Russian Pharmaceutical Market: what was the change in 2020?

How did Russia react to the COVID-19 crisis? What is the outcome of the year 2020? Russia is one of the most appealing markets between Asia and Europe, find out more in this article!

Between 2019 and 2020, the Russian pharmaceutical market has witnessed several fluctuations due to the Covid-19 crisis. From hospital to consumer purchase, there have been shifts from the previous trends.

Figure 1: Dynamics of the volume of the Russian pharmaceutical market in 2019-2020, by segment. (Source: DSM Group Russia)

The state sector – the publicly funded market sector: hospital purchases, pharmaceutical benefits (including High-Cost ICD and Essential Drug Coverage programs) and regional benefits — accounts for 36% of the drug market volume.

The highest growth in 2020 was in purchases of drugs for HCI – to 401 billion roubles (+23.5%). Purchases funded at the regional expense remained at the level of 2019 (+1.2%). However, the total federal benefits were 16% less than a year earlier. This was, among other things, due to a shift in purchases of certain drugs to the hospital segment.

Dynamics in the commercial segment of drugs could be hardly predicted in 2020: all the trends that had existed over time fizzled out. The growth in sales observed in March 2020 turned out to be one of the most notable ones over the last years. The feverish demand was triggered by the starting spread of the coronavirus infection and a worsening economic crisis. Russians rushed to buy large amounts of drugs, expecting a surge in prices amid the increase in the currency rates and the lack of essential drugs due to restrictive measures.

Naturally, after the population had stocked up, the sales dynamics were weak and, in some months, even went negative. Only in December 2020, the market was back to the growth figures observed in January- February (before the coronavirus crisis). In April, the «anti-covid» drugs became a growth driver. The drug names varied but owing to high demand for them the market, in general, showed positive dynamics in roubles (+10.6%) and fell only by 2.3% in packages. In 2020, 5,002 million packages of drugs worth 1,128 billion roubles (in retail prices) were sold through pharmacy chains.

In crisis period, pharmacy sales of para-pharmaceuticals grow slower than sales of drugs. The year 2020 was not an exception. The segment augmented by 6.7% to come to 279 billion roubles.

Figure 2: Pharma Market Volume (RUB and Packages) in different segments
(Source: DSM Group Russia)

At the end of 2020, imported drugs in the overall market accounted for 56.3% in roubles, and for 31.4% in packages. In volume terms, the market growth was negative both for made-in-Russia drugs (-4%) and foreign-made ones (-3%). In rouble terms, localized drugs grew by 13%, and imported ones – by 8%.

By the type of dispensing, the market structure varied towards over-the-counter drugs. Rx drugs account for around 67% in monetary terms. Owing to lower prices, however, OTC drugs prevail in packages and account for 54.9%.

Let us note that most of OTC drugs are sold in pharmacies (about 97% in roubles of the OTC volume). Rx drugs are sold mainly in the state segment: over 90% of the consumption volumes in bid purchasing.

Vital and Essential Drugs (VED) are a list of drugs, approved by the Government of the Russian Federation for the state regulation of drug prices. VEDs account for a bit more than 50%, both in volume and value terms, of the total volume of the drug market.

In 2020, the share of original drugs was 43.7% in value terms, and 15.9% in volume terms. Compared to 2019, their share had increased, especially, as can be observed, in value terms (+3%). The growth was thanks to the increased funding in the state segment for purchases of expensive drugs. In pharmacy sales, on the contrary, generic drugs grow faster (+12% in roubles against +8% for original drugs).

The Russian pharmaceutical market has seen shifts in the purchase of certain drugs in the hospital segment and on the OTC market due to the change in consumer behavior and government expenses after the beginning of the Covid crisis. For example, as restrictive measures arose, Russians expected a shortage on essential drugs, which led the market to a stagnant phase for a while. However, the end of the year 2020 showed a positive outcome in the market as the sales increased by 10.6% in value.

Good impressions on Russia? The Consumer Healthcare and Pharma industry will keep growing in the country. Don´t miss the chance to expand your business´ horizons in the country! If you want assistance in entering the Russian market, we are here to help you!

Picture from: St. Basil’s Cathedral, Moscow Pedro Szekely