With its fast-growing pharmaceutical market and high growth prospects for the coming years, Russia remains an attractive market for foreign Pharma OTC enterprises to expand into. Knowledge and understanding about Russia’s governing practices are vital for entering the market successfully.
The Eurasian Economic Unio n (EAEU) is comprised of Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia. In 2015, the EAEU member states formed a single market for pharmaceuticals and medical devices, to be implemented from 1 January 2016. This will impact Pharma OTC imports into Russia. The Prime Minister, Dmitriy Medvedev, approved the Decree on the Limitation of State Purchases of Import Drug Products in November 2015. This is a bill that further favours domestic production companies. Localised businesses are currently eligible for price preferences in local tenders and international companies that export their drugs into Russia through public tenders will have to offer a discounted price of 15%. Furthermore, if there are two EUEA companies already producing a product on the Vital and Essential Drug List, then the international company will be unable to enter the Russian market with that same product through public tenders. This is something worth bearing in mind when entering the Russian market.
In 2009, the Ministry of Industry and Trade launched the “Development of the pharmaceutical and medical industry” until 2020 initiative, more commonly referred to as the Pharma 2020 agenda. We are currently at the end of the second phase of the agenda, which is focused around the localisation of production and import substitution policy.
By 2020, one goal is for 50% of the pharmaceutical market (generic and innovative) to be produced locally within Russia. In January 2017, imported medicines into Russia amounted to 29.8 billion roubles. This is equal to 125.8 million packages, with an annual growth rate close to 19%. At the end of 2015, the domestic share in value of the pharmaceutical market was 27%, leaving 73% of it coming from abroad. Therefore, to reach the goals of the agenda by 2020, there is still some way to go for Russia.
The first stage of the Pharma 2020 agenda (2009-2012) witnessed an increased investment into R&D as planned. In 2016 procurement of R&D increased by 3.5 fold, indicating the impact of the agenda to date.
In order to boost local start-up pharmaceutical companies, a single brand name “Made in Moscow” has been set up. This allows for manufacturers to produce their products under a unified brand name, giving them a way into the competitive pharmaceutical market. The single brand name has been shown to be beneficial for Russian companies exporting their goods abroad, which complements the final stage of the Pharma 2020 agenda.
Looking to expand into the Russian pharmaceutical market? We can help you build your global strategy to ensure a smooth and efficient expansion process. Our team consists of experts with over 20 years of experience in Rx., OTC, Medical Devices, Food Supplements and Cosmetics.