Why this is important to Wisconsin businesses: This strong growth is creating opportunities for Wisconsin companies.
The pharmaceutical market in Russia is one of the fastest growing globally, and is set to rise from $21 billion in 2016 to $39 billion by 2021, representing a compound annualized growth rate of 13 percent.
The Russian pharmaceutical market comprises two business segments: the commercial market and the government procurement market. The commercial market dominates, accounting for 73 percent of overall value and 85 percent of volume. However, domestic products only accounted for $6.1 billion, or 28 percent of the commercial market, in 2015.
Prescription drugs dominate the pharmaceutical market, accounting for 60 percent of sales in 2016, worth $17.8 billion; over-the-counter drugs accounted for 35 percent, worth $10.6 billion, and food supplements 5 percent, worth $1.4 billion. By volume, generic drugs accounted for 65 percent of marketed drug sales. In 2016, spending per capita on medicines was $115 per person, which placed Russia 16th out of 32 Central and Eastern European countries.
Key market drivers include improving regulatory guidelines and government initiatives to develop the domestic pharmaceutical market. Although the Russian government has instituted programs with the goal of achieving domestic market share of 50 percent by 2020 (known as the “Pharma 2020 Strategy”), this seems unlikely to be achieved. However, in a broader sense it aims to reduce Russia’s reliance on imported pharmaceuticals.
Even as reliance on imports decreases, there remain excellent opportunities for Wisconsin companies to export finished and semi-finished medical products to this market, and to seek Russian partners for strategic alliances. In addition, Russia's increasing focus on biotechnology may provide ample opportunity for biopharma companies in Wisconsin. With a growing pharmaceutical market, there is a wide opportunity for the development of biosimilars. Despite the challenges that U.S. companies face as the result of this strategy, there are indeed opportunities, including licensing agreements and technology transfer for pharmaceutical companies, as well as sales of pharmaceutical equipment.
The most widespread diseases in Russia are cardiovascular diseases, cancer and HIV. As a result, pharmaceutical products addressing these ailments are the leading subsectors for the pharmaceutical industry in Russia. The factors that contribute to spreading of these diseases include a high rate of cigarette smoking—39 percent, compared to 23 percent globally and 27 percent in Europe, according to the World Health Organization report in 2015. Moreover, per capita alcohol consumption (in liters of pure alcohol per year) was an average of 15.1 between 2008 and 2010, compared to 6.0 globally and 10.9 in Europe countries. Especially given these substance use patterns, the Russian pharmaceutical market has great potential to expand as the population grows and ages.