Analytic review by DSM Group: RUSSIAN PHARMACEUTICAL MARKET 2009

11.03.2010

SUMMARY

Amid declining GDP and dwindling key national performance indicators, Russia’s pharmaceutical market in 2009 was among the few markets which showed growth in terms of the national currency. In 2009, the size of Russia’s pharmaceutical market stood at Rbs 538 billion (including VAT) in end consumer prices adding 18% of economic growth as compared with the previous year. This compares with an overall decline in GDP of -8%.

The commercial segment of the Russian market showed 22% growth in 2009. The main factor driving the market up was higher prices for medications, which was greater than in previous years and DSM anticipates that the growth rate for this segment will reduce in 2010.

The state sector, which is among the steadiest pharmaceutical market segments, showed an 11% growth in 2009. It is financed using the fiscal resources, and the state fully complies with its obligations each year making appropriate adjustments to its Program for Additional Provision of Medications.

Looking forward, the DSM Group expects the Russian pharmaceutical market will grow by more than 11% in 2010 in terms of rubles and by 16% in terms of dollars thus reaching the level of $20 bn. More significant growth can be expected in 2011, when all the hardships of the crisis-ridden years will have been overcome.

The Russian pharmaceutical market is mostly based on imported products, where 80% of medications (in money terms) consumed by the Russian customers are foreign-made. Therefore, foreign manufacturers, such as SANOFI-AVENTIS and NOVARTIS, top the list of the producers and dominate the Top 20. The exception is the Russian producer PHARMSTANDARD  which is the third largest and only domestic producer in the top 20.

Market segments

Distributors are the driving force behind the development of Russia’s pharmaceutical market, which has a lot to do with the vastness of Russia’s territory. Therefore, major distributors have a rich network of branches in almost all Russian regional capital cities. CV Protek and CIA International lead the distribution segment in 2009 with their aggregate market share standing at 44%.

There are a huge number of players in the pharmacy segment of the Russian market. Therefore, the concentration levels are low in this particular segment with 36.6, Rigla, and Pharmakor being the largest chains. However, their aggregate share is as low as 9%. In 2009, the largest chains focused their efforts on business optimization and boosting the performance levels of existing outlets, which led to the closing down of unprofitable outlets and an overall drop in the numerical strength of many chains.

The parapharmaceuticals segment has been gaining momentum on the pharmaceutical market year in and year out. This market’s capacity stood at over Rbs 116 bn in 2009. The trend for increasing the sales of health and beauty items in pharmacies has somewhat slowed down during the crisis. However, the segment will continue to grow as the economy recovers, driven by a need for pharmacies to diversify their revenue sources.

 

 

The full report on the Russian pharmaceutical market is available:

Russian Pharmaceutical Market 2009 ( *.pdf file 353 Kb )

 

 

 

For additional information, please contact:

azaharova@dsm.ru - Alexandra Zakharova, DSM Group

sshulyak@dsm.ru  – Sergey Shulyak, Director General, DSM Group