IHS Global Insight Perspective | |
Significance | Retail drug sales grew by 13% to 18.6 billion roubles in February compared with January. However, the volume of drugs sold in February was down by 1% compared with a year ago. |
Implications | Lower capacity for spending brought on through unemployment and the effects of the recession have had a negative impact on volume sales, and there is a nascent trend towards the purchase of locally made generics over high-cost innovative drugs imported from overseas. |
Outlook | As the recession continues, patients will be forced to make stark choices in terms of what they can afford, and to avert a political crisis, the government must implement pricing controls on all non-reimbursed drugs, with imported medicines being the main target. |
Pharmaceutical sales in Russia's retail market grew by 13% month-on-month (m/m) to a total value of 18.6 billion roubles (US$551.3 million) in February 2009. Prescription drugs made up 51% of all drugs sold in retail pharmacies, while over-the-counter medicines made up the remaining 49%. The average retail price of a medicine grew by 3.2% in February, compared with January, to stand at 55.71 roubles. A heavy 31% increase in the rate of VAT compared with February 2008 played an important role in pushing up retail drug prices, while inflation and currency effects also inflated end-user prices of imported drugs.
According to the DSM Group, which published these figures in a recent report, imports continued to dominate the retail market in value terms during February, accounting for 76% of the sector due to their higher prices. In volume terms, however, some 63% of all drugs sold in pharmacies during the month of February were produced domestically. DSM also noted that despite the price rises and overall m/m value gains witnessed that month, the total volume of drugs sold in pharmacies contracted by 1% compared with February 2008. The report attributes this to the effects of the deepening financial crisis, which it says is forcing patients to choose between buying medicines and other essential goods.
Leading the market by both value and volume was Russia's largest drug maker, Pharmstandard. The group had the largest share of sales in both January and February, when it held a 5.05% stake by value, and a 9.99% stake by volume. Pharmstandard's presence on the market has been growing steadily in recent years, and it is one of the few Russian companies to hold its own against much larger international players. An important trend noticed in February was that by and large the market shares of innovative multinationals tended to diminish, while those of generics producers grew stronger.
Top 10 Producers by Retail Market Share, Jan-Feb 2009 | ||||||
Ranking, January 2009 | Ranking, February 2009 | Manufacturer | % Rouble Sales, January 2009 | % Rouble Sales, February 2009 | % Volume Sales, January 2009 | % Volume Sales, February 2009 |
1 | 1 | Pharmstandard | 4.19 | 5.07 | 8.84 | 8.99 |
3 | 2 | Berlin-Chemie/Menarini (Germany) | 3.62 | 3.79 | 1.93 | 2.14 |
2 | 3 | Sanofi-Aventis (France) | 3.96 | 3.67 | 1.47 | 1.32 |
4 | 4 | Nycomed (Switzerland) | 3.37 | 3.15 | 1.32 | 1.28 |
5 | 5 | Gedeon Richter (Hungary) | 3.17 | 3.15 | 1.30 | 1.37 |
6 | 6 | Novartis (Switzerland) | 2.88 | 2.90 | 1.06 | 1.08 |
7 | 7 | Servier (France) | 2.70 | 2.60 | 0.48 | 0.46 |
9 | 8 | Lek (Switzerland) | 2.49 | 2.57 | 0.83 | 0.82 |
8 | 9 | Pfizer (U.S.) | 2.69 | 2.55 | 0.65 | 0.64 |
10 | 10 | Krka (Slovenia) | 2.30 | 2.35 | 1.14 | 1.18 |
Overall Proportion of Top 10 | 31.38 | 31.82 | 19.02 | 19.29 | ||
Source: DSM Group | ||||||
In terms of top-selling retail medicines, traditional top-sellers such as Arbidol, Essentiale, and Linex retained their strong market position in February, but here too, imported brand-name drugs are beginning to lose their hold. One example is Pfizer's erectile dysfunction blockbuster Viagra (sildenafil), which has been among Russia's leading drugs by sales for several years. From January to February, however, Viagra's share of retail pharmacy sales calculated in euro terms declined from 0.74% to 0.66%. Cardiovascular drug Mildronate (trimethylhydrazinium propionate dihydrate), produced by Russian firm Sotex under licence from Latvian drug maker Grindeks, saw its market share increase from 0.46% in January to 0.50% in February, although its subsequent market withdrawal will mean a shake-up at the bottom end of the top 20 retail products over the remainder of the first half (see Russia: 6 April 2009: Roszdravnadzor Confirms Two Deaths Linked to Sotex's Mislabelled Mildronate).
Top 20 Brands by Retail Market Share, Jan-Feb 2009 | ||||
Ranking, January 2009 | Ranking, February 2009 | Brand | % Euro Sales, January 2009 | % Euro Sales, February 2009 |
1 | 1 | Arbidol | 1.17 | 2.01 |
4 | 2 | Oscillocoxinum | 0.78 | 1.07 |
3 | 3 | Actovegin | 0.87 | 0.86 |
2 | 4 | Essentiale | 0.90 | 0.84 |
9 | 5 | Linex | 0.69 | 0.83 |
10 | 6 | Theraflu | 0.69 | 0.80 |
21 | 7 | Anaferon | 0.49 | 0.70 |
12 | 8 | Vitrum | 0.66 | 0.70 |
7 | 9 | Enap | 0.71 | 0.69 |
8 | 10 | Nurofen | 0.70 | 0.68 |
5 | 11 | Viagra | 0.74 | 0.66 |
11 | 12 | Concor | 0.68 | 0.64 |
6 | 13 | Mezim Forte | 0.71 | 0.63 |
14 | 14 | Coldrex | 0.60 | 0.61 |
16 | 15 | Sumamed | 0.54 | 0.57 |
22 | 16 | Lazolvan | 0.47 | 0.56 |
13 | 17 | Pentalgin | 0.60 | 0.54 |
17 | 18 | Geptral | 0.52 | 0.53 |
19 | 19 | Diroton | 0.51 | 0.53 |
23 | 20 | Mildronate | 0.46 | 0.50 |
Overall Proportion of Top 20 | - | 14.92 | ||
Source: DSM Group | ||||
Outlook and Implications
High prices continue to push up the value of retail sales in Russia, at a time when the actual number of treatments being purchased is diminishing. With the added backdrop of a crippling economic recession, the situation is untenable in terms of patient affordability, and will put more pressure on the government to reform the system. The best hope of producing rapid effects lies in the development of effective pricing controls for medicines that fall outside the country's reimbursement programme, and particularly those that are imported from overseas. Discussions held last month at the ministerial level suggested that moves are being made towards implementing such a plan, but progress is likely to be slow (see Russia: 6 March 2009: Health Ministry Considers Capping Drug Price Growth as Imported Medicines Inflate Russian Market). While there is clearly evidence of persistent double-digit growth on Russia's retail pharmaceutical market, a slowdown in consumption seems inevitable under the current economic conditions.