The current Report uncovers the 2019 business trends of the pharmaceutical market of the Russian Federation, overviews its healthcare system, portrays its epidemiology and demographics. It also depicts pharma regulation features in Russia including a step-by-step process of the marketing authorization for pharmaceutical products. It provides insight into the country’s socio-political development since independence, describes recent economic trends, and provides the pharmaceutical market forecast for the next three years (2020-2022).
The Report is intended for industry executives, decision-makers, sales & marketing, and market access managers and other stakeholders. "Russia Pharmaceutical Country Report 2019" will be useful for top-managers, business owners, consultants and other stakeholders of the Life Sciences industry, who are analyzing, planning to enter or invest in the Russian pharma and/or healthcare market.
The Report covers 2013-2019 data for the pharmaceutical market and provides a forecast for the period of 2020-2022.
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After a rise in consumption tax, a change to the pension laws to make people work longer and tight fiscal policies that have seen the government-run a budget surplus while real incomes have slipped, trust in Putin fell to a 13-year low of 31.7% in mid-2019. Distrust of the authorities affected the protest mood of Russian citizens. In 1Q-3Q, 1,443 protests were recorded in Russia, which was the largest number in the last years.
In the summer, protests broke out after election authorities barred more than a dozen opposition candidates from running for Moscow's City Council, claiming they had not collected enough valid signatures. The opposition seized the opportunity to turn a local election into a battle with the ruling government and President Putin. The ruling party ended up narrowly retaining control of Moscow's City Council, ceding seats to other parties under the Kremlin's control.
Throughout 2019, Russia tried to draw closer to Belarus in anticipation of the 20th anniversary of the signing of the treaty on the creation of the Union State, which the countries celebrated on December 8. It was assumed that on the eve of the memorable date, the parties would conclude an agreement on in-depth integration. Experts have suggested that the creation of the Union State is one option that would allow Putin to remain in power after 2024. However, the Belarusian president refused to sign any agreements and stated that the Russian position towards his country was derogatory.
After growing by 2.3% in 2018, the Russian economy expanded by just 0.7% YoY in 1H 2019, with the slowdown explained by declining energy exports and the impact of rising inflation on household consumption. Economic growth accelerated in 2H 2019, so the GDP growth for 2019 amounted to 1.3%, which was the lowest rate since 2016. Growth in the natural resources industries, including the production of gas and gas condensate — which jumped by more than 10% — was the biggest contributor to increase over the year.
Dashboard. Russia's Real GDP and GDP growth rates + RUB/EUR/USD (avg) rates (Sources: IMF, Central Bank of the Russian Federation)
The economy is projected to grow by 1.8% in 2020, driven by a boost to household consumption from higher real wages and by public investment. However, the pension reform and the infrastructure program will help boost growth in 2020.
Substantial uncertainty remains about future sanctions and counter-sanctions, which could dent exports and trigger a new wave of capital outflows and further depreciation of the economy.
The Russian pharmaceutical market consists of three sales segments:
Dashboard. Shares of the Main Segments in the Total Pharma Market, VALUES and VOLUMES (Sources: UPharma Consulting, DSM)
The retail segment is predominantly of local origin in volumes and foreign – in values. Sales in the retail segment are generated through pharmacies and pharmacy units only.
In 2019, the share of the public procurement segment was 15.5% and the share of retail – 72.3%. The share of the segment related to the preferential provision of medicines has been expanding over the last years and amounted to 12.2% in 2019. The retail segment sales correlate with the growth in real incomes of the population directly, stringent government regulation and containment of prices for essential drugs, and overall economic development.
The Russian government is actively providing measures to increase the share of drugs produced in Russia, import substitution, GMP rules, the Special Invest Contract, drug labeling.
Localization and import substitution encouraged foreign manufacturers to conclude agreements with RUS companies on the production of their drugs at their facilities. As a result, seven factories belonging to foreign manufacturers appeared in Russia, more than 80 companies localized output at the sites of domestic enterprises.
Dashboard. Weighted average cost of a pack (WACP) on the pharmaceutical market by segments (Sources: UPharma Consulting, DSM)
In 2019, the weighted average drug price of the total market amounted to USD 4.3 per pack. Average prices in retail and hospital segments were at the level of USD 3.9-4.0 per pack. Medicines provided through preferential programs are conventionally much costly than ordinary medicines as the programs include the provision of high-cost drugs for the treatment of orphan diseases.