Russia Pharmaceutical Market Overview Pharma companies target Russia despite the challenges it presents

Russia Pharmaceutical Market Overview Pharma companies target Russia despite the challenges it presents

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

Scope

*Overview of socioeconomic and demographic trends, healthcare system, regulation, pricing and reimbursement and intellectual property in Russia

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

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

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

Highlights

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

Registration of drugs in the Russian Federation remains a cumbersome and lengthy procedure which lacks clarity and transparency and is subject to frequent change. Cultural and language barriers present further obstacles to foreign companies "going it alone".

The generics industry is complex and fragmented, dominated by a small number of international generics manufacturers. Generics produced by these companies enjoy preferential uptake driven by their perceived superiority to domestically manufactured generics, with Russians choosing to pay higher prices for guaranteed quality.

Reasons to Purchase

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

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

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

Table of Contents :

ABOUT DATAMONITOR HEALTHCARE 2

About the Healthcare Strategic Analysis Team 2

Geographic specific reports: 2

Global issue reports: 2

1. Executive Summary 3

Introduction 3

Strategic scoping and focus 4

Key Findings 5

Russia - Socio-demographic and economic analysis 5

Socio-demographic trends 5

Socio-economic trends 6

Russia - Healthcare system and drug regulatory analysis 8

Healthcare expenditure 8

Healthcare insurance 9

Regulatory issues 10

Pricing and reimbursement issues 11

Russia - Prescription pharmaceutical sales analysis 13

Pharmaceutical market size 13

Leading therapy areas 13

Leading pharmaceutical brands 13

Leading pharmaceutical companies 13

Russia - Drug expiry analysis 15

Generics market 15

Brand erosion post patent expiry 15

Biosimilars market 15

Russia - Drug Industry Infrastructure analysis 17

Pharmaceutical industry infrastructure overview 17

Related reports 19

Upcoming related reports 19

Table of Contents 20

2. Russia - Socio-demographic and economic analysis 21

Russia - Key findings 21

Socio-demographic trends 21

Socio-economic trends 21

Russia - Demographic trends 23

Population in Russia expected to decline rapidly 24

Population growth rate in Russia remains low due to low birth rates 24

Proportion of elderly people will remain lower than in all other markets 27

Life expectancy in Russia is poor and will remain so 27

Russia - Disease burden in Russia 29

Cardiovascular diseases and injuries are the leading cause of death and account for the highest disease burden in Russia 31

High level of preventable deaths in Russia 31

HIV/AIDS presents a worrying trend in Russia 32

Russia - Political climate 33

The political climate in Russia has undergone recent changes 33

Russia remains a centralized country with power centered on Moscow 33

Russia - Economic climate 34

Economy - recovery post-recession is slow but will gain momentum from 2010 34

Economic growth is impacted by income inequality in Russia 35

Russia - Business environment 37

Although impediments to investing in Russia remain, the government is prioritizing healthcare 37

The recession has impacted unemployment levels 37

Russia has a uniform tax rate 38

Pharmaceuticals are subject to a reduced VAT rate of 10% 38

Corruption significantly impedes foreign investment in Russia 39

Local knowledge is critical for business success 39

3. Russia - Healthcare system and drug regulatory analysis 40

Russia - Key findings 40

Healthcare expenditure 40

Healthcare insurance 40

Regulatory issues 41

Pricing and reimbursement issues 41

Russia - Healthcare expenditure 43

Russia - Healthcare System 45

Key bodies regulating the healthcare system 45

Ministry of Health and Social Development (MOH) 46

Parallel healthcare system 46

The Federal and Territorial Mandatory Health Insurance Fund 46

Additional experts and coordinating bodies 46

Primary versus hospital healthcare in Russia 47

In efficiencies in the primary care system lead to over-referral, over-hospitalization and over treatment 47

Significant disparities exist in the distribution of physicians and healthcare facilities 47

Access to healthcare is especially problematic for the poor population... 48

...but healthcare modernization plans are in place 49

Project Zdorovie is focused on developing healthcare in Russia 49

Local governments draft modernization plans for regions 49

...but the government 2020 healthcare plan is aimed at improving healthcare 50

Russia - Health insurance 51

Mandatory health insurance was introduced in 1991 but has done little to improve healthcare 51

The healthcare system is funded by formal and informal means 52

Guaranteed Package Program does not necessarily guarantee access to medicines 53

Reformed mandatory medical insurance system is intended to give patients more choice 55

Private health insurance 55

Voluntary Health Insurance is in high demand 55

Concerns raised over privatization of a number of public hospitals 56

Russia - Regulatory issues 57

Drug approval and regulatory processes - registration of drugs in Russia is considered a cumbersome process 57

The high number of registered drugs indicates inadequate control of the registration process 57

There are two regulatory bodies involved in the licensing of medicines in Russia 57

New Federal Law on Circulation of Medicines attracts criticism 58

Regulation process now less costly but time taken to register a drug is increasing 58

Russias manufacturing facilities will need to align with international GMP standards 59

Domestic clinical trials were to be required as a registration prerequisite under the new law 59

New law lacks orphan drug clause 59

Additional new provisions 60

Russia - Intellectual property environment 61

There are two ways of obtaining patent protection in Russia 61

Enforceability of patent laws is still weak and data exclusivity remains an unresolved issue 61

Drug counterfeiting is an ongoing problem but there are few recent developments 62

Drug importation - new law streamlines import procedures 63

Russia - Pricing and reimbursement 64

Russia is looking to its Essential Drug List to contain costs 64

Pricing issues - the government is increasing its controls 66

New Essential Drug List compiled in 2009 66

Mandatory state registration of maximum prices replaces voluntary system 66

Reimbursement issues - introduction of the federal reimbursement system DLO was a major change 68

Supply and deficit problems have historically hampered the DLOs success 69

DLO was modernized again and split into two procurement branches 70

Centralized program covers seven expensive-to-treat diseases 70

ONLS program covers remaining drugs 70

Oncology drugs had the highest sales volume in the DLO 71

Ongoing issues regarding the DLO program 71

4. Russia - Pharmaceutical sales analysis 72

Russia - Key findings 72

Pharmaceutical market size 72

Leading therapy areas 72

Leading pharmaceutical brands 72

Leading pharmaceutical companies 72

Russia - Pharmaceutical market size 74

Russia - Leading therapy areas 76

Central nervous system drugs hold the largest share of the Russian market value 78

Infectious disease drugs exhibited the strongest annual sales growth (2008-09) 78

Hematology drugs showed the fastest growth in terms of sales CAGR (2005-09) 79

Russia - Leading pharmaceutical brands 80

Velcade was the top selling brand in Russia 82

Octavi exhibited the strongest sales CAGR of the top 20 brands, but faces competition from its follow-on product 83

Glivecs gold-standard position drives uptake 83

Russia - Leading pharmaceutical companies 84

The leading international companies offer both innovative therapies and generic products 85

Domestic companies offer largely generic and consumer healthcare products 88

Pharmstandard 89

Valenta 89

Biosyntez 90

5. Russia - Drug expiry analysis 91

Russia - Key findings 91

Generics market 91

Brand erosion post patent expiry 91

Biosimilars market 91

Russia - Generics market dynamics 93

Russia generics volume uptake 94

Russia generics value uptake 95

Russia generics market size 96

Russia - Generics drivers and resistors 97

Despite universal health insurance, significant out-of-pocket costs limit access to generics 99

The new pharmaceutical bill will lead to enforced pricing and preferential listing of domestically manufactured generics 100

Domestic GMP standards are poor, but are set to improve 100

Lack of adequate pharmacovigilance puts patients at risk and reduces trust 101

Patients prefer branded generics 101

Russia - Key generics players 102

International funds invest in Pharmstandard 103

ratiopharm acquisition gives Teva a leading role in Russia 103

Stada sees high growth levels in the Russian market 103

Novartis holds a strong position in Russia through Sandoz, Lek and Hexal 103

Zentiva continues to shine in the Russian market for Sanofi-Aventis 104

Ranbaxy fails in its attempt to enter the Russian market 104

Opportunities for the generics industry 105

Russia - Small molecule brand erosion 106

Overview of drugs analyzed 106

Mean level of brand erosion in Russia 107

Brand erosion in the Russian retail and hospital setting 109

Brand erosion by therapy area in Russia 111

Brand erosion by drug formulation in Russia 113

Russia - Biosimilars market dynamics 115

Drivers and resistors to biosimilar uptake in Russia - development costs and lack of regulation is attractive to biosimilar manufacturers 115

Biosimilars available in Russia 117

Biosimilar filgrastim 118

Opportunities for the biosimilar industry 120

Biosimilars in development internationally 122

Russia presents challenges for monoclonal antibody manufacturers 123

6. Russia - Pharmaceutical industry infrastructure analysis 125

Russia - Key findings 125

Russia - Pharmaceutical infrastructure overview 126

The new pharmaceutical bill will lead to enforced pricing and preferential listing of domestically manufactured generics 126

Domestic GMP standards are poor, but are set to improve 126

Russia is becoming a hotspot for clinical trials 128

Russia - key company infrastructure 130

Novartis 131

Sanofi-Aventis 134

Johnson & Johnson 137

Roche 140

Pharmstandard 143

Bayer Schering 146

Servier 149

Teva 152

Merck & Co. 155

Gedeon Richter 158

Gedeon Richter boosts its Russian presence 160

7. Russia - Bibliography 161

Russia - Executive summary 161

Publications and online articles 161

Datamonitor reports and products 162

Russia - Socio-demographic and economic analysis 162

Publications and online articles 162

Publications and online articles 165

Russia - Healthcare systems and regulations 165

Publications and online articles 165

Datamonitor products 170

Russia - Prescription pharmaceutical sales analysis 170

Publications and online articles 170

Datamonitor reports and products 170

Russia - Drug expiry analysis 170

Publications and online articles 170

Datamonitor reports and products 173

Russia - Pharmaceutical industry infrastructure analysis 174

Publications and online articles 174

Appendix 177

Exchange rates used in this report 177

Russia brand erosion - additional data and analysis 178

Brand erosion - methodology 180

Datamonitor prescription pharmaceutical definition and therapy area classification 183

About Datamonitor 184

About Datamonitor Healthcare 184

Datamonitor consulting 184

Disclaimer 186

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