Russian drug producers are not yet meeting the rising demand for drugs

8 july 2015 | PROVED

The Government is currently reviewing a resolution on import substitution in the pharmaceutical sector in Russia. The document, informally referred to as “two’s company, three’s none”, has been discussed for a fairly long time and has every chance of being passed in the near future. The gist of the resolution is that it restricts state purchases of imported pharmaceuticals for which at least two replacements can be found in the territory of the Eurasian Economic Union.

Natalia Nikolayeva
Natalia Nikolayeva
Department for Social Policy

The Head of the Department for Social Policy of the Analytical Center Natalia Nikolaeva shared her thoughts on this situation with PROVED. According to her, domestic pharmaceutical companies are not yet managing to meet the rising demand for drugs in the country. In 2014 imports of pharmaceuticals totaled about USD 13 billion, almost twice the domestic output and 20 times the amount of Russian drug exports, the expert noted. “In retail the share of Russian drugs is about a fourth of total sales in money terms and more than half in terms of unit sales. In state purchases the share of domestically sourced drugs in money terms is even less, just 23.7%, however in terms of unit purchases it is quite significant, accounting for 72% of all drugs purchased,” Ms. Nikolaeva pointed out.

The expert also explained that foreign manufacturers that have localized production in Russia will not be subject to the import substitution restrictions. However, it has to be noted that these preferences will not apply to all drugs but only to the so-called ‘vitally important’ pharmaceuticals and in this category the share of available locally sourced substitutes is rather modest at just 47%. Ms. Nikolaeva believes significant investments will be needed if this share is to be increased.

“At this point it is rather difficult to estimate future growth in concrete numbers. We are bound to see growth but in 1 or 2 years only. The thing is that in the new list of vitally important pharmaceuticals out of the total of 602 international unpatented drug names, there are no domestic producers for 193 drugs and for 83 R&D still has not been finished. This means that a lot of time and significant investments are going to be needed to bring to market substitutes for all the drugs on the list,” the expert explains.

However, some work is already being done in this area. Thus, as part of a program to develop the pharmaceutical and medical industry in 2013-2020 (Pharma 2020) development of 103 domestic substitutes for non-patented pharmaceuticals included on the list of vitally important drugs is currently being financed, the publication explains.

According to Ms. Nikolaeva, ordinary consumers buying drugs in pharmacies will not be affected by these restrictions because they will only apply to state purchases. Replying to a question about what the state buys drugs for the expert said: “State purchases of foreign drugs are made to supply hospitals and provide free drugs to patients under federal and regional programs.” Thus patients that use state medical services and rely on drugs provided by the state (and these are the vast majority of patients) are going to be affected by these restrictions: instead of original foreign drugs they will be given domestically sourced substitutes. It remains to be seen whether it is for good or ill, the publication concludes.