Russia’s pharmaceutical market is one of the fastest growing in the world and is expected to reach $36.61 billion by 2021, according to GlobalData, a recognised leader in providing business information and analytics.

The company’s latest report, CountryFocus: Healthcare, Regulatory and Reimbursement Landscape – Russia,  reveals that the key market drivers are improving regulatory guidelines together with  government initiatives to develop the domestic pharmaceutical market.

However, limited access to healthcare facilities, price cuts, high Out-Of-Pocket (OOP) payments and low R&D expenditure are likely to restrain market growth.

The Russian pharmaceutical market comprises two business segments: the commercial market and the government procurement market. The commercial market dominates, accounting for 73% of overall value and 85% of volume. However, domestic products only accounted for $6.05 billion, or 28%, of the commercial market in 2015.

Sharath Chandra, Healthcare Analyst at GlobalData, commented: ‘The Russian Government’s Pharma Strategy 2020 is aimed at  boosting domestic production of  pharmaceutical and medical device products.”

“Consequently, several multinational pharma giants such as Novartis, Takeda, Teva, Novo Nordisk and AstraZeneca have established their manufacturing facilities in Russia since 2011, and GlaxoSmithKline, Pfizer and Bayer have signed partnership agreements with domestic manufacturers.”

The government has also implemented a policy of import substitution in more than 20 sectors including pharma. This aims to gradually reduce the importation of foreign-made industrial products and replace them with domestically produced alternatives targeting a 50–100% reduction by 2020.

Prescription drugs dominate the pharmaceutical market, accounting for 59% of sales in 2015, worth $17.80 billion, OTC drugs accounted for 36%, worth $10.64 billion and food supplements 5%, worth $1.38 billion.

In August 2017, the Russian State Corporation (Rostec) and local pharmaceutical manufacturing company Marathon group announced a merger. The new company will focus on building a national pharmaceutical distributorship together with developing and manufacturing innovative new domestic medicinal products.

Marathon Group produces around 350 drugs and medical products while Rostec Natsimbio produces vaccines against TB and viral hepatitis.

The medical device market in Russia was valued at $6.7 billion in 2016 and is forecast to reach $8.5 billion in 2021. The key driver of growth is an ageing population and consequent demand for healthcare products and services. Major segments likely to experience high growth are ophthalmic devices, wound care management, cardiovascular devices, orthopedic devices and diagnostic imaging.

The government has also introduced the Comprehensive Programme for the Development of Biotechnology in the Russian Federation through to 2020.

The programme sets targets for the development of the biotechnology market and will require $31.8 billion in financing from 2012 to 2020. The government is planning to construct 10 factories for the manufacturing of biogenerics by 2020, with an investment of $265.3 million.

Sharath continued: “Biotechnology serves as a key driver for growth in the pharmaceutical industry by introducing new and improved products and innovative technologies, adding revenue streams, improving the quality of life of patients and extending patient life.”

With a growing pharmaceutical market, there is a wide opportunity for the development of biosimilars. Since 2014, 20 erythropoietin biosimilars, 53 interferons biosimilars, 42 monoclonal antibodies biosimilars, 61 insulin biosimilars, 11 somatropins biosimilars, 24 granulocyte-colony stimulating factor biosimilars, 55 heparins biosimilars, 31 plasma coagulation factor biosimilars and 9 r-coagulation factor biosimilars have been granted market authorisation.

The Ministry of Health is the regulatory body responsible for the reimbursement process in Russia. In 2016 the Federal Compulsory Medical Insurance Fund, estimated that 53 insurance companies covered the entire population.

Sharath added: “The government has initiated several reimbursement programmes to provide better healthcare in the country. Public funding for drugs is operated through programs including: Vital and Essential Drugs (VED), Seven rare expensive diseases/ Seven Nosologies Program (VZN) and Essential Drug Reimbursement Program (ONLS).’’