國際醫療Business News

The share of foreign drugs on the Russian market in the first half of 2023 remains at the level of the same period the year before last and is 34%, according to the calculations of the marketing agency DSM Group. According to the results of the first six months of last year, the share of imported medicines was 35%.

As for sales, this year, foreign manufacturers, according to DSM Group estimates, sold medicines for a total of 349 billion rubles. If we do not count the "hype" year 2022 (then sales for the first half of the year amounted to 387 billion rubles), this is the highest figure for at least the last six years. For example, in the first half of 2021, it was almost 15% lower – 297 billion rubles.

Last year, many foreign pharmaceutical companies announced a decrease in investment in Russia. In particular, the French Sanofi has reduced advertising and promotion costs in our country. So did the Danish Novo Nordisk. As stated in its report for the first half of 2023, the company suspended investments in marketing, and also "shifted the focus from launching new drugs and clinical trials to ensuring the supply of insulin." "The Finnish Orion Pharma has also stopped operating in Russia." American pharmaceutical companies Eli Lilly and Bristol-Myers Squibb (BMS) also left the country, transferring the local business to Swiss Swixx BioPharma. The shares of foreign pharmaceutical giants that left Russia were taken by other foreign companies that were not previously so widely represented on the local market, explains the trend of DSM Group CEO Sergey Shulyak.

Nikolay Bespalov, Development Director of RNC Pharma, also points to this. According to him, smaller participants in the global pharmaceutical market began to occupy vacant and generally in demand niches in this industry. For example, Swiss Avva Pharmaceuticals increased its share by 54.6% to 0.23%, Macedonian Alkaloid AD Skopje – by 50.1% to 0.29%, CSL Behring – by 35.9% to 0.21%, Polish Polpharma – by 5.6% to 1.98%, Hungarian Gedeon Richter – by 2.5% to 2.31%. The latter, in its financial statements for the first half of 2023, reported that its sales year-on-year increased by 23% to 165.4 million euros. She explains this, among other things, by "a more favorable competitive environment."

GROWTH IN SALES OF MEDICINES FROM FOREIGN MANUFACTURERS   

YEAR	VALUE in bn rubles	SHARE in %
2018	282	35
2019	277	33
2020	306	33
2021	297	34
2022	387	35
2023	349	34

Source: DSM Group

Foreign companies continued marketing activities in Russia, which also led to an increase in drug sales, Shulyak continues. He did not give specific figures. As the Kommersant newspaper wrote, in 2022, marketing payments by foreign vendors for the promotion of medicines amounted to 19.6 billion rubles, which is 6.6% more than it was a year earlier. In the first six months of 2023, Gedeon Richter's expenses for this item increased by 13%, the company indicates in its reporting. A representative of its Russian office said that in the current conditions it continues to supply its products. According to Shulyak, the promotion of drugs takes place through specialized medical organizations. This is due to the fact that most large foreign companies, including Novo Nordisk and Eli Lilly, reported that they would import medicines to Russia exclusively from the list of vital and necessary. At the same time, most of their income comes from public procurement.

The increase in sales from foreign pharmaceutical companies is also associated with an increase in drug prices, Bespalov says. According to him, in the first half of 2023, they rose in price by an average of 5.2%. Gedeon Richter also writes about this in his reporting.

The Russian pharmaceutical market continues to be attractive for foreign manufacturers, Shulyak notes. He recalls that according to the results of the first half of 2023, its volume amounted to more than 1 trillion rubles. For this reason, it is unprofitable for them to lose a share, since a competitor can take it at any time. For example, Orion Pharma's operating profit decreased by 25 million euros (to 102 million euros) due to its departure from Russia, the company indicated in its reporting for the first six months of 2023. As a rule, pharmaceutical companies try to stay on the local market or continue to supply their medicines to the country through intermediaries, agrees Pavel Lisovsky, managing partner of the Management Systems Design consulting company specializing in the pharmaceutical market.

Source: https://www.vedomosti.ru/business/articles/2023/08/16/990310-v-rossiyu-zarubezhnie-farmkompanii-prodolzhayut-zanimat-tret-rinka