Healthy Skepticism Library item: 17071

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Russia’s health drive to help pharma growth
InPharm 2010 Jan 22
http://www.inpharm.com/news/russia-s-health-drive-help-pharma-growth

Full text:

Russia endured a turbulent 2009 in economic terms, thanks to the steep drop in oil prices, but the country is expected to bounce back in 2010, and for pharma, this will help make it one of the key emerging markets.

In terms of healthcare, there is much room for improvement. Tsar Nicholas I is said to have coined the phrase ‘the Sick Man of Europe’ to described the Ottoman Empire, but it could now be applied to Russia itself (see box, Russia’s battle with the bottle).

Since the collapse of the Soviet Union in 1991, Russia’s population decline has declined by seven million. Smoking, drinking and unhealthy diets and lifestyles are behind very high levels of cardiovascular diseases, cancers and respiratory disease are all major contributors to this. The level of HIV/AIDS infection is also high, with treatment levels low.

This all adds up to a very high death rate of 15 deaths per 1000 people per year, and a UN forecast says Russia’s population could decline by a further 11 million by 2025 unless radical measures are taken.

Vitaliy Lehkyy, consultant analyst at Foster and Sullivan believes that the largest challenge will be to halt the population decline by establishing a well-functioning and modern healthcare system.

This is of course good news for the international pharmaceutical industry, which stands to benefit in the long term from greater healthcare investment.

“We would expect that, in search of profits, foreign companies will not miss an opportunity to market their products in such a lucrative and untapped market,” says Lehkyy.

Around 80% of Russia’s current medicines needs are met by imported drugs, but the Kremlin wants to see more supplies generated domestically, with a target in place to reach a 50-50 ration by 2020. The government is encouraging further construction of manufacturing facilities within Russia. Recently, Nycomed announced plans for building a plant in Russia by 2013 and Sanofi-Aventis has bought a majority stake in a leading insulin producer.

Pricing reforms to bring stability

As with other emerging markets, the regulatory and pricing environment in Russia is a good deal more volatile than established markets. This is currently reflected in the unpredictable pricing of medicines in pharmacies, but the government hopes to impose order in April with the introduction of a new maximum sale price.

This should ensure prices are the same everywhere, and ensure the market is a lot more stable and transparent than currently. Russians were taken by surprise by an overnight increase in prices at the end of 2009, causing a public outcry, which the new price controls should eliminate.

Manufacturers have to register or re-register by 1 March 2010 their maximum sale price for any essential medicines on the official list, which will set a maximum price and control wholesale margins.

Meanwhile, international pharma companies are rapidly increasing the number of sales reps working in Russia in order to capitalise on the market growth. As in established markets, this has not gone unnoticed, and has even attracted unwelcome attention from Prime Minister Vladimir Putin.

In October last year, the St Petersburg Times reported that Putin had promised to ban pharmaceutical company sales representatives from seeing doctors, concerned about inappropriate influencing of prescribing decisions.

RUSSIA’S BATTLE WITH THE BOTTLE

President Dmitry Medvedev has began 2010 with a New Year’s resolution to curb Russia’s epidemic of alcohol abuse.

Russia’s traditional toast of ‘Na zdorovye’ (to health) when drinking vodka is ironic in the light of the huge damage caused by the country’s over consumption of alcohol.

Russians are among the heaviest drinkers in the world, with annual consumption estimated to be equivalent of nearly 15 litres of pure alcohol per person. By comparison, rates in the European Union and US are around ten and seven litres per person.

This makes alcohol – most specificially vodka – one of the country’s most pressing public health problems, and has contributed to its worrying decline in population.

Previous leaders, including Mikhail Gorbachev, have tried to curb public consumption of alcohol, but these have been unpopular and proven to be unsuccessful.

President Medvedev has established healthcare as one of his primary concerns in a country that has a series of severe healthcare problems, and his ‘war against alcohol’ is a serious change in policy direction.

From 1 January, Russia introduced a minimum price for vodka.

The cheapest bottle of vodka on sale is now 89 roubles (around $3) for a half-litre bottle, but the government will have to enforce the restrictions tightly if it is to have the desired sobering effect.