Ailing pharmaceuticals producers look for state support

The Russian government is trying to revive the domestic pharmaceutical industry with calls to reduce reliance on imports.

A cure for pharmaceutical industry. The income of domestic drug producers fell to just 21% of the $5.5-billion-dollar market in the first half of this year. The Russian government prescribes an import-substitution program.

If you count the “number of packs” – Russians producers are in the lead. They sold almost 70% of all medicines in the country. But that’s because they are much cheaper. The only way to make the industry profitable is to push foreigners out of the market.

But why do pharmacies and distributors prefer imported medicines? Experts such as Aleksandr Kuzin, General Director of DSM Group, say it’s just a matter of profitability.

“For a pharmacy it’s more gainful to buy expensive medicine – and it really doesn’t matter where it was produced. Expenses are the same, storehouses are the same, but the income is bigger.”

In the first half of 2009, 94% of the money from a state program to provide free medicine for needy citizens, was spent on foreign drugs.

Viktor Dmitriev, CEO, of Russian Pharmaceutical Manufacturers Association, blames unfair competition, bureaucratic barriers and lack of real state support.

“There should be replacement at the level of sales. The industry is available to replace most imported drugs, but we are waiting for state support.”

Experts say a state offer could be just a temporary measure. Aleksandr Kuzin says the remedy to revive the national pharmaceutical industry could come from abroad.

“I think we can’t create giants such as Pfizer or Novartis in our country. We should behave as we do with car makers – invite leading foreign companies to produce their medicines at our plants.”

However, there is one more recipe for producers to become profitable – to export drugs. So far, they have not risen to the challenge.