg Moscow Izhevsk Moscow Moscow Samar a Moscow Moscow St. Petersburg Moscow Ufa Kr asnoyarsk St. Petersburg Novosibirsk Chelyabinsk St. Petersburg Moscow
0.878 0.576 0.507 0.482 0.421 0.385 0.340 0.334 0.314 0.302 0.278 0.272 0.272 0.242 0.238 0.225 0.224 0.217 0.216 0.195 0.129
0.962 0.672 0.281 0.560 0.319 0.253 0.440 0.372 0.329 0.320 0.200 0.290 0.301 0.301 0.263 0.083 0.232 0.231 0.223 0.175 0.150
0.701 0.376 0.147 0.318 0.376 0.143 0.130 0.254 0.284 0.266 0.043 0.236 0.211 0.119 0.183 0.133 0.209 0.187 0.201 0.237 0.084
**
2010 results
Table 4. Shares of 10 Russian drugstore chains in out-of-pocket drug market, 2010
Share (%) Number of outlets R ank 1 Drugstore chain A pteki 36.6 R igla (including 2 3 4 5 6 7 8 9 10 Zhivik a and 0 3) Pharm acor* Implozia*
a nd
HQ location Moscow
as of end 2010 989
2010 2.53
2009 3.16
Moscow St. Petersburg
645 402 663 259 425 396 309 502 16
2.44 1.70 1.42 1.11 0.94 0.83 0.81 0.81 0.76
2.28 1.83 1.65 0.73 0.74 0.92 0.95 0.91 0.75
**
Samar a Izhevsk Moscow Moscow Samar a St. Petersburg Moscow
Pharm aimpex A5 Doctor Stoletov Vita** R aduga Samson Pharm a
70
<71
IX.
out-of-pocket pharma market has grown. really
2010 results
report on out-of-pocket sector of russias pharma market

In 2010, the size of Russias out-of-pocket pharma market reached 4.4 bn units in real terms and 13.3 bn USD 1 in value terms, which is equivalent 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.
Against the background of economic recovery taking place after the recession of 2008 2009, Russias 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
Fig. 1. Dynamics of Russias out-of-pocket pharma market, 20082010
14 12 10
Sales, bn USD
+ 13% +2%
14 12 + 19% 10
Sales, bn EUR
+6% 8 6 4 2 0 7.9 8.4 10.0
8 6 4 2 0 2008 2009 2010 11.6 11.8 13.3
2008
2009
2010
a) In value terms, bn USD
b) In value terms, bn EUR
450 400 350 +29%
+ 9%
5 + 11% 4
Sales, bn units
+3%
Sales, bn RUB
300 250 200 150 100 50 0 2008 2009 2010 288.7 372.8 404.5
3 3.8 4.4
4.0
0 2008 2009 2010
c) In value terms, bn RUB

Source: Pharmexpert Monitoring of retail drug sales in Russia
d) In real terms, bn units
Here and hereafter in customer prices.
72
<73
out-of-pocket pharma market has grown. really report on out-of-pocket sector of russias pharma market
they did in 2009 due to high demand related to a widening flu epidemic. In 2010, consumers stocked up on cough and cold medications 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 particular, 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 cardiac and cough drugs as well as specific eye moisturizing and anti-inflammatory drugs.
Fig. 2. Month-on-month drugstore drug sales (in real terms), 20082010
425 400 Sales, bn units 375 350 325 300 275 250 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec a) Total market 2008 120 105 Sales, bn units 90 75 60 45 30 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec b) Cough and cold drugs 2008 2009 2010 2009 2010
2010 results
The average retail price in the drugstore segment 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.
Fig. 3. Average retail price dynamics in drugstore sector as a whole and in VED/non-VED groups, 20092010
3.2 3.15 3.1 3.0

USD
98 96 94 92
RUB
95.6 95.0 0 0 94.0 92 92.1 5 93.5
2.9 2.8 2.7 2.6
3.00 2.97 2.95
3.04
90 88 86 84 82 80
2.82
85.6
2009 a) Average price, USD/unit Total market VED non-VED
2010
2009 b) Average price, RUB/unit Total market VED non-VED
2010
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
Fig. 4. VED and non-VED sales split in Russias out-of-pocket pharma market (%), 20092010
In value terms
In real terms
65.2
67.6
65.5
65.1
34.8
32.4
34.5
34.9
2009 VED non-VED
2010
2009
2010
Fig. 5. Imported and local drug sales split in Russias out-of-pocket pharma market (%), 20092010
In value terms
In real terms
25.5
25.1
64.6
63.7
74.5
74.9
35.4
36.3
2009 Imported Local
2010
2009
2010
2010 results
Fig. 6. Rx and OTC drug sales split in Russias out-of-pocket pharma market (%), 20092010
In value terms
In real terms
26.3 48.6 48.5
26.8
73.7 51.4 51,5
73.2
2009 OTC Rx
2010
2009
2010
The Fisher index1 in 2010 was equal to 0.93 indicating a reduction of prices in the out-ofpocket 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 expensive 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 reduction 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 regulation 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.
The Fisher inde x offsets t he dow nside s of t he Pa a sche inde x (pr ice ch a nge ov er e st im ation in c a se of pr ice s going dow n a nd 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 aver aging. It is computed as the square root of the product of the two indices.
Market size calculated in 2009 prices.
76
<77
Fig. 7. Nominal and real size of Russias out-of-pocket pharma market, 20082010
450 400 350 Sales, bn RUB 300 288.7 250 200 150 100 50 0 2008 Nominal market size Market size in preceding years prices Average price Average price without state regulation Source: Pharmexpert Monitoring of retail drug sales in Russia 2009 2009 2010 2010 75.3 75.9 94.0 99.1 92.1 372.8 300.8 435.1 404.5
150 140 130 120 110 100 90 80 70 60 50 Price, RUB/unit
The recently launched immunomodulator Revlimid (INN lenalidomide) priced at 450,700 RUB/unit became the most expensive drug of 2010; Bramitob (IMM tobramycin) inhalation 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 companys share grew last year from 4.74% to 5.17% in value terms due to an increase in the sales of hepatoprotector Essentiale, hypertension agent Losap, and Magne B6 containing magnesium in combination with B6 vitamin. The runner-up was last years leader Pharmstandard, 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 market 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 leadership 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
2010 results
demand in 2009 in the midst of the flu epidemics 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).
Fig. 8. Price segmentation of Russias out-of-pocket pharma market (in value terms), 20092010
a) Total market 0.11 1.24 4 1 93 15.93 16.29 0.10 0.7 0.78 0.57 4.53 3
b) VED 0.21 1.6 1.66 18.22 16 16.48 0.06 0.97 7
c) non-VED 0.05 0.9 0.91 22.81 21.62
49.80
48.85
52.80
52.65
52.40
51.11
32.92 2009 <5 USD
33.98 2010
23.88 2009
29.00 2010
23.76 2009
26.31 2010
520 USD 20100 USD 100500 USD >500 USD

78
<79
Table 1. TOP15 corporations in Russias out-of-pocket pharma market (in value terms), 2010
R ank 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
*
Tr adem ark 2009 2 1 4 3 5 8 6 9 7 10 13 11 12 17 15 SanofiAventis Pharmstandard Berlin-Chemie/ Menarini Bayer Healthcare Sandoz Nycomed Gedeon R ichter Servier Novartis STA DA CIS Abbott Products Teva Pharm aceutical Industries Ltd* K rk a Pfizer Boehringer Ingelheim
Sales share (%, USD) 2010 5.17 5.12 3.84 3.80 3.35 3.24 3.14 2.73 2.72 2.42 2.37 2.09 2.03 1.83 1.74 2009 4.74 5.76 3.66 3.71 3.18 2.94 3.12 2.76 2.95 2.37 1.89 2.11 2.02 1.66 1.70
Share grow th (%), 2010/2009
9 11 5 3 5 10 1 1 8 2 26 1 1 10 2
Data on Teva do not include Ratiopharm GMBH sales.
Table 2. TOP15 trademarks in Russias out-of-pocket pharma market (in value terms), 2010
R ank 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 2009 1 2 4 5 10 12 9 8 7 3 11 14 25 6 21 A rbidol Essentiale Viagr a Actovegin Concor Nurofen Linex Pentalgin Ther aflu Oscillococcinum Mezym forte No-spa A lflutop A naferon Detr alex Tr adem ark Sales share (%, USD) 2010 1.46 1.07 0.88 0.85 0.76 0.71 0.71 0.69 0.68 0.61 0.61 0.54 0.53 0.53 0.52 2009 2.02 0.89 0.81 0.78 0.63 0.59 0.68 0.68 0.74 0.86 0.61 0.55 0.44 0.76 0.46 28 20 8 8 20 20 4 1 8 29 1 2 19 31 13 Share grow th (%), 2010/2009
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 20082009 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
X.
hospital market has recovered after crisis
2010 results
report on russias hospital drug purchase market

As of the end of 2010, the aggregate hospital segment of Russias 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, consumption declining by 8%.
Traditionally, the largest share of drugs purchased for hospitals and other medical 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-
Fig. 1. Drug purchasing dynamics in hospital sector, 20082010
2.0 + 15% 1.5 +24%
1.4 1.2 1.0 0.8 -25% + 27%
1.0 0.6 1.7 0.5 1.3 1.5 0.4 0.2 0.0 2008 a) Bn USD 2009 2010 0.0 2008 b) Bn EUR 2009 2010 1.2 0.9 1.1
50 +0.5% 40
+ 7%
30 42.3 42.5 45.7
20
10
0 2008 c) Bn RUB
Source: Pharmexpert Monitoring of hospital drug purchasing in Russia
2009
2010
82
<83
hospital market has recovered after crisis report on russias hospital drug purchase market
lactam antibiotics Meronem and Tienam, fluroquinolone Tavanic, cephalosporin Ceftriaxone, and broad spectrum penicillin 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 hospital 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 Mabthera 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-urinary system and sex hormones (+57%); this growth was largely due to heavier purchasing 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 chloride, also ranks first among the TOP5 trademarks in the hospital purchase segment (Table 2). The 2 nd place goes to betalactam 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. Manufacturers 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 latters market share in value terms from 23.0% in 2009 to 28.1% in 2010 (Fig. 4). It should be noted that the segments 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
2010 results
Table 1. TOP5 trademarks of 1st level groups (EphMRA) in hospital purchasing sector (%, USD), 2010
Groups total purchases share / share in groups purchases (%) 2010 I 1 2 3 4 5 II 1 2 3 4 5 III 1 2 3 4 5 IV 1 2 3 4 5 V 1 2 3 4 5 VI 1 2 3 4 5 V II 1 2 3 4 5 V III 1 2 3 4 5 J Gener al anti-infectives systemic Meronem Tienam Tavanic Ceftria xone A mpicide L Antineoplastic and immunomodulating agents M abther a Ta xotere Gemzar Ox ater a Leucostim B Blood and blood forming organs Clex ane Heparin Actilise Feiba Tim 4 Immuno Fr a xiparine N Centr al nervous system Sevor ane Naropin Propofol Diprivan Zyprex a K Hospital solutions Sodium chloride Glucose A lbumin Voluven R heopolyglucine A Alimentary tr act and metabolism Quam atel Heptr al Essentiale Berlithion Losec C Cardiovascular system Actovegin Vasoprostan Mexidol Cordarone Potassium-m agnesium aspar aginate Berlin-Chemie T Diagnostic agents Ultr avist Omnipaque Optir ay Omniscan Urogr aphin 26.18 7.10 4.31 3.79 2.49 2.30 20.08 7.02 5.69 4.42 3.83 3.64 10.13 13.01 10.41 8.74 7.31 5.72 9.52 8.04 6.21 5.74 5.08 3.47 8.51 38.24 11.49 8.41 3.92 3.07 5.69 6.48 5.40 5.12 4.14 3.52 5.37 13.56 5.57 4.49 3.10 3.03 3.24 22.91 22.29 16.51 8.96 6.83 2009 27.36 6.98 4.20 4.39 2.29 2.19 14.60 4.65 6.90 7.59 5.20 1.32 9.89 11.27 8.90 9.65 5.54 6.33 11.94 5.31 6.80 4.50 5.29 2.92 8.10 36.84 13.42 7.87 2.28 3.67 8.09 4.59 4.48 2.99 2.19 2.37 6.09 14.53 3.85 5.34 2.43 3.11 2.89 25.15 35.07 12.17 3.76 10.45 4 2 3 14 9 5 37 51 18 42 26 177 2 15 17 9 32 10 20 51 9 27 4 19 5 4 14 7 72 16 30 41 20 71 89 48 12 7 44 16 27 3 12 9 36 36 138 35
R ank
group / Tr adem ark
Share grow th (%), 2010/2009
84
<85
R ank
group / Tr adem ark
Groups total purchases share / share in groups purchases (%) 2010 2009 2.81 8.53 12.66 9.73 8.28 7.44 2.40 28.87 4.83 8.81 7.36 2.81 1.83 27.04 11.12 4.44 10.83 0.37 0.99 1.43 7.06 12.52 8.27 12.12 1.64 10.53 30.43 0.00 4.56 4.62 0.91 30.89 8.81 9.40 0.42 11.66 0.41 15.46 0.16 4.28 3.81 5.27 0.04 45.50 8.41 3.96 6.53 8.39
Share grow th (%), 2010/2009
IX 1 2 3 4 5 X 1 2 3 4 5 XI 1 2 3 4 5 XII 1 2 3 4 5 XIII 1 2 3 4 5 XI V 1 2 3 4 5 XV 1 2 3 4 5 XVI 1 2 3 4 5
M Musculo-skeletal system Zometa K etonal Esmeron K etorol A rduanum R Respir atory system Curosurf Xolair Supr astin Berodual Pulmicort H Systemic hormonal prepar ations (excluding sex hormones) Octreotide Dex amethasone Mimpar a Sandostatin Cetrotide G Genito-urinary system and sex hormones Menopur Gonal-F Puregon Hinipr al Ox y tocin D Dermatologicals Chlorhexidine Ethyl alcohol Tachocomb Mistr al A ntiseptic medical solution V Various Medical ox ygen Leucovorin Uromitex ane Exjade A nex ate S Sensory organs Lucentis Vita-Iodurol Inocaine Corneregel Sulfacylum-natrium P Par asitology Medifox Plaquenil Nemozole Benzyl benzoate Biltricide
2.76 13.89 11.15 9.41 6.09 5.50 2.31 38.98 8.31 6.91 5.42 3.75 1.79 23.92 10.96 9.40 9.01 7.50 1.55 28.11 14.70 12.67 5.55 5.22 1.36 17.92 17.28 15.65 4.99 3.19 1.05 40.84 15.71 8.53 7.64 6.97 0.42 21.58 8.86 4.79 4.61 4.12 0.03 45.61 9.15 8.79 7.33 4.13
1 63 12 3 26 26 4 35 72 22 26 34 2 12 1 112 17 1952 57 1866 108 1 33 57 17 70 43 ~ 9 31 16 32 78 9 1733 40 2 40 5535 12 21 22 32 0.26 9 122 12 51
2010 results
Table 2. TOP15 trademarks in hospital purchasing sector (%, USD), 2010
R ank
Tr adem ark
TMs total purchases share (%) 2010 2009 2.98 1.91 0.68 1.12 1.01 1.15 0.89 1.20 1.09 0.69 1.11 0.95 0.76 0.63 0.73
Share grow th (%), 2010/2009
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Sodium chloride Meronem M abther a Clex ane Ta xotere Tienam Heparin Tavanic Glucose Curosurf Gemzar Actilise Ox ater a Sevor ane Ultr avist
3.25 1.86 1.41 1.32 1.14 1.13 1.06 0.99 0.98 0.90 0.89 0.89 0.77 0.77 0.74
9 3 108 18 13 2 20 18 10 30 20 7 1 21 2
Fig. 2. Split of imported and local drug purchases in hospital sector (%), 20092010
In value terms
In real terms
21.3
22.0
71.5
73.9
78.7
78.0
28.5
26.1
2009 Imported Local
2010
2009
2010
86
<87
Table 3. TOP15 corporations in hospital purchasing sector (%, USD), 2010
R ank
Corpor ation
Total purchase share (%) 2010 2009 6.66 4.65 3.86 3.27 2.02 2.08 1.53 2.09 0.98 1.84 2.32 1.85 2.40 1.55 2.29
Share grow th (%). 2010/2009
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Sanofi-Aventis Astr aZeneca Roche Nycomed Ba xter Pfizer Genfa Medica S.A. GSK Veropharm ZAO Bayer Healthcare Sandoz Boehringer Ingelheim Biotec OOO Novartis Gedeon R ichter
6.30 4.10 4.08 3.56 3.07 2.70 2.21 2.16 2.10 2.01 1.98 1.96 1.95 1.92 1.87
5 12 6 9 52 30 44 4 114 10 15 6 19 24 18
Fig. 3. Average price dynamics in hospital purchasing sector as a whole and in VED/non-VED groups, 20092010
9.00 7.85
300.0 239.1
6.00
USD
200.0 4.57 7 8 3.68 7 3.47 4 4.61 3.9 3.97

RUB
3.00
100.0
144.2 2 116.3 3 109.9 9
140.3 14 4 120.8 12 2
0.00 2009 a) average price, USD/unit Market, total VED non-VED 2010
0.0 2009 b) average price, RUB/unit Market, total VED non-VED 2010
2010 results
Fig. 4. Split of VED/non-VED purchases in hospital sector (%), 20092010
In value terms
In real terms
23.0
28.1
18.5
16.5
77.0
71.9
81.5
83.5
2009 VED non-VED
2010
2009
2010
Fig. 5. Average price dynamics in hospital purchasing sector as a whole and in local/imported drug groups, 20092010
20.00 15.69 12.58

USD
600.0 477.9 400.0

RUB
15.00
398.1
10.00
200.0 5.00 3.68 7 1.37 0.00 2009 a) average price, USD/unit Market, total Local Imported 2010 4.61 15 1.5 1.56 0.0 2009 b) average price, RUB/unit Market, total Local Imported 2010 116.3 3 0 43.0 140.3 140 47.6 47 47.
88
<89
those of Group T Diagnostic agents and Group L Antineoplastic and immunomodulating 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 highest share growth was demonstrated by the most expensive drug segment (+6.4%).
Fig. 6. Average price per unit in different groups and in hospital purchasing sector as a whole (USD), 2010
90.0 80.0 70.0 60.0

USD
84.5
60.2
50.0 40.0 30.0 20.0 10.0 0.0 A 3.2 B C 5.1 8.1 1.1 D G H 7.6 3.7 1.4 J K L M 7.0 4.7 3.1 N P 3.9 R S 3.4 T V 4.0 24.6
Average price in ATC group Average price in sector A Alimentary tract and metabolism B Blood and blood forming organs C Cardiovascular system D Dermatologicals G Genito-urinary system and sex hormones H Systemic hormonal preparations (excluding sex hormones) J General anti-infectives systemic K Hospital solutions L Antineoplastic and immunomodulating agents M Musculo-skeletal system N Central nervous system P Parasitology R Respiratory system S Sensory organs T Diagnostic agents V Various
2010 results
Fig. 7. Drug price segmentation in different groups and in hospital purchasing sector as a whole (%, USD), 2010
26.7 2.7 16.5 19.6 49.5 11.6 13.6 20.5 18.1 19.2 28.2 61.1 1.2 6.4 6.8 8 23.7 20.4 38.4 28.1 35.1 0.6 4.1 0.4 .1 25.6 42.5 16.4 21.8 17.0 6.8 8 28.2 4.0 .0 17.5 14.9 8.2 16.3 52.9
49.5 56.3
4.5 5
14.5
4.8
A Alimentary tract and metabolism B Blood and blood forming organs
12.1 18.3 13.5 48.8 17.4 8.0 11.2 15.4 78.8 7.0 0 20.2 5.6 6 15.9 44.6 49.4 43.2 69.3 28.7 2.0 9.4 0.1 .5 3.5
4.6 6
10.8 15.2
C Cardiovascular system D Dermatologicals G Genito-urinary system and sex hormones
34.9 32.1 3.6 7.6 .6 6 12.3
H Systemic hormonal preparations (excluding sex hormones) J General anti-infectives systemic K Hospital solutions L Antineoplastic and immunomodulating agents
35.5 21.7
M Musculo-skeletal system N Central nervous system P Parasitology R Respiratory system 21.6 S Sensory organs T Diagnostic agents 17.4 V Various
4.5 1.6 5
18.6 22.2
22.0 25.3
8.4
10.9 9.4 9.7
40.1 33.4
2010 2 2009 2
<5 USD 5-25 USD 25-50 USD 50-100 USD >100 USD
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 years 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
XI.
local companies strengthen positions in high-cost segment
2010 results
report on beneficiary drug coverage market in russia
The post-crisis year was a landmark for Russias pharma market: the new law On Drug Circulation was enacted; measures of VED price control were tightened; the drug coverage issue was discussed by the government several times etc. Not only legislative efforts but also economy was revitalized: the second wave of recession 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).
In 2010, a market share of over 58% in value terms was accounted for by purchases under 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-
Fig. 1. Drug purchasing dynamics in beneficiary drug coverage sector, 20082010
50%
46%
11% 33% -5%
15% 12% 7%
-13% 74.6 2.0 2008 2008 0 bn RUB bn EUR bn USD Growth, RUB Growth, EUR Growth, USD
Source: Pharmexpert Beneficiary drug coverage
3.0
82.6
1.9 2009 09
2.6
88.1
2.2 2010 2010 0
2.9
92
<93
local companies strengthen positions in high-cost segment report on beneficiary drug cover age market in russia
charidosis of types 1, 2, and 6; osteogenesis imperfecta; soft-tissue sarcoma; the resistant 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 expanding the list of multiple sclerosis drugs. Federal budget expenditures on drug purchases 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 shipment 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 preparations Rezoklastin FS and Zolerix. For INN interferon beta-1b, apart from Betaferon purchased every year (28% of total purchases of that INN in value terms), Extavia (40%) and Ronbetal (32%) were also purchased. The TOP10 newcomers among hemophilia drugs, besides Coagil VII (eptacog alpha [activated]), also included Beriate (coagulation factor VIII) and Mononine (coagulation factor IX; Table 1).
Fig. 2. Split of drug purchases under 7 Nosologies/ONLS programs in beneficiary drug coverage sector (%, USD), 20082010
2010
58.50
41.50
2009
59.78
40.22
2008
53.89
46.11
ONLS 7 Nosologies
2010 results
Fig. 3. Split of imported and local drugs in beneficiary drug coverage sector (%, USD), 20082010
2010
90.32
9.68
2009
93.90
6.10
2008
94.38
5.62
Imported Local
Table 1. TOP10 trademarks purchased in beneficiary drug coverage sector for the first time in 2010 (%, USD)
Supplies R ank 1 2 3 4 5 6 7 8 9 10 Tr adem ark Coagil V II Extavia Ronbetal Beriate R ezoklastin FS Mononine Galvus met Zolerix Supresta Vincater a Corpor ation Lekko Novartis Biocad GSK F-Sintez ZAO CSL Behring Novartis Biocad Veropharm ZAO Genfa Medica S.A. ONLS/7 Nosologies Hemophilia Multiple sclerosis Multiple sclerosis Hemophilia ONLS Hemophilia ONLS ONLS Tr ansplantology ONLS INN eptacog alpha [activated] interferon beta-1b interferon beta-1b coagulation factor V III zoledronic acid coagulation factor IX vildagliptin+metformin zoledronic acid mycophenolate mofetil vinorelbine (%, USD) 1.44 1.06 0.87 0.59 0.14 0.05 0.04 0.04 0.04 0.04
94
<95
Table 2. TOP20 trademarks in beneficiary drug coverage sector (USD), 2010

Total supply TM total share (%, USD) supply share R ank 1 Tr adem ark Velcade ONLS/7 Nosologies Myeloleucosis ONLS 2 Glivec Myeloleucosis ONLS 3 4 M abther a Octanate Myeloleucosis Hemophilia ONLS 5 6 Copa xone L antus Multiple sclerosis ONLS ONLS 7 8 9 10 11 12 13 14 R ebif Herceptin Seretide Humulin Coagil V II R emicade Hemoctin Eprex Multiple sclerosis ONLS ONLS ONLS Hemophilia ONLS Hemophilia ONLS ONLS 15 16 17 Cerezyme R ecormon Extavia Gaucher disease ONLS Multiple sclerosis ONLS 18 19 20 Pulmozyme Avastin Novor apid Mucoviscidosis ONLS ONLS 1.02 0.99 0.96 1.32 1.10 1.06 1.94 1.71 1.65 1.49 1.44 1.43 1.42 1.33 3.70 2.46 5.25 4.01 5.73 (%, USD), 2010 6.07 2010 6.07 0.40 5.33 0.38 4.87 4.01 0.02 3.68 2.46 0.02 1.92 1.71 1.65 1.49 1.44 1.43 1.42 1.33 0.004 1.32 1.10 1.06 0.00 1.02 0.99 0.96 2009 6.35 0.39 4.93 0.42 3.65 5.77 0.03 3.23 2.13 0.00 1.25 1.57 1.54 1.66 0.00 1.35 1.90 2.42 0.00 1.38 1.23 0.00 0.001 0.86 1.08 1.03 grow th (%) 4 3 8 8 33 30 21 14 16 53 9 6 10 6 25 45 4 10 19 9 7 Nosologies progr ams (%, USD) 14.63 0.69 12.84 0.65 11.73 9.67 0.03 8.88 4.21 0.04 4.62 2.92 2.81 2.54 3.46 2.45 3.42 2.27 0.01 3.19 1.89 2.56 2.45 1.69 1.64 Share TM share in ONLS / 7
2010 results
Table 3. TOP20 corporations in beneficiary drug coverage sector (%, USD), 2010
Main products supplied for beneficiary drug coverage Mabther a Herceptin Recormon Glivec Extavia Sandostatin Velcade Eprex Rispolept Copa xone Beclazone Alpha D3 Teva Novor apid Protaphane Levemir Octanate Octagam Octanine L antus Insuman Depakine Arimidex Symbicort Zoladex Seretide Beriate Telzir Remicade Temodal Pegintron Humulin Humalog Gemzar Betaferon Kogenate FS Fludar a Rebif Saizen Recombinate Hemofil Immunine Prestarium Diabetone Pronor an Hemoctin Pentaglobin Intr atect Cerezyme Aldur azyme Renagel Coagil V II Taurine Cefazolin Spiriva Berodual Berotec R astan Biosulin Phosphogliv
Rank
Corporation
Corporation Share market share growth (%, USD) (%)
Total market share of main products (%, USD)
Share of main products in beneficiary drug coverage sector (%, USD)
Roche
12.59
10
8.07
64.05
Novartis
11.34
12
7.71
67.95
Janssen-CIL AG Teva Pharm aceutical Industries Ltd
9.34
15
8.31
88.95
5.09
10
4.11
80.74
Novo Nordisk
4.93
31
2.73
55.30
Octapharm a AG
4.89
29
4.89
100.00
Sanofi-Aventis
4.50
12
3.19
70.95
Astr aZeneca
3.59
2.16
60.18
GSK
2.71
40
2.31
84.99
10
Schering-Plough
2.69
2.61
96.77
11
Eli Lilly
2.26
10
2.21
97.65
12 13
Bayer Healthcare Merck Serono
2.09 1.95
53 40
1.87 1.95
89.40 100.00
14
Ba xter
1.63
48
1.31
80.31
15
Servier Biotest Pharm a GMBH Genzyme Pharm aceuticals
1.56
1.00
64.53
16
1.55
22
1.54
99.18
17
1.51
1.51
100.00
18
Lekko Boehringer Ingelheim
1.44
1.44
100.00
19
1.43
1.20
84.10
20
Pharmstandard
1.28
74
1.04
81.03
96
<97
The TOP3 market players remained unchanged, i.e. Roche, Novartis, and Janssen-CILAG (Table 3). Teva Pharmaceutical 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
companys share in the BDC sector are accounted 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 apparent 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 segment grew by 1% year-on-year (the share of
Fig. 4. Average price per unit of drug in beneficiary drug coverage sector (RUB), 20082010
1800 1600 1400

Average price/unit, RUB
1536 1320
1200 1000 800 600 400 200 0 2008 Imported VED Market as a whole Non-VED Local 181 1 113 3 1063 948 1050 889 6 746 600 270 156 2009 2010 343 288 785
2010 results
Fig. 5. Average price per unit of drug in beneficiary drug coverage sector (USD), 20082010
60 50
Average price/unit, USD
51.0 43.0 41.0 35.0 29.4 24.7 9.0 7.0 0 4.6 2008 Imported VED Market as a whole Non-VED Local 4.9 2009 2010 11.0 11. 9.5
40 30.0 30 20 10 0 30.0 0 24.5
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 number 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 antineoplastics, by coagulation factors (Coagil VII, Novoseven), immunomodulating agents (Copaxone), and interferons (Betaferon, Avonex). The biggest growth was demonstrated by Group A16A Other alimentary tract and metabolism products, namely Cerezyme, Elaprase, Aldurazyme, their prices also exceeding 1,500 USD.
98
<99
Fig. 6. Price segmentation of beneficiary drug coverage sector (%, USD), 20082010
% 100 90
31.63
23.25
25.40
0.04 0.06 0.16 1.72 0.23 1.74 20.21 21.19
0.08 0.20 2.37 24.28
17.56
10.37 11.14
10.38 12.96
80 70 13.28 60 50 40 30 20 10 0 9.91 2008 10.09 2009 BDC <10 USD 10100 USD 100500 USD 5001500 USD >1500 USD
19.63 16.66 16.8
22.86
26.38
27.38
57.83
67.20
65.22
22.32
23.62
22.74
8.40 2010
77.87 2008
76.78 2009 ONLS
73.07 2010
4.98 2008
11.29 2009 7 Nosologies
11.44 2010
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
XII.
ex-ussr pharma sector overcomes crisis
2010 results
cis and georgia pharma market report

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 environment. The resumed production growth was accompanied by the improvement of the key socioeconomic 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.
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 Kazakhstan 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%, respectively. Russias 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 growing again in H210 due to some supply-side disturbances, including a drought in Russia and Ukraine, which resulted in skyrocketing food prices. Even though the external
Table 1. Basic socioeconomic indicators of invididual CIS countries1 and CIS as a whole, 2010/2009 (%)
Industrial output (at constant prices) Investment in capital assets (at constant prices; all funding sources) Gross agriculture product (at constant prices, all t ypes of economic models)
GDP (at constant prices)
R etail tr ade turnover (at constant prices: all distribution channels)
Country A zerbaijan A rmenia Belarus K azakhstan Moldova Russia Uzbekistan Ukr aine CIS total
105.0 102.6 107.6 107.0* 107.0* 104.0 108.5 105.0* 104.5
102.6 109.7 111.3 110.0 110.0 108.2 108.3 111.0 108.7
97.8 86.5 102.0 88.3 88.3 88.1 106.8 99.0 93.1
121.2 96.7 116.6 99.5 99.5 106.0 109.2 98.0* 105.5
108.8 100.8 117.5 112.3 104.9* 104.4 114.7 107.6 105.6
128.3 122.6 113.6 125.2 107.9 114.9 120.9 116.5
105.7 108.2 107.8 107.1 107.4 106.9 109.4 107.4
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
Consumer price indices
Price indices of industrial m anufacturers
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-ofpocket 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).
Fig. 1. CIS GDP dynamics (% y/y), 20002010

% 120 115 110 105 100 95 90 85 80 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 93 108 106 108 105 107 107 108 109 106 104.5
GDP dynamics, % Source: CIS Interstate Committee for Statistics
Fig. 2. Pharma market size in CIS countries and Georgia, 2010 (plus growth y/y)
16 14 12 Market size, bn USD 10 8 6 4 2 0
14.3 14 11 12 6 7 5
18
17
30 20
10 11 7
10 8 10 5 0 -1 -5 0.12 Mol M l 0.07 -10 Arm Growth , %
5 3
2.86 0 88 0.88 0 67 0.67 -4 0.31 Az 0.25 Uzb 0.16 Geo G
Rus
Ukr Uk
Kaz
Bel B l
Total sales, bn USD Growth in USD, % Growth in national currency, % Source: Pharmexpert Monitoring of retail drug sales in CIS countries and Georgia
Hereunder at wholesale prices.
2010 results
The highest market growth rates against 2009 were demonstrated by Ukraine (12%), Russia (11%), Azerbaijan (11%), Belarus (10%), and Uzbekistan (7%), while there was negative 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 devaluation 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 currency 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 monetary standard 1 throughout 2010. Analysis of the out-of-pocket segment of the pharma market in the region under coverage 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

R etail sales turnover (bn, national Country Population, mn currency) Consumer price index Annual aver age r ate, national currency: USD Devaluation r ate, national currency : USD, 2010/2009 (%)
2010
2009
Russia
141.91
16435.8
106.9
30.39
31.93
4.83
Ukr aine
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
A zerbaijan
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
A rmenia
3.25
1196.6
108.2
372.30
363.30
-2.48
Source: CIS Interstate Committee for Statistics; geostat.ge
1 Aver age r ate against the dual currency basket (USD + EUR).
104 <105
the global economic crisis hit all sectors including the pharma market. In H109, the recession 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 prevention 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 complex of factors, such as the overall size and development level of the market, mentality of the population, government policy, maturity and attractiveness of the countrys 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
Fig. 3. Pharma market size in CIS countries in dynamics by half years, 20082010
12 16 10 Market size, bn USD 8 6 4 2 8.9 0 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 9.3 8.1 9.4 9.9 9.6 96 -3 -13 4 5
20 15 10 Growth, % 5 0 -5 -10 -15 -20
Total sales, bn USD Growth, %
Source: Pharmexpert Monitoring of retail drug sales in CIS countries and Georgia
2010 results
growth in the national currency (12%), but a mere 4% growth in USD. There was a negative growth in per capita drug consumption 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 countries (except Azerbaijan and Uzbekistan). In Azerbaijan, the share of cheaper pharmaceuticals grew while that of more expensive drugs fell. Conversely, the share of expensive 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.
Fig. 4. Drug consumption per capita in CIS countries and Georgia, 2010
120
Drug consumption per capita, USD
40 30 14 10 10 13 4 4 4 10 5 -3 -1 -10 -20 99.5 Rus 70.4 Bel B l 62.4 Ukr Uk 54.2 Kaz K 35.4 Geo 34.5 Az A 32.4 Mol M l 22.8 Arm 8.9 Uzb U b -30 4 0 20 10 12 8 10
Consumption growth, %
100 18 80 60 40 20 0 11
Drug consumption per capita, USD Growth in USD, % Growth in national currency, %
106 <107
Fig 5. Price segmentation of CIS and Georgia pharma markets in dynamics (%, USD), 2009/2010
9.7
8.2
7.3 13 1 13.5
8.6 1 14 5 14.5
6.2 1 17.6
5.7 18.3
5.1 12 1 1 12.1 20.2
4.8 13.5 13 5 3 21.4
20.4
16.7
5.2 9.9
6.0 14 14.3
5.8 21.6
5.8 22.1
4.6 19.4
5.1 18.7
10.9
9.2
21.0
21.9
19.8 38.3 35.8
19.9 30.3 32.9 34.0 29.8
26.4
31.2
23.5 31.6 30.8
24.9 27.3 29.0
32.1 35.4 26.0 27.4 31.8 31.3 30.2
32.5 28.3 28.9
27.3
27.7
28.9
26.9
24.0
24.3
32.1
31.4 20.5 20.1
11.7
11.7
20.3
20.2
17.6
16.8
30.5
27.8
10.4 2.6
12.9 5.7 37.8 31.9 15.7 13.6 13.4 14.8 13.3 12.6
2009 2010 Rus <2 USD 25 USD 510 USD 1025 USD >25 USD
2009 2010 Bel
2009 2010 Kaz
2009 2010 Ukr
2 009 20 2009 2010 9 Az
2009 2010 Uzb
2009 2010 Geo
2009 2010 Mol
2009 2010 Arm
Fig. 6. Split of local and imported drugs in CIS countries and Georgia in dynamics, 20082010
2010
77.9
22.1 +4.9%
2010
40.6
59.4 +1.8% +1 8%
2009
78.9
21.1 +4.9% +4 +4.9%
2009
41.7
58.3 +4.9% +4 9%
2008
79.9
20.1
2008
44.4
55.6
In value terms, USD Imported Local
In real terms, units
2010 results
Ukraine has the biggest share of local drugs (30%) in 2010, just like in 2009. The local 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 appreciably in Georgia (25%) but went down in Azerbaijan (4%).
It is but natural that local manufacturers in each of the countries (except Azerbaijan and Armenia) 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% yearon-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, 20092010
Country
2010
2009
Share grow th (%), 2010/2009
Ukr aine
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
A rmenia
5.92
5.71
3.66
A zerbaijan
3.52
3.66
3.97
108 <109
and Armenia are 3.5% and 5.9%, respectively; this share makes each of them #8 among the manufacturer nations on their respective markets. Local companies are among the TOP5 drug manufacturers 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. 5 drug manufacturing countries in out-of-pocket sector of CIS and Georgia pharma markets (%, USD), 2010
K azakhstan
A zerbaijan
Uzbekistan
Moldova
Russia 1 25.2 Germany 2 14.5 Fr ance 3 9.3 Italy 4 5.4 India 5 4.4
Ukr aine 29.8 Germany 13.9 Fr ance 6.4 India 5.8 Great Britain 4.9
Germany 16.7 Austria 9.6 K azakhstan 9.1 Russia 7.1 Belgium 5.9
Belarus 23.3 Germany 11.2 Fr ance 7.7 Switzerland 4.8 India 4.6
Germany 11.0 India 10.7 Russia 8.5 Turkey 8.1 Fr ance 8.0
Uzbekistan 22.1 Germany 15.2 Russia 8.8 Great Britain 8.1 India 8.0
Georgia 14.5 Germany 9.7 USA 7.5 India 7.1 Fr ance 5.8
Germany 16.2 Hungary 9.3 Moldova 8.1 India 6.9 Russia 5.1
Fr ance 11.7 Germany 11.7 Great Britain 8.2 USA 7.4 Belgium 6.7
A rmenia
Ukr aine
Georgia
Belarus
Russia
R ank
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 competition 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 observed in Azerbaijan: the TOP10 manufacturers account for no more than 18% of the market, which is down 4% year-onyear. Uzbekistan demonstrated the highest concentration of the TOP10 corporations 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 populations living standard. The higher the countrys 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 domination 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, considerable differences are obvious among the
Table 5. TOP5 manufacturers in out-of-pocket sector of CIS and Georgia pharma markets (sales share, %, USD), 2010*
R ank Russia
Ukraine
K azakhstan Sanofi-
Belarus Belmedpreparaty 5.98 Pharmland SP
Azerbaijan
Uzbekistan
Georgia
Moldova
Armenia
Berlin-Chemie/ Aversi Sanofi- Aventis Menarini 3.86 7.90 Jurabek GSK 2.39 Laboratories 6.07 Rational Ltd 4.45 World Medicine 4.25 Gedeon Richter Servier 6.66 Berlin-Chemie/ Menarini 5.26 GSK 5.47 6.31
Sanofi- Aventis Pharmak OAO Aventis 1 5.34 Pharmstandard 2 4.68 3.95 SanofiAventis 3.77 Nycomed 5.23 5.43
OOO 4.56 Borisov Plant
Bayer Healthcare 3 3.60 Berlin-Chemie/ Menarini 4 3.58 Arterium 3.02 Menarini 3.66
Bayer Health- of Medicinal care 5.20 Preparations 4.18 SanofiKhimpharm 4.02 Aventis 3.94
Berlin-Chemie/ Menarini 2.29 Nika Pharm 5.39 SanofiGedeon Richter Aventis 1.69 4.41 GSK 3.71 SanofiKrka 3.75 World Medicine 2.87 Novartis 3.63 G.M.P. Ltd 4.07 GSK 3.87 Nycomed 5.20 Gedeon Richter 3.89
Nycomed 5 3.31
GSK 2.87
Sandoz 3.19
Nycomed 3.49
Servier 1.63
GSK 4.03
Aventis 3.68
*Local manufacturers are highlighted with blue. Source: Pharmexpert Monitoring of retail drug sales in CIS countries and Georgia
110 <111
countries. For example, the OTC segment share is the biggest in Russia (37.5%), where the populations incomes are higher than in
other countries of the area under coverage (Fig. 9), while Azerbaijan has the smallest OTC drug share (23.6%).
Fig. 7. Pharmaceutical manufacturer concentration in out-of-pocket sector of CIS and Georgia pharma markets (%, USD), 20092010
7.9 6.8 5.1 4.3 4.2 11.0 11.0 21.4 16.2 16.5 22.1 22.6 22.5 16.8 17.3 13.5 6.0 14.7 5.5 15.3 5.3 15.5 4.0 11.0 3.9 11.4 2.7 7.4 11.9 11.2 3.6 8.1 19.3 7.0 4.4 15.6 22.0 27.8 17.9 20.1 23.8 22.4 4.2 11.4 12.7 25.7 24.5 17.2 15.8 8.2 6.6 17.1 6.3 17.0
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
2009 2010 Rus 10 5 3 1
2009 2010 Bel
2009 2010 Kaz
2009 2010 Ukr
2009 2010 Az
2009 2010 Uzb
2009 2010 Geo
2009 2010 Mol
2009 2010 Arm
Fig. 8. Split of Rx and OTC drugs in CIS pharma market (%, USD), 20082010
65.3
63.3
63.3
34.7
36.7
36.7
2008 OTC Rx
2009
2010
2010 results
Fig. 9. Split of Rx and OTC drugs in CIS countries (%, USD), 2010
62.5
64.3
64.9
65.0
65.6
66.0
66.6
72.9
76.4
37.5
35.7
35.1
35.0
34.4
34.0
33.4
27.1
23.6
R Rus OTC Rx
Uk Ukr
Mol M l
K Kaz
Bel B l
Arm A
Geo G
Uzb U b
Az A
Fig. 10. Split of ATC groups in CIS countries (%, USD), 2010
V 1.3 B 1.9 S 2.6 L 2.7 D 5.4 M 7.4 G 8.0 J 9.0 N 10.2
H 0.8 K 0.7 P 0.4 T 0.1 A 19.9 A Alimentary tract and metabolism R Respiratory system C Cardiovascular system N Central nervous system J General anti-infectives systemic G Genito-urinary system and sex hormones M Musculo-skeletal system D Dermatologicals L Antineoplastic and immunomodulating agents S Sensory organs B Blood and blood forming organs V Various H Systemic hormonal preparations (excluding sex hormones) K Hospital solutions P Parasitology T Diagnostic agents
R 15.1 C 14.5
112 <113
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 compared to 2009 (Table 6). In substantially all CIS nations, the biggest share of the outof-pocket market is represented by drugs of Group A Alimentary tract and metabolism (except Uzbekistan and Armenia). In Russia, drugs of Group J General antiinfectives systemic and Group L Antineoplastic and immunomodulating agents, which showed negative growth (13% and 11%, respectively), moved
one line downwards in the TOP10 rating and ranked 6th and 10 th 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 10 th to the 9 th 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 forming 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), 20092010
Russia R ank Ukr aine K azakhstan Belarus A zerbaijan Uzbekistan Georgia Moldova Armenia
2009 A R C N J* G M D L S
2010 A R C N G J M D S L
2009 A R C J N M G D L B
2010 A R C J N M G D B L
2009 A R C J G N M D L B
2010 A R C J G N M D L S
2009 A C R J N M G D L S
2010 A C R N J M G D L S
2009 A J C V N R G M D L
2010 A J C V N R G M D L
2009 A J C N R K M G D B
2010 J A N C R K M G B D
2009 A C J N R M G D V S
2010 A C J N R M G V D S
2009 A C J R N G M D V L
2010 A C J R N M G D V L
2009 C A J N R M G D S L
2010 C A J N R M G D S L
1 2 3 4 5 6 7 8 9 10
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
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 9 th line (share growth at 13%). In Georgia,
Table 7. Split of ATC groups in out-of-pocket markets of CIS countries and Georgia 2010 (sales share, %, USD; share growth, %, 2010/2009)
Kazakhstan
Uzbekistan
Azerbaan
Moldova
ATC1 _ EphMR A A Alimentary tr act and metabolism R R espir atory system C Cardiovascular system N Centr al nervous system J Gener al antiinfectives systemic
19.72 2.5 15.36 0.7
21.57 1.8 16.90 2.5
20.55 1.4 15.44 4.3
19.15 2.0 13.07 8.6
18.06 13.2 7.59 4.4
17.31 8.36
7.6 10.5
17.88 5.5 10.07 5.8
19.53 1.2 12.44 2.9
Armenia
14.61 0.9 9.92 3.2 19.43 3.3 9.8 10.76 4.8 14.14 8.8 4.5 6.46 0.5 6.7 0.6 7.69 5.05 4.2 7.2 14.3 8.3 2.26 3.11 10.5 17.3 39.1 2.03 7.8 7.2 13.9 1.62 13.6 1.26 19.1 6.7 23.7 0.92 0.73 0.02 0.6 8.9 27.6 22.9
Ukraine
14.87 3.2
13.29 7.2
12.58 7.6
18.68 5.9
11.20 13.9 9.53
12.5
Georgia
15.34 4.9
Belarus
Russia
12.67 5.5
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
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
G Genito-urinary system and sex hormones 8.43 M Musculo-skeletal system D Derm atologicals
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
7.45 5.70
8.4 4.9
7.79 4.92
3.8 3.1
6.42 4.51
6.3 4.5
7.81 4.63
9.1 0.2
5.32 4.26
2.8 0.3
6.32 4.16
6.0 3.5
7.76 4.65
6.0 2.6
8.54 4.76
L Antineoplastic and immunomodulating agents 2.78 S Sensory organs B Blood and blood forming organs V Various H Systemic hormonal prepar ations (excluding sex hormones) K Hospital solutions P Par asitology T Diagnostic agents 2.83
11.0 2.22 11.1 1.97
17.5 2.44 3.1 1.96
22.6 3.08 5.0 3.07
1.1 20.3
3.74 2.45
2.6 9.8
1.52 1.39
33.4 1.98 5.7 2.23
16.2 2.14 14.4 1.63
1.70 1.03
5.4 9.4
2.28 0.34
11.5 21.1
1.77 1.52
10.6 2.11 4.3 1.59
25.8 2.1
2.99 9.34
3.5 2.8
4.24 1.87
13.1 3.5
2.22 4.65
7.4 2.2
2.00 2.58
0.74 0.33 0.40 0.02
6.2
0.88
1.6 0.2
1.10 0.95
14.8 1.16 0.6 17.0 0.26 0.66
9.7 5.8 5.9
1.25 2.30 0.80
16.2 1.09 14.2 12.0 6.33 0.85
8.7 1.6 2.2
1.25 0.89 0.66
5.5 22.9 4.7 2.5
0.83 1.31 1.20 0.04
19.2 1.69 16.1 0.62 31.2 0.11
18.9 0.55 106.3 0.02
26.3 0.03
10.6 0.12
30.4 0.04
69.6 0.01
114 <115
Group V Various and Group D Dermatologicals 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 Moldova, Group M Musculo-skeletal system, which showed a 7% share growth, ranked 6th having left drugs of Group G Genitourinary 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 Azerbaijan) 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 segments of Kazakhstan, Belarus, and Armenia 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

Sales share grow th in Sales grow th R ank 1 2 3 4 5 6 7 8 9 10 TOP10 A rbidol Essentiale Linex Ther aflu Nurofen Pentalgin Mezym forte Vitrum No-spa A naferon Sales, mn USD 163.0 121.5 92.0 84.4 79.3 72.6 70.1 68.2 68.1 67.1 886.3 (%, USD) 17 34 13 1 33 14 11 3 16 23 4 OTC segment share (%, USD) 2.3 1.7 1.3 1.2 1.1 1.0 1.0 1.0 1.0 1.0 12.7 OTC segment (%, USD), 2010/2009 25 20 2 11 19 2 0 13 4 30 7
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 maturity 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 Kazakhstan. This will have serious implications, including, among other things, for
Table 9. TOP10 OTC trademarks in CIS countries and Georgia (%, USD), 2010
Kazakhstan
Azerbaijan
Uzbekistan
Moldova
1 Arbidol 2 Essentiale 3
Codter2.94 pinum Essen1.85 tiale AmizoNurofen 1.38 num 1.03 1.32 1.83
Theraflu Essentiale
Thera2.12 flu Essen2.07 tiale 1.29 1.34 Vitrum Prostamol uno Fastum 1.02
Paracetamol 2.65 No-spa 2.05 Vitrum Cocar1.00 Trizyme Essen0.99 tiale 2.55 Lirica Citra0.93 Pikovit Mezym 0.76 forte 2.24 Valerian 1.25 No-spa Cocar0.74 Linex 2.03 nit 1.21 Magne B6 Activated 1.22 1.24 2.46 mon 1.49 Otilin 1.58 2.58 Tantum 2.04 nit Mezym 2.03 forte 1.87 1.92
Thera2.06 flu Cardiomagnyl Fluconazole Cocarnit 1.66 1.81 2.14 3.05
Linex
1.88 Linex
1.24
gel Woben-
4 Linex 5 Pentalgin 6 Theraflu 7 1.31 No-spa 1.33 Mezym 0.98 Vitrum Mezym 0.97 forte 1.37 Linex 1.03 Creon 1.66 Arpetol Theraf1.60 lex Cardio1.41 magnyl 1.11 1.13 1.21
zym Mezym forte HepaMerz
Valerian 1.43 Theraflex 1.42
Mezym forte 8 Oscillococcinum 9 Anaferon 10 1.17
Caneph1.20 ron
Caneph0.90 ron N 1.28 Theravit 1.10 Mepril 0.73
HepaMerz
Mezym 1.88 forte
char1.14 coal 1.19 Coldrex 1.32 Calcium
Hylak Karsil 0.85 forte
Anafer1.22 on
Bromh0.98 exine Myco0.71
CardioColdrex 1.76 magnyl Prosta0.66 mol uno 1.52 Senade
Essen1.09 tiale 1.15
D3 Nycomed Tempal1.25
1.04 Arbidol
0.85 No-spa Calcium D3 Ny-
1.18 Mezym
0.96 syst
1.04 Coldrex 1.11
gin
Armenia
Ukraine
Georgia
Belarus
Russia
Rank
1.24
Ascorbic 1.12 acid
Celesto0.94 derm
Espum0.64 isan
Multi 1.43 tabs
Espum1.03 isan
Essen1.08 tiale 1.20
No-spa
1.00 Vitrum
0.81 comed
116 <117
the development of the pharma business. Several countries, both ex-USSR and others, 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 Kazakhstan, 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 entire 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 Kazakhstan. 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 different 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 1 2 3 4 5 6 7 8 9 10 TOP10
Actovegin Viagr a Concor Enap Preductal A lflutop Movalis Sum amed Detr alex Heptr al
Sales, mn USD 128.7 97.9 92.8 65.3 63.7 62.5 61.0 60.7 55.9 55.0 743.4
Sales grow th (%, USD) 22 16 31 3 8 31 21 4 25 9 17
R x segment share (%, USD) 1.7 1.3 1.2 0.9 0.9 0.8 0.8 0.8 0.8 0.7 10.0
Sales share grow th in R x segment (%, USD), 2010/2009 9 4 17 8 4 17 7 7 12 3 4
2010 results
Table 11. TOP10 in out-of-pocket sector of CIS countries, (%, USD), 2010
Kazakhstan
Azerbaijan
Uzbekistan
Moldova
Viagra
Ceftriax1.78 Actovegin 2.07 Actovegin 3.17 Lisinopril 2.44 Diabetone 0.72 one
2.94 Nimesil
1.15 Diroton Sodium 1.06 chloride
1.39 Noliprel Ceftriax1.02 one Augmen0.89 tin
Armenia
Ukraine
Georgia
Belarus
Russia
Rank
2.36
Mildro2 Actovegin 1.66 nate Sodium 1.59 chloride
1.12 Sumamed
1.39 Enalapril 1.52 Amaryl
0.68 Infezol Sodium 0.47 chloride
2.54 Enap Augmen2.28 tin
2.23
3 Concor
1.07 Dufaston 1.34 Actovegin 1.23 Siofor
0.92 Ketanov
2.13
4 Alflutop
1.08 Preductal 0.92 Viagra Augmen1.05 tin
1.12 Diabetone 1.21 Salofalk
Utroges0.47 Cefazolin 2.16 tan
0.79 Cavinton
0.87 Preductal 1.87
Detralex
Seretide Immuno0.85 Cefazolin 1.12 multidisk 1.15 globulin Augmen1.05 tin
0.45 Actovegin 2.13 Ampicide
0.71 Nimesil
0.86 Enap
1.76
6 Movalis
1.04 Ceraxon Ceftriax0.99 one
0.69 Concor
1.07 Actovegin 0.44 Ampicillin 1.84 Detralex Cerebro0.43 lysin Oxamp 0.37 sodium Gluco1.60 vance
0.70 Mycosyst Augmen0.69 tin
0.86 Concor
1.73
Enap
0.69 Preductal 1.04 Diroton
0.99 Depakine
0.84 Actovegin 1.70
8 Mexidol
0.94 Ketanov
0.66 Amoxiclav 1.03 Concor
0.96 Albumin
1.44 Azimac
0.67 Cefazolin 0.78 Nimesil Normo0.63 dipine Prestar0.73 ium
1.68
9 Sumamed
0.93 Enap Thiotri0.91 azoline
0.66 Ketonal
0.97 Egilok
0.94 Viferon
0.29 Glucose
1.42 Amaryl
1.45
10 Heptral
0.62 Ceraxon
0.96 Preductal 0.92 Seretide
0.29 Cipro
1.22 Concor
0.63 Enap
0.73 Dufaston 1.29
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
XIII.
market opinion as it is
R AT I NG OF MOST I N F LU E N T I A L SU B J EC TS OF RUSSI A N PH A R M A M A R KET
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 efforts for funding the drug coverage of the population. It wont be an exaggeration to state that the government was the main factor 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 substituted 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 newsmakers or not. But this is the opinion of the market. Lets take it as it is.
INFLUENCE
2010 results
INFLUENCE
rating of most influential subjects of russian pharma market

M e t hod s a n d ge n e r a l c h a r ac t e r i s t ic s of s a m pl e
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 Russias pharma market, at the end of 2010 beginning of 2011 Pharmexpert Analytics and Consulting conducted the next stage of a traditional Russian pharmaceutical market subjects influence rating project. The research covered 35 largest Russian regions in all eight Federal districts. The cities were selected based on the number of population 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 FDs share (%) in total per capita consumption in the outof-pocket sector/100. The sample has been calculated based on the targeted selection of respondents from six expert groups, viz. scientists; state
Fig. A. Split of respondents by Federal districts, %
5 6
4 34
11 22
Central FD Volga FD Northwestern FD Southern FD Siberian FD Urals FD Far Eastern FD North Caucasus FD Source: Pharmexpert Analytics and Consulting
120 <121
market opinion as it is r ating of most influential subjects of russian pharma market
employees; representatives of local and foreign manufacturers; representatives of distributors; drugstore directors/managers (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 influential pharma market subjects in the following nominations: Distributors; Local pharmaceutical manufacturers; Foreign pharmaceutical manufacturers; Drugstore 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 following nominations: Businessmen, directors of commercial corporations; State officials, public figures, and scientists; Professional nonprofit unions & associations; Nonprofit partnerships and patient unions; Professional doctor associations; Web-sites.
Questions in nominations Businessmen, directors 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 questions 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 option the interviewer put an answer in a free form. Data was collected by the interviewers without either pharmaceutical or medical education, which excludes a possibility of biased fill-outs.
Fig. B. Split of respondents by expert groups, %
5 7 10 46 14
18
Drugstore directors/managers Foreign pharmaceutical manufacturers Local pharmaceutical manufacturers Distributors State employees Scientists Source: Pharmexpert Analytics and Consulting
2010 results
INFLUENCE
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 calculated, and the tables of the most influential subjects of the pharma market were drawn based on their rankings. Before we come to discussing each nomination 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 stakeholders. The Local pharmaceutical manufacturers 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 infrastructural projects have been declared
in this sector. These projects relate to construction of new plants involving both foreign corporations (such as SanofiAventis, 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 active participants of the Pharma industry development process. Apart from a classical example of the distributor company Protek that owns the manufacturer Sotex s 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 traditionally low in this informal rating. The respondents are not well informed about
Fig. C. Comparison of the leader in each nomination by the number of points
Businessmen, directors 629 of commercial corporations
Local manufacturers
6000 5000 4000
5612
Distributors 4423
Patient associations
1985 2015 2040 2183
3000 2000
Specialized universities
Foreign manufacturers State officials and scientists
1000
3624 Most popular drugs 3606 3170 Professional doctor associations
2573
2780
Professional and nonprofit associations Web-sites
Drugstore chains
Source: Pharmexpert Analytics and Consulting
122 <123
this category and often respond in the manner director of company X obviously referring to successes of a specific company. 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 professional 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 popular drug nomination predictably leads; the 2nd place is occupied by the Businessmen, 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 Russias regions. The gap in ranking points of the leader in each nomination with the immediate rival (Fig. E) provides for evaluating the competition 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 professional doctor associations and distributors. It is worth mentioning that a year ago there was a minimum gap among the distributors. The fact that this gap has been growing 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 manufacturers. It should be noted that Arbidol was mentioned as the most popular drug
Fig. D. Comparison of each nomination by the number of participants
Most popular drugs Patient associations 66 Professional and nonprofit associations 79 101 141 143 Foreign manufacturers 150 Web-sites Local manufacturers 158 70
600 500 400 300 200
537
Businessmen, directors of commercial corporations 329 353 State officials and scientists 237 Specialized universities Drugstore chains
Professional doctor associations
100
Distributors
2010 results
INFLUENCE
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. Lets look closer at each nomination.
Fig. E. Comparison of the leader in each nomination by gap in ranking points with immediate rival, %
Most popular drugs
Foreign manufacturers 100% 96

80%
Professional doctor associations 92 86 Nonprofit and patient associations 82 Distributors
Local manufacturers 33 56 Drugstore chains 58 Businessmen, directors of commercial corporations Professional and nonprofit associations 58
22
60% 40% 20%
75 72 75
State officials and scientists
Web-sites Specialized universities
124 <125
Th e mo s t i n f lu e n t i a l l o c a l ph a r m ac e u t ic a l m a n u fac t u r e r
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 manufacturers, 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 companys PR actions or flu epidemic as the year before. In all likelihood, experts assess not just the companys 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 Generium project. The second Russian pharma manufacturer in terms of size, STADA CIS, was runner-up just as the year before. Here, certainly, the companys 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 Russian 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 significant gap from the forth position and breathing down STADAs neck. Compared to last years rating, the company demonstrated quite a leap jumping from the seventh position to number three. This kind of pharma professionals assessment of Akrikhins business activity is certainly associated with the companys strengthening positions in the market, the start of a large-scale investment program of production modernization 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 1 2 3 4 5 6 7 8 9 10
Local m anufacturer Pharmstandard STA DA CIS (Nizhpharm, M akiz-Pharm a, Skopin-Pharm) A krikhin Veropharm Valenta (Otechest vennye Lek arst va) Ozon Vertex A ltay vitaminy Sotex Biotec
No. of points 5 612 1 851 1 605 849 763 549 479 389 251 250
2010 results
with foreign corporations in 2010 on bringing heavy-type drugs (for treating oncology 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 market. 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.
Th e mo s t i n f lu e n t i a l for e ign ph a r m ac e u t ic a l m a n u fac t u r e r

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
1
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 priority 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 building 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 developing country governments to increase their spending on social needs, most importantly education and healthcare, Russias 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 pharmaceutical 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
Among 20 companies.
126 <127
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.
Th e mo s t i n f lu e n t i a l di s t r i bu t o r
The past year was rather difficult for pharma distributors: besides the effects of the economic crisis, the new drug markup regulation 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 market, or a full 100% of the turnover of quite a number of specialized distributors. The markup cap logically led to notable reduction 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 companies 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 1 2 3 4 5 6 7 8 9 10
Foreign m anufacturer Berlin-Chemie / Menarini Novartis K rk a Gedeon R ichter Pfizer Nycomed Bayer Healthcare Sanofi-Aventis Servier Sandoz
No. of points 2 015 1 930 1 868 1 638 1 383 1 280 1 269 1 133 702 647
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 companies in Kazakhstan and Belarus just in two years. Katrens 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 International leads in terms of gross turnover among pharma wholesalers), a significant share of its turnover was in secondary distribution: thus the companys 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 business community.
Experts have not as yet responded to the active progress of R-Pharms production business: the company remained in the 9th position. Most likely, the reason is the distributors 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 business line (direct drug supplies); it enabled the wholesaler to retain stability in the period after the implementation of the VED markup cap.
Th e mo st i n f lu e n t i a l drug stor e chain

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 1 2 3 4 5 6 7 8 9 10
Distributor Protek C V K atren NPK SI A International Ltd Rosta A lliance Healthcare Rus (A ptek a-Holding) Oriola (Moron) Shreya Corpor ation Biotec Group R-Pharm Pulse
No. of points 4 423 3 795 3 457 1 832 998 630 315 268 204 179
128 <129
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 environment 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 4) the companies are placed not at all in accordance with their market positions (leaving the national level chains out). Given the difficulties encountered by drugstore 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 performance. There were exceptions though: thus, Melodiya zdorovya rose from position 10 to position 4 in 2010, while the 5 chain made it to the 10 for the first time. The both mentioned companies were actively opening new outlets and managed to significantly boost their sales. Among regional drugstore chains (Table 4b), those companies 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 significant changes in the drugstore retail sector. 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 unprofitability as a result of the growing tax burden. In this connection, we are likely to witness
Table 4. 10 most influential national and interregional* drugstore chains
R ank, 2010 1 2 3 4 5 6 7 8 9 10
Drugstore chain A pteki 36.6 R igla (including Zhivik a and 0 3) Vita Melodiya zdorov ya Doctor Stoletov Implozia Pharm acor Staryj lek ar R aduga A5
No. of points 2 780 1 555 686 626 577 505 359 280 259 258
*Chains presented in more than three Federal subjects. Source: Pharmexpert Analytics and Consulting
2010 results
Table 4b. 5 most influential regional* drugstore chains
R ank, 2010 1 2 3 4 5
Drugstore chain/region of oper ation A ptek a Avicenna (Irkutsk ) Samson Pharm a (Moscow) Volgopharm ( Volgogr ad region) Zdorovie (Kr asnodar territory) Yukon ( Yaroslavl region)
No. of points 493 329 258 240 223
*Chains presented in one or two Federal subject. Source: Pharmexpert Analytics and Consulting
growth of the chain retail market share that has demonstrated negative dynamics in the recent years.
Th e mo s t i n f lu e n t i a l busi n e s sm a n/di r e c t or of c om m e rc i a l c or p or at ion

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 demonstrating a steady and tangible sales growth in the past three years; it moved to the top category among national pharma distributors in the 2010 cumulative distributor rating, 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 distributor company Alliance Healthcare Russia for four years, switched tack in February 2011 and took charge of production company Binnopharm. However, his entering the top ten most influential business leaders is reflection of his work in pharma distribution. Given that the overwhelming majority of the Influence Rating respondents are drugstore chain managers, the reputation of Mr. Varlamov testifies to the fact that Alliance 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
130 <131
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) Pharmacor 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.
Th e mo s t i n f lu e n t i a l s tat e of f ic i a l / pu bl ic f igu r e / scientist

Minister for Healthcare and Social Development Tatiana Golikova remains at the lead of the top ten persons of nation-wide influence and prominence, who had the most influence 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 Onishchenko lost his place among the three
Table 5. 10 most influential businessmen
R ank, 2010 1 2 3 4 5 6 7 8 9 10
Businessm an Igor Rudinsky, CEO, SIA International Leonid Konobeev, CEO, K atren Igor K rylov,CEO, Pharmstandard Vladimir Bryntsalov, owner, Bryntsalov-A Vadim Yakunin, Chairman of Board, Protek Group A lexey Molchanov, ex-CEO, Protek C V A rtem Bektemirov, CEO, Apteki 36.6 Drugstore Chain Igor Varlamov, ex-CEO, Alliance Healthcare Russia; CEO Binnipharm since February 2011 Tatiana Munina, CEO and owner, Apteka Avicenna Drugstore Chain Alex ander Afanassiev, founder, owner and president, Pharmacor Group
No. of points 629 364 206 200 184 171 142 121 115 82
2010 results
leaders of the ranking to President Medvedev. 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, Pulmonology Institute Director and, concurrently, Chief Therapist of Russia Alexander Chuchalins appearance in the ranking is but natural. While understandably unable to withstand nature and human folly that caused peat to burn, he managed the situation efficiently at his level the level of a doctor with some authority. TV presenter Elena Malyshevas 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 Matvienkos association with the sphere of healthcare, it can be explained by the Governors custom to verify victorious reports of her subordinates (who, for example, may report that the problem of access to specialty 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 subordinates to rely on the facts of life and not some unconvincing reports. What deserves noting is that Public Healthcare Chamber Commission Chairman Leonid Roshals position significantly deteriorated compared to 2009. It suggests a grim thought that the publics 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 1 2 3 4 5 6 7 8 9 10
State official/public figure/scientist Tatiana Golikova, Russias Health and Social Development Minister Vladimir Putin, Russias Prime Minister Dmitry Medvedev, Russias President
No. of points 2 096 1 566 1 227
Gennady Onishchenko, Head, Russian Agency for Health and Consumer Rights (Rospotrebnadzor) 355 Elena Telnova, Vice-Head, Russian Healthcare Surveillance Agency (Roszdr avnadzor) Leo Bokeria, Head, Bakoulev Center for Cardiovascular Surgery A lex ander Chuchalin, Director, Pulmonology Institute, Russias Chief Ther apist Leonid Roshal, Chairman, Public Chamber Commission on Healthcare Elena M alysheva, T V presenter, health-related progr ams Valentina M at vienko, Governor, St. Petersburg 248 112 89 86 61 55
132 <133
Th e mo s t i n f lu e n t i a l prof e s sion a l non prof i t a s s o c i at ion

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 Pharmaceutical 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 Pharma2020 strategy decreeing that local players shall have a 50% share of the domestic pharma market. On the other hand, ROSMEDPROMs 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: arent there too many profes-
sional organizations with pharm in the root of their name that intend to influence the industry? Lets say at once that the question does not apply to either AIPM or IMA: their activities are expressly international by nature. We dont mean RAFM and FARMASK, either. But we are ready to shake the hand of that analytical shark that will be able to clearly explain the difference among the other six influential players.
Th e mo s t i n f lu e n t i a l non prof i t pa rt n e r sh i p/pat i e n t a s s o c i at ion

This nomination is represented in the Influence 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 assisting healthcare social program promotion
Table 7. 10 most influential professional nonprofit associations
R ank, 2010 1
Professional nonprofit association Russian Pharm aceutical Association ROSPHA R M A Russian Association of M anufacturers and Suppliers of Pharm aceuticals, Medical Products and
No. of points 2 183
2 3 4 5 6 7 8 9 10
Equipment ROSMEDPROM Russian Association of Pharm acy Chains R A AS Association of Russian Pharm aceutical M anufacturers A R FP Russian Association of Pharm aceutical M arketing R A FM Russian Pharm aceutical League R FL Association for Pharm aceutical Organization R ights Protection FA R M ASK Union of Professional Pharm aceutical Organizations SPFO Association of International Pharm aceutical M anufacturers A IPM International Medical Association IM A Source: Pharmexpert Analytics and Consulting
1 273 1 270 1 072 748 512 501 456 327 275
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 diagnostics 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.
Th e mo s t i n f lu e n t i a l prof e s sion a l d o c t or a s s o c i at ion

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 stakeholders, promoting the ideas of evidence based medicine and at the same time accumulating the experience of drug use. The amount of drugs prescribed, as before, depends not only on the effective work of medical representatives of pharma companies, but also on personal preferences for this or that treatment scheme on part of doctors, given the absence of comprehensive treatment standards in the Russian medical practice. The Russian Cardiologists Society became first (2nd in 2009) confirming the sad statistics that proves the leadership of cardiovascular diseases among the mortality factors. The Russian Association of Oncologists was one position up (Table 9). The unfortunate 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 1 2 3 4 5 6 7 8 9 10
Nonprofit partnership/patient association Movement Against Cancer: interregional public movement Russian Diabetes Association Equal R ight to Life: nonprofit partnership for assisting healthcare social progr am promotion Association of Patients Living with HI V/A IDS Gepatitu net: patient association Nadezhda (Hope): rheum atologic association Association of Patients with Hemophilia: interregional charitable public organization of the disabled R ight to Life: public organization of disabled patients with kidney diseases Blago: Russian public organization of the disabled Together Against Cancer: interregional public organization
No. of points 1 985 1 618 1 518 1 129 830 589 550 538 534 486
134 <135
TOP5 associations took the lead with a significant gap over the other five, but gaps within the fives are relatively small.
Th e mo s t i n f lu e n t i a l m e dic a l / ph a r m ac e u t ic a l u n i v e r si t y
The rating of industry specific universities has a new old leader: Sechenov Medical Academy (Moscow) has turned university, but retained its reputation among respondents (Table 10). The scandal with court hearings involving former Academy rector Mikhail Paltsev ended, resulting in his resignation. The new rector, Petr Glybochko, was selected out of Russias 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 Academys graduates work all over the country, contributing to the Academys popularity. Several graduates are widely known in the pharma industry, which is also important.
Pavlov State Medical University (St. Petersburg) 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 considerable 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 Burdenko State Medical Academy (Voronezh) a surge from position 10 in 2009 to position 7 in 2010 with much more points scored.
Th e mo s t p opu l a r w e b - si t e
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 1 2 3 4 5 6 7 8 9 10
Professional medical doctor associations Russian Cardiologists Societ y Russian Association of Oncologists Association of Family Doctors Russian Union of Pediatricians National Health League Russian Association of Endocrinologists Russian Association of R heum atologists Russian Neurologists Societ y Russian Union of Obstetricians Russian Association of A llergologists and Immunologists
No. of points 1 694 1 558 1 156 1 135 1 027 525 486 474 439 428
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 government have made the sites of two federal agencies, Roszdravnadzor and Minzdravsotsrazvitiya, the undisputed leaders of the rating (Table 11). Roszdravnadzors site that won in the rating had been only number 8 the year before. Minzdravsotsrazvitiya 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. Market 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.
Th e mo s t p opu l 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 Tamiflu), 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 (Valenta), 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 1 2 3 4
Universit y/academ y Sechenov State Medical Universit y (Moscow) P yatigorsk State Pharm aceutical Academ y (Pyatigorsk) Pavlov State Medical Universit y (St. Petersburg) Perm State Pharm aceutical Academ y (Perm) St. Petersburg Chemical and Pharm aceutical Academ y (St.
No. of points 1 850 1 328 987 901
5 6 7 8 9 10
Petersburg) Military Medical Academ y (St. Petersburg) Burdenko State Medical Academ y ( Voronezh) Pirogov State Medical Universit y (Moscow) Sam ar a State Medical Universit y (Samar a) Tomsk State Medical Universit y (Tomsk)
793 743 705 653 623 606
136 <137
Table 11. 10 most popular web-sites
R ank, 2010 1 2 3 4 5 6 7 8 9 10
Web-site roszdr avnadzor.ru minzdr avsoc.ru pharm vestnik.ru pharmexpert.ru protek.ru remedium.ru roche.ru krk a.ru pharmindex.ru nizhpharm.ru
No. of points 2 573 1 919 1 633 1 037 816 632 623 449 406 370
Table 12. 10 most influential Rx drugs
R ank, 2010 1 2 3 4 5 6 7 8 9 10
1 2
R x drug/m anufacturer Viagr a (Pfizer) Ingavirin ( Valenta) Actovegin (Nycomed) Concor (Nycomed)1 Tamiflu (Roche) Preductal (Servier) 2 Enap (Krka) 3 A moxiclav (Sandoz) 4 Heptr al (Abbott L abor atories) A lflutop (Biotechnos S.A.)
No. of points 455 222 183 183 180 173 160 157 154 138
Summarized points of Concor and Concor cor. Summarized points of Preductal and Preductal . 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
2010 results
Actovegin to the top ten most popular brands and enabled Concor to significantly improve its position (7th in 2009). The same figures, but in the other order 138 refer to the absolute newcomer of the rating, Alflutop.
Th e mo st p opu l a r drug
Taking stock of the year 2010, we can draw a breath of relief: flu is in retreat! The symptoms 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 treacherous flu infection has weakened. By stocking up Arbidol (Pharmstandard) and securing, 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 treating 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 1 2 3 4 5 6 7 8 9 10
1 2
OTC drug/m anufacturer A rbidol (Pharmstandard) Ther aflu (Novartis)

1
No. of points 3 606 777 566 469 441 408 381 312 262
7
Essentiale (Sanofi-Aventis) 2 Mezym forte (Berlin-Chemie/Menarini) 3 Oscillococcinum (L abor atoires Boiron) No-spa (Sanofi-Aventis)
4
A naferon (MateriaMedica) 5 Pentalgin (Pharmstandard) 6 Linex (Sandoz) Complivit (Pharmstandard)
238
Summarized points of Theraflu, Theraflu extra, Theraflu lar, Theraflu extratab, Theraflu bro. 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 trimetrum 2, Complivit trimetrum 3, Complivit calcium D3 for kids. Source: Pharmexpert Analytics and Consulting
138 <139
firmly secured by Essentiale (Sanofi-Aventis). The fact that Essentiale has held the 2nd position for two straight years leads one to think that the populations civic responsibility 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.
mobilization of certain resources on part of the company, including financial (advertising and marketing costs). The launch is the first and extremely important phase in the trademark lifecycle, where all advantages 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 anticongestant used in ENT practice, Vaginorm , an intravaginal antiseptic, Rezalut pro, a drug for treating liver diseases, including chronic hepatitis, and Ingavirin, an original antiviral drug. Sub-nomination The most successful local drug launch 1 The Ingavirin trademark has been demonstrating 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, information on the drug was placed in health-related TV programs, circulated at scientific conferences, roundtable discussions etc. The swine flu epidemic contributed to its sales growth (Ingavirin is recommended by Minzdravsotsrazvitiya for the treatment of adult patients 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
Th e mo s t suc c e s sf u l drug l au nc h ( G ol de n L au nc h )
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
1 2
Aggregate sales in three years (20082010). ATC classification (EphMR A).
2010 results
Fig. 1. TOP10 trademarks with biggest aggregate sales (USD) in three years (20082010)
0.20 0.18 0.16 Share of three-year sales in total market size (%) 0.14 0.12 0.10 0.08 0.06 0.04 0.02 0.00 -50 000 0 50 000 100 000 150 000 Rezalut pro Orsoten Imunorix Herbotone Vaginorm Combilipen Systane SNUP Lorista Ingavirin
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 successful 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 registered 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 hematologists. Multiple myeloma was considered a hopeless 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 aggravated 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 bortezomib, 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
140 <141
tumor and blocks re-appearance thereof by means of mobilizing the patients 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 Russian consumer. Drugs of the 1st group provide the cell with building material for the membrane; drugs of the 2nd group indirectly
stimulate the membrane regeneration process. Ropren may be classified as a new in principle, third, group: the drug is capable of regulating nerve and endocrine processes, thus supporting regeneration not only on the cell level. The process takes place due to long-chain polyisoprenoid alcohols (polyprenols) present in the drug. According 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 significantly affecting the fluidity of synaptic membranes. The drugs high cost and the need for a prescription implicate the risk of comparatively low sales in the out-of-pocket sector. However, the drugs unique properties (the ability to provide clinical effect in shorter times compared to other hepatoprotectors)
Fig. 2. TOP5 drugs of Group L Antineoplastic and immunomodulating agents in value terms (mn USD) among launches of imported LLO drugs, 2010
800 700 Sales growth rate (%, USD) 600 500 400 300 200 100 0 -100 Q2 2010 Extavia Vincatera Camptera Revlimid Bicalutamid Source: Pharmexpert Reimbursable drug distribution (LLO) Q3 2010 Q4 2010 -200
2010 results
and the peculiarities of the distribution policy of Solagran Son, the company that manufactures and markets Ropren, have created 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 drugs actual presence on the market (+219% in value terms). Interestingly, the Australian company Solagran 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 allowed, in the years of the Second World War, to create anti-burn and wound-healing drugs based on biologically active substances 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 residents of sieged Leningrad.
Fig. 3. TOP5 hepatoprotectors new to market in value terms, 2010
10 9 8 7 6 % 5 4 3 2 24 1 0 Rezalut pro Octolipen Heptor Phosphontiale h h i l 18 20 31 105, 8
234
250
200
150 % 100 50 0 Ropren
Sales (mn USD), 2010 Average sales growth rate, Q410 (%) Source: Pharmexpert Monitoring of retail drug sales in Russia
142 <143
XIV.
rating of investment attractiveness of russian federal subjects by specific sectors of regional pharma markets
2010 results
methods
The compilation methods for the Rating of investment attractiveness of Russian Federal subjects are based on analyzing their economic and socio-demographic indicators as well as basic indicators of individual sectors of the regional pharma and medical services markets. Analysis included the following 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 attractiveness of the Federal subjects (split by regions) in the perspective of different pharma market sectors is presented in Table 2.
Table 1. Basic categories and indicators used for evaluating investment attractiveness of Russian Federal subjects
# Category Indicator Aver age employee nominal monthly salary Cash income per capita 1. Economic indicators Consumer spending Population, total Population, urban 2. Socio-demogr aphic indicators Population, unemployed Out-of-pocket market size Hospital market size 3. Pharma and healthcare indicators
1
Beneficiary drug cover age market size (7 Nosologies + ONLS)
Except for the number of doctors as official data for this catetogy
is available as of 2009 only.
As a result of ranking the investment attractiveness of the Federal subjects, 5 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
r ating of investment attr activeness of russian feder al subjects by specific sectors of regional pharma markets
T OP 5 r e gion s: H igh e s t s a l a ry
1. Chukotka autonomous district 2. Moscow 3. Tyumen region 4. Sakhalin region 5. Magadan region
T OP 5 r e gion s: Sm a l l e s t sh a r e of u n e m pl oy e d p opu l at ion

1. St. Petersburg 2. Moscow 3. Leningrad region 4. Moscow region 5. Lipetsk region
T OP 5 r e gion s: H igh e s t c a sh i nc om e pe r c a pi ta
1. Moscow 2. Chukotka autonomous district 3. Sakhalin region 4. Tyumen region 5. St. Petersburg
T OP 5 r e gion s: L a rge s t ou t - ofpocket market

1. Moscow 2. St. Petersburg 3. Moscow region 4. Sverdlovsk region 5. Krasnodar territory
T OP 5 r e gion s: H igh e s t c on s u m e r spe n di ng

1. Chukotka autonomous district 2. Kamchatka territory 3. Sakhalin region 4. Magadan region 5. Moscow
T OP 5 r e gion s: L a rge s t ho spi ta l market

1. Moscow 2. St. Petersburg 3. Moscow region 4. Rostov region 5. Republic of Tatarstan
T OP 5 r e gion s: L a rge s t p opu l at ion

1. Moscow 2. Moscow region 3. Krasnodar territory 4. St. Petersburg 5. Sverdlovsk region
TOP5 r egions: L a rge st be nefici a ry drug cov e r age m a r k et

1. Moscow 2. Moscow region 3. St. Petersburg 4. Krasnodar territory 5. Sverdlovsk region
T OP 5 r e gion s: L a rge s t u r b a n p opu l at ion

1. Moscow 2. Moscow region 3. St. Petersburg 4. Sverdlovsk region 5. Rostov region
T OP 5 r e gion s: L a rge s t n u m be r of d o c t or s
1. Moscow 2. St. Petersburg 3. Moscow region 4. Krasnodar territory 5. Sverdlovsk region
Source: Rosstat Calculations: Pharmexpert
2010 results
Table 2. Rating of investment attractiveness of Russian Federal subjects (by pharma market sectors), 2010
R ank, economic indicators R ank, socio-demogr aphic indicators R ank, pharm a and healthcare indicators
Beneficiary drug cover age m arket (7 Nosologies + ONLS)
1 2 3
Moscow St. Petersburg Moscow region Tyumen region (incl. Khanty-Mansiyskiy and Yamalo-Nenetskiy
2 9 11
1 5 10
5 17 15
2 10 12
1 4 2
1 3 2
2 1 4
1 2 3
1 2 3
1 2 3
1 3 2
1 2 3
1 2 3
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
autonomous districts) Sverdlovsk region Krasnodar territory Samara region Novosibirsk region Rostov region Krasnoyarsk territory Nizhniy Novgorod region Chelyabinsk region Republic of Tatarstan Republic of Bashkortostan Perm territory Irkutsk region Primorie territory Leningrad region Volgograd region Khabarovsk territory Kemerovo region Tula region Voronezh region Archangel region (incl. Nenetskiy autonomous
3 22 39 40 25 48 14 33 31 35 38 34 20 16 17 56 12 29 43 50
4 13 23 14 26 34 21 24 20 17 19 16 41 18 39 38 12 33 28 55
9 28 25 22 30 33 19 42 57 73 64 24 36 10 20 43 7 80 48 27
6 16 26 23 24 34 15 29 31 40 38 21 27 14 22 46 9 49 37 43
10 5 3 12 17 6 14 11 9 8 7 18 21 26 27 19 34 16 28 23
9 4 8 11 15 5 14 10 6 7 12 17 18 22 28 16 30 13 26 21
7 36 11 33 25 14 47 9 40 30 46 52 39 51 3 28 67 45 15 29
6 8 4 12 13 5 22 7 11 9 16 29 23 31 14 15 45 20 17 19
11 4 5 6 10 13 25 12 8 9 7 23 16 19 20 17 24 18 44 14
29 6 7 16 9 4 13 43 8 5 12 20 19 14 62 27 35 18 17 33
10 5 4 13 8 7 11 14 15 9 6 12 18 33 21 19 22 16 23 25
6 5 4 11 12 9 13 10 15 8 7 14 20 25 39 17 28 16 43 21
12 4 5 10 9 8 13 17 11 6 7 15 16 23 32 18 26 14 31 25
24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
district) Omsk region Stavropol territory Belgorod region Orenburg region Saratov region Tver region Murmansk region Lipetsk region Republic of Sakha (Yakutia) Sakhalin region Vologda region K aluga region Tomsk region Yaroslavl region Republic of Daghestan K aliningrad region
13 37 58 44 46 51 45 7 47 8 4 23 32 18 42 80 27
15 40 58 22 57 67 51 8 27 9 3 53 31 35 46 29 25
13 66 26 72 75 78 32 8 60 6 3 23 50 29 41 62 18
13 50 48 47 62 70 41 8 45 7 3 28 33 25 42 59 17
41 25 15 29 24 20 33 61 43 54 70 42 51 49 39 13 55
38 23 20 34 27 19 33 45 44 55 69 41 43 48 32 24 50
50 26 48 19 20 13 17 54 5 61 8 58 6 55 56 73 38
44 21 27 25 18 10 28 58 30 62 50 47 32 55 43 36 48
32 22 26 29 27 15 45 38 39 47 59 43 54 49 35 31 66
58 21 10 28 11 23 47 39 25 34 48 42 38 31 41 24 66
27 24 28 26 20 30 34 46 39 51 64 31 42 55 40 41 45
33 23 19 37 26 18 31 52 48 45 67 54 56 30 29 24 62
35 22 19 27 20 21 37 42 36 44 61 39 51 38 34 28 62
*Based on three categories of indices, viz, economic, socio-demographic, and pharma & healthcare.
R ank, total, pharm a and healthcare indicators
Aver age employee nominal monthly salary
Consumer spending (cost of a fixed set of consumer products and services)
R ank, total, economic indicators
R ank, total, socio-demogr aphic indicators
Population, unemployed
Cash income per capita
Cumulative rank*, 2010
Out-of-pocket m arket
Number of doctors
Population, urban
Population, total
Hospital m arket
Federal subject
146 <147
r ating of investment attr activeness of russian feder al subjects by specific sectors of regional pharma markets
R ank, economic indicators
R ank, socio-demogr aphic indicators
R ank, pharm a and healthcare indicators
Beneficiary drug cover age m arket (7 Nosologies + ONLS)
41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77
Smolensk region Kirov region Komi Republic Ryazan region Penza region Vladimir region Ulyanovsk region Udmurt Republic Amur region Transbaikal territory Buryat Republic Altai territory Kursk region K amchatka territory Astrakhan region Republic of K arelia Magadan region Tambov region Bryansk region Novgorod region Chukotka autonomous district Evreyskaya autononous region Ivanovo region Republic of Khakassia Chuvash Republic Kostroma region Kurgan region Oryol region Pskov region Chechen Republic Republic of Mordovia Republic of Northern Ossetia Alania Altai Republic Tyva Republic Republic of Mariy El Republic of Adygeya K abardino-Balkar Republic K arachai-Cherkess
52 63 10 68 53 49 64 55 15 24 28 76 62 6 41 21 5 72 73 36 1 19 66 26 69 57 65 67 60 59 74 75 54 30 71 70 77 79 61 78
32 59 11 61 56 65 69 62 42 49 44 74 45 6 48 30 7 50 54 36 2 43 75 52 72 68 47 63 60 79 71 37 64 76 77 66 73 70 80 78
39 46 11 35 65 34 74 67 14 45 31 63 55 2 58 21 4 53 61 40 1 12 44 37 69 54 56 77 47 51 70 71 16 38 76 49 79 52 68 59
39 57 11 55 60 53 72 65 18 36 30 76 54 4 52 19 5 61 68 32 1 20 66 35 75 63 58 73 56 69 78 64 44 51 79 67 80 71 74 77
52 35 57 44 32 31 36 30 60 46 53 22 45 74 50 67 79 47 37 68 80 78 48 69 40 66 56 62 65 38 59 63 77 75 64 72 58 71 73 76
51 35 52 42 37 29 36 31 57 49 56 25 47 71 53 61 76 54 39 66 80 78 40 70 46 64 58 59 62 67 60 65 79 75 68 72 63 73 74 77
23 57 59 18 12 41 10 49 69 66 42 75 34 65 37 62 53 24 31 22 74 21 60 43 63 16 68 27 44 80 35 72 78 77 32 64 70 71 79 76
40 42 61 34 24 33 26 37 68 59 54 38 41 74 46 69 72 39 35 57 79 64 51 66 53 49 65 52 63 67 56 71 80 77 60 73 70 75 76 78
41 30 67 42 36 46 28 33 50 34 48 21 40 64 51 58 73 60 37 74 79 72 61 76 52 56 53 63 75 55 57 65 80 78 68 69 62 70 71 77
52 15 54 57 69 49 30 22 36 56 46 32 59 50 44 70 75 40 73 61 77 78 63 55 26 65 60 51 67 37 53 72 79 74 45 76 64 71 68 80
53 44 47 38 32 36 35 43 50 48 54 17 49 73 62 56 79 52 37 67 80 77 29 72 57 63 60 59 65 66 58 68 78 76 69 71 61 75 70 74
41 34 53 35 44 49 50 27 46 36 57 22 38 73 32 60 78 59 51 65 80 79 42 70 40 66 64 63 69 61 55 47 77 75 68 71 58 72 76 74
49 29 57 40 46 45 33 30 47 41 54 24 48 68 50 63 76 55 53 69 80 78 52 70 43 65 60 59 71 56 58 67 79 75 66 73 64 74 72 77
78 Republic 79 Ingush Republic 80 K almyk Republic
Source: Rosstat Calculations: Pharmexpert
R ank, total, pharm a and healthcare indicators
Aver age employee nominal monthly salary
Consumer spending (cost of a fixed set of consumer products and services)
R ank, total, economic indicators
R ank, total, socio-demogr aphic indicators
Population, unemployed
Cash income per capita
Cumulative rank*, 2010
Out-of-pocket m arket
Number of doctors
Population, urban
Population, total
Hospital m arket
Federal subject
2010 results
148 <149
XV.
paradox of movement
2010 results
price dynamics in the russian pharmaceutical market

The issue of the drug pr ice control has taken a n importa nt place in the Russi a n infor mation space r ight after the beginning of the economic cr isis. The issue was r aised by everyone: by the state le aders, officials of var ious r a nks, businessmen, a nd consumers. The control mecha nism was launched in A pr il 2010, a nd just a few months later officials r eported on the successes in the spher e of drug pr ice stabilization. Indeed, since A pr il 2010 the pr ices have been decr easing: it is recor ded by Rosstat a nd it is also confir med by Ph a r me x pert a na lysts.
and finally, some medications withdrew from the market (however, these were relatively 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 Russias 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 Academician 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).
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;
Fig. 1. Russias pharma market structure, 20062010
1500 1700 3000 1580 1500 2500 11 600 9 000 6 700 11 800 13 300 2000 1300 2600 2800
2006 Hospital market
2007
2008
2009
2010*
Beneficiary drug coverage Out-of-pocket market

*Preliminary data. Source: Pharmexpert Monitoring of drugstore drug sales, hospital procurement and reimbursable distribution (LLO): Russia
150 <151
par adox 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 Medical Device Pricing and On Providing Measures 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 presentday 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 manufacturer 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 beneficiary 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 market 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 segments share growth. Noticeable changes in the out-of-pocket market structure also occurred in respect to price
Fig. 2. Structure of Russias out-of-pocket drug market split for VED/non-VED, 20062010
2010
66.8
33.2
2009
65.1
34.9
2008
65.9
34.1
2007
65.5
34.5
2006
65.7
34.3
Non-VED VED
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 considerably (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 groups share persisted through the end of 2010. Peak sales in the 2-7 USD price segment fell on Q310 when this segments 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-related 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-
Fig. 3. Price segmentation dynamics of Russias out-of-pocket drug market, 20092010 (q/q)
4.01 7.50 11 47 11.47
5.48 9.97 12.69
5.20 9.46 12.73
4.63 9.55 11.38
4.33 9.29 11.89
3.64 10.98 13.10
3.26 9.41 11.71
3.31 9.35 12 13 12.13
25.54
29.46
29.17
32.30
30.92
27.13
26.95
28.22
38.61
30.42
31.67
31.27
32.22
33.87
37.17
36.19
12.90 Q1 2009 >50 USD 25-50 USD 15-25 USD 7-15 USD 2-7 USD <2 USD
12.00 Q2 2009
11.80 Q3 2009
10.90 Q4 2009
11.40 Q1 2010
11.30 Q2 2010
11.50 Q3 2010
10.80 Q4 2010
152 <153
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 compensate 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 highcost 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 average price index cannot be viewed as a direct evidence of either effectiveness or non-effectiveness of the markup cap regulation, as
this index may overlap with changes in consumer preferences and consumption structure, 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 regulation 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
Fig. 4. Average price dynamics (USD) in Russias out-of-pocket drug market, January December 2010
7 6 5
USD
6.39
6.73 6.25
6.74
6.42
6.20
6.24
6.09
5.72
6.13
6.27
6.10
4 3.08 3 2 1 0 Jan Feb Imported 1.22 1.23 3.04
3.28
3.25
3.06
2.87
2.82
2.81
2.94
3.12
3.10
3.09
1.32
1.27
1.16
1.07
1.02
1.05
1.24
1.29
1.25
1.27
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Market average Local

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 movement it is necessary to use the price index which is, in fact, the inflation rate indicator. The price index (in particular, we used Laspeyres index for our calculations) is calculated as the ratio of consumer expenditures 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 downtrend throughout the year (Fig. 6). This was recorded by both Rosstat and independent 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 specifics 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
Fig. 5. Retail markup dynamics (%) for basic drugstore product groups, 20092010 (q/q)
% 40 36.9 35.7 35.1 30.1 29.2 28.8 28.5 30.2 29.7 29.3 28.9 30.3 30.2 29.6 29.4 29.9 30.0 29.1 28.8 29.7 29.6 29.0 28.4 30.2 29.9 28.8 28.0 37.1 35.9 35.4
35
30
28.3 25.8
25
20 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010
VED Non-VED Dietary supplements Cosmetics

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, weve 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 expenditures 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 engineering companies. Thus, even if pharmaceuti-
cal manufacturing is localized in Russia, a vast proportion of payments to counteragents 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 beginning 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-ofpocket market, local products lead the sales in the anti-flu drug segment; it was specifically obvious during the flu epidemics at the end of 2009. But the system-based problems remain; in particular, starting from December 31, 2010, the preferences for local drugs, envisaged by the Order of Russias Ministry of Economic Development No 427 dd 05.12.2008, have expired.
Fig. 6. Laspeyres drug price index, Russias out-of-pocket drug market, 2010 (m/m)
1.2 1.1
1.163
1.161 1.126 1.072
1.073 1.0 0.978 0.9 0.8 Jan Feb Mar Apr May Jun 0.960 0.932 0.966 0.898 0.918 0.902 0.850 Jul 0.846 Aug 0.874 Sep 0.867 Oct 0.854 Nov 0.881 Dec 0.875 0.882 0.875 0.894 0.913 0.907
Drug price index, Pharmexpert, RUB Drug price index, Pharmexpert, USD Drug price index, Rosstat, RUB
2010 results
Fig. 7. Russias pharma market split for imported/local drugs in value terms (%), 20062010
21.2
22.2
20.3
21.4
22.0
78.8
77.8
79.7
78.6
78.0
2006 Local Imported
2007
2008
2009
2010
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
XVI.
natural selection
2010 results
months best companies and trademarks pharmexpert selected

For a few years running, Pharmexpert has taken the liberty (and responsibility, of course) to select the best pharmaceutical manufacturers and trademarks and give them awards in the form of publications in INPHARMACIA Monthly Analytical Reports. In 2010, INPHARMACIA Months 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 Months Best merely based on their sales or growth dynamics.
The year past has also seen flu panic (it was not as manifest as the year before; nonetheless, 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 Months Best. There was also growth in very specific market segments: e.g. in March 2010, an erectile dysfunction drug manufacturer (TM Zydena, Dong-A Pharmaceutical Co. Ltd. ) and a monophasic oral contraceptive agent (Yaz) were nominated for the Months Best. Among well-expected or forecasted winners in summer and autumn, there were an antifungal agent (Loceryl) and a lice spray (Paranit). The import substitution trend has grown well-manifest as local players have been increasingly often selected the Months Best (e.g. Nearmedic, Moskhimpharmpreparaty, Biotics MNPK, Laboratory ANVI).
Fig. 1. Months Best corporations/ trademarks covered in INPHARMACIA 2010 split for pharma market sectors
Out-of-pocket
Import
Nearmedic
Tamiflu
Shire Human Genetic Therapies Inc.
Yondelis
Dong-A Pharmaceutical Co. Ltd.
Yaz
Stragen
Extavia
Sanofi-Aventis
Concor
Genfa Medica S.A.
Ambrobene
Biotics MNPK
Ingavirin
State procurement
Moskhimpharmpreparaty
Loceryl
Eli Lilly
Spiriva
Laboratory ANVI
Ropren
Lives of Remarkable Drugs
Omega Pharma
Paranit
Parasitology
158 <159
natur al selection months best companies and tr ademarks pharmexpert selected
Table 1. Companies covered as Months Best (INPHARMACIA), 2010

Companys market Share growth Coverage month share (%, USD) (%), 2010/2009 October November Main sector share (%, USD)
Company
L abor atory A N V I
Biotics MNPK
Genfa Medica S.A. Dong-A Pharm aceutical Co. Ltd. L abor atories Pharm ygiene-SCAT
Main TMs Antigrippin Citr amon Mukaltin Glycine Biotredin Limontar Abita xel Ox ater a Campter a Zydena Spregal Par a-Plus A-Par Salbutamol Alloholum Enterodes K agocel Essentiale No-spa L antus Pacliter a Elapr ase Cialis Humulin Humalog
1
Main sales sector
0.22
out-of-pocket
99.87
June
0.11
49
out-of-pocket
98.81
December March
0.25 0.02
7 246
hospital out-of-pocket
61.63 100.00
September
0.07
14
out-of-pocket
99.83
Moskhimpharmprepar at y Nearmedic Plus
August February
0.39 0.06
21 3
out-of-pocket out-of-pocket
91.80 99.12
Sanofi-Aventis Str agen Pharm a Shire Hum an Genetic Ther apies Inc.
May July April
5.15 0.00 0.08
8 136
out-of-pocket beneficiary drug cover age beneficiary drug cover age beneficiary drug cover age
77.67 100.00 100.00
Eli Lilly
January
0.78
10
45.24
Table 2. Trademarks covered as Months Best (INPHARMACIA), 2010

TMs m arket share (%, USD) Tr adem ark Corpor ation R atiopharm GMBH/Teva A mbrobene Yaz Ingavirin* Yondelis Concor Loceryl Par anit Ropren Spiriva Tamiflu Extavia Pharmaceutical Industries Ltd Bayer Healthcare Valenta Ba xter AG Nycomed Galderma L abor atories Richard Bittner GMBH Solagr an Son Boehringer Ingelheim Roche Novartis 0.14 0.10 0.05 0.05 0.62 0.11 0.01 0.001 0.11 0.04 0.17 0.14 0.02 0.03 0.001 0.53 0.05 0.003 0.00 0.11 0.14 0.00 1 415 62 7770 17 123 205 3 75 3 26 14 4233 9 52 23 183 78 44 947 3.11 3.41 0.77 0.48 2.94 0.19 0.24 0.04 1.71 2.68 6.61 0.22 0.10 0.01 0.79 0.12 n/a 1.71 2.68 6.61 2010 2009 Corpor ations m ars import ket share (%, share USD) (%, USD)
Share grow th (%), 2010/2009
Aver age price/unit (USD)
*Local TMs are specially marked. Source: Pharmexpert Analytics and Consulting
K agocel is included in 2011 V ED list as well as drugstore minimum product r ange.
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

Pharmexpert 2010 Eng

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Pharmexpert 2010 Eng

Hochgeladen von

Copyright:

Verfügbare Formate

the russian pharmaceutical market 2010 results

The Russian pharmaceutical market

The Russian pharmaceutical market

The Russian pharmaceutical market

summing up: pharmexpert main achievements, 2010

L au nc h e s of n e w a n a ly t ic a l data b a se s f rom Q111 prov i de d for

summing up: pharmexpert main achievements, 2010

New businesses set up

The Russian pharmaceutical market

I N PH A R M AC I A P h a r m a A n a ly t ic a l Mon t hly r e de signe d

macroeconomics: russia and federal subjects

The Russian pharmaceutical market

Table 1. Macroeconomic indices of Russian pharma market, 2010

3 000 2 130 870

4 600 3 600 1 100 3 420 230 950 3.27 3.92

macroeconomics: russia and feder al subjects

3 410 2 530 880

4 360 3 510 850

3 850 2 600 1 250

14 620 10 770 3850

4 400 3 400 1 000 3 250 350 800 3.13 3.76

4 080 3 100 1 000 3 090 390 600 2.75 3.40

4 520 3 300 1 100 3 540 530 450 2.76 3.46

17 600 13 400 4 200 13 300 1 500 2 800 2.98 3.63

The Russian pharmaceutical market

Archangel K aliningr ad Murmansk Great Novgorod Pskov Vologda

Hospital m arket, mn USD (wholesale prices)

Total drug consumption per capita, USD

Drug consumption per capita, out-of-pocket m arket, mn USD

Population (as of 01.01.2011)

macroeconomics: russia and feder al subjects

Beneficiary drug cover age (LLO) m arket, mn USD (supply prices)

Center of Feder al subject

Out-of-pocket m arket, mn USD (consumer prices)

Pharm a m arket, total, mn USD (consumer prices)

Astr akhan Rostov Volgogr ad

1 010 407 4 276 426 2 608 500 9 507 004

81.74 381.07 275.97 575.01 156.66 70.85 28.45 48.74 25.33

80.90 89.11 105.80 60.48 52.54 55.56 68.56 56.69 52.98

64.29 265.28 224.80 424.11 119.74 53.36 17.39 32.95 17.88

63.63 62.03 86.18 44.61 40.16 41.85 41.90 38.33 37.40

10.73 68.77 37.87 91.14 21.30 9.60 7.83 11.73 4.67

6.72 47.02 13.30 59.75 15.62 7.89 3.24 4.06 2.78

Makhachkala Grozny Magas Nalchik Cherkessk

Chelyabinsk Kurgan Ekaterinburg

3 478 037 908 838 4 297 510

Hospital m arket, mn USD (wholesale prices)

Total drug consumption per capita, USD

Drug consumption per capita, out-of-pocket m arket, mn USD

Population (as of 01.01.2011)

The Russian pharmaceutical market

Beneficiary drug cover age (LLO) m arket, mn USD (supply prices)

Center of Feder al subject

Out-of-pocket m arket, mn USD (consumer prices)

Pharm a m arket, total, mn USD (consumer prices)

Hospital m arket, mn USD (wholesale prices)

Total drug consumption per capita, USD

Drug consumption per capita, out-of-pocket m arket, mn USD

Population (as of 01.01.2011)

weather forecast for russias pharma

The Russian pharmaceutical market

Expert estim ates

4.0 471.6 291.9 13.3

6.54 303.3 192.7 8.8