In line with Russias economic recovery this year, BMI expects the pharmaceutical sector to post 22.4% US dollar growth in 2010 a figure enhanced by the appreciation of the rouble in relation to the US dollar. The Russian market is expected to deliver a five-year compound annual growth rate (CAGR) of 17.54% in US dollar terms between 2009 and 2014, with the total market value more than doubling, from US$15.4bn to US$34.5bn, by the end of this forecast period.
Russias pharmaceutical market is entering a renewed era of growth following the instability of 2008 and 2009. It will be markedly different from the previous decade of growth, driven by the private market and largely independent of the state-owned sector outside of specific market segments such as vaccines. In some ways, the Russian market is starting to more resemble other European markets, with prices more closely watched and, ultimately, managed by the state. In other ways, the pharmaceutical market is also the subject to the Medvedev administrations appetite for controlling lucrative industries once ignored in favour of bigger targets in the natural resources industry, pharmaceuticals is now a big growth area for state companies.
A prime example of Russian state-backed corporations getting into the drug industry is the Russian Nanotechnology Corporation (Rosnano). The state holding company has pledged about US$30mn in equity participation and loans to a new clinical research centre to be built among the cluster of technology businesses in Dubna, near Moscow. It is important to underline that US and EU companies will be involved in setting up the new contract research centre. But the project, one of many announced in Russia in the past six months, underlines that the development of the pharmaceutical sector in Russia will be led from the top. Still, as the 2010 US Trade Representative Special 301 report published in April underlines, major deficiencies remain with Russian intellectual property (IP) legislation. Russia remains a Priority Watch country, something that will annoy the government and drive tough talks with US trade officials as Russia looks to push forward with stalled WTO negotiations.
The dominant role of the state and IP issues will not keep multinationals out of this large and fast-growing marketplace, however. Novo Nordisk has announced that it is building an insulin plant worth up to US$100mn, while Swiss Nycomed is developing a US$80mn site in Yaroslavl and has teamed up with GE Healthcare to sell reagents for medical imaging. Sanofi Aventis has already acquired 74% of insulin maker Bioton Wostok. Novartis has also indicated that the Russian market is a core focus. An important development for the market will be whether the manufacturer Veropharm a long-time a takeover target attracts new suitors and sets a new valuation level after the mergers and acquisitions (M&A) market in the manufacturing sector has been almost dormant for 18 months. On the wholesale side, Protek raised US$400mn in the second largest initial public offering (IPO) in the pharma sector to date and the largest Russian IPO since 2007 a clear sign that pharmaceuticals is no longer an overlooked sector for investors in Russia.
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Report Table of Contents:
Executive Summary
SWOT Analysis
- Russia Pharmaceuticals And Healthcare Industry SWOT
- Russia Political SWOT
- Russia Economic SWOT
- Russia Business Environment SWOT
Pharmaceutical Business Environment Ratings
- Table: Central And Eastern Europe Business Environment Ratings, Q310
- Limits Of Potential Returns
- Risk To Realisation Of Returns
Russia - Market Summary
Regulatory Regime
- Intellectual Property Environment
- Pricing And Reimbursement Issues
Industry Developments
Industry Forecast Scenario
- Overall Market Forecast
- Key Growth Factors - Industry
- Key Growth Factors - Macroeconomic Forecast
- Table: Russia Economic Activity, 2007-2014
- OTC Market Forecast
- Prescription Market Forecast
- Generics Market Forecast
- Export/Import Forecasts
- Medical Device Market Forecast
- Key Risks To BMI's Forecast Scenario
Competitive Landscape
- Manufacturing Sector
- Wholesale Sector
- Retail Sector
Company Profiles
- Berlin-Chemie/
- Gedeon Richter
- Krka
- Lek (Novartis/Sandoz)
- Stada AG (Stada CIS)
- Veropharm
- Pharmstandard
Country Snapshot: Russia Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2002-2005
- Table: Vital Statistics, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Wages, 2000-2006
BMI Methodology
- How We Generate Our Pharmaceutical Industry Forecasts
- Pharmaceutical Business Environment Ratings Methodology
- Ratings Overview
- Table: Pharmaceutical Business Environment Indicators
- Weighting
- Table: Weighting Of Components
- Sources
Forecast Tables
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