German Stada enters Russia’s pharmaceutical market

Russia's pharmaceutical market has seen a record deal – Germany`s Stada has acquired locally-based Makiz Farma for almost $US185 MLN

Russia’s pharmaceutical market depends heavily on imported medical products.

But these imports are often of a low quality, produced without licenses and crossing the border illegally.

Meanwhile, the local market is still fragmented. The anti-monopoly service tries to prevent any company holding a more than 10 % market share.

But small-scale does not put off investors, attracted by a growth rate of 30 % a year.

“The Russian pharmaceutical market is developing dynamically. Many international companies have expressed their interest in the market. I think that the number of deals can only increase in the future,” explained David Melik-Guseynov, an analyst of Pharmexpert.

According to the marketing agency DSM Group, Russia’s pharmaceutical market will top $US 11 BLN by the end of 2007.

The market is heavily supplied by imports. However, this may change as growing demand for medicines leads for more producers to enter the market and to consolidate with local players.

Germany’s Stadais only the latest to player to fall for the charms of a Russian partner. 

In 2005 the company bought a major local pharmaceutical producer for almost $US 110 MLN.

And after the current purchase is accomplished, Stada will have up to 2 % of the market.

“I think the main reason for the purchase was the market’s impressive capacity. This will develop its presence on the generic products market,” added David Melik-Guseynov

Stada follows other foreign investors in the Russian market.

This March saw Poland’s PolPharma buying locally-based factory Akripin for more then $US 120 MLN – another big deal by the standards of the Russian drugs market.

And analysts say the shortage of capacity on the market is sure to attract new international players.