russian pharma market today main trends & forecasts phd (pharma) david melik-gusseynov, head of...
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Russian Pharma Market Today Main trends & forecasts
PhD (pharma) David Melik-Gusseynov,
Head of advisory board in public health committee «Business Russia» (Delovaya Rossia)Cegedim (Russia), director
+7 903 7 555 4 66www.davidm-g.ru
Supported by Main sources
Global Pharma*
*IMS Health
Global Pharma Market Value, 2004-2010 Contribution to Global Pharma Market Growth
Global pharma market growth slows further in 2009-2010
US will make no contribution to growth in 2009, “Pharmergin” markets contribute around 50%.
3|
Big Pharma
North Amercia (USA) is the largest Pharma Market in the world. But market growth rates are
decreasing year by year (CAGR +1-3%) by the reason of generics growing consumption
North Amercia (USA) is the largest Pharma Market in the world. But market growth rates are
decreasing year by year (CAGR +1-3%) by the reason of generics growing consumption
NNorth Americaorth AmericaNNorth Americaorth America
4|
Big Pharma
Stable growth rates (CAGR 15-20%) in Brazila and Mexico by the reason of population growing and new State
drugs’provision programmes (Reimbursment).
Stable growth rates (CAGR 15-20%) in Brazila and Mexico by the reason of population growing and new State
drugs’provision programmes (Reimbursment).
SSouth Americaouth AmericaSSouth Americaouth America
5|
Big Pharma
In Europe is expected sluggish growth rates (CAGR 3-5%) by main
market participants (France, Germany, UK, Italy and Spain).
Aging of population will motivate the market growth rate but situation will
not change cardinalEast Europ is in better situation by the reason of natural consumption
growing
In Europe is expected sluggish growth rates (CAGR 3-5%) by main
market participants (France, Germany, UK, Italy and Spain).
Aging of population will motivate the market growth rate but situation will
not change cardinalEast Europ is in better situation by the reason of natural consumption
growing
Europe Europe Europe Europe
6|
Big Pharma
Japan market is the second one in the world and its growth rates are expected to be near 5% annually. New onco portfolio of some local pharma companies, state programs for desease preventing,
two years restriction on price increasing – will favor the market development . State generic programs are not popular among
consumers.
Japan market is the second one in the world and its growth rates are expected to be near 5% annually. New onco portfolio of some local pharma companies, state programs for desease preventing,
two years restriction on price increasing – will favor the market development . State generic programs are not popular among
consumers.
JapanJapanJapanJapan
7|
Big Pharma
China, India and South Korea will increase their share in global
pharma market.Huge population and fantastic
growth rates will help these markets to be leaders in the world
consumption in 5 years.
China, India and South Korea will increase their share in global
pharma market.Huge population and fantastic
growth rates will help these markets to be leaders in the world
consumption in 5 years.
Asia Asia Asia Asia
8|
notBig Pharma
??Наша РашаOur Russia
Russian Pahrma Market Drivers
before 2009 2009г after 2010
Demand swithes on more expensive drugs
- -
New Sate «Reimbursment»Programms
-
New Sate «Reimbursment»Programms
New drugs launches - -
Prices increse Prices increase-
Well-being of the people -
Well-being of the people
*ЛО – лекарственные обеспечение
Main Russian Pharma Market Questions
Social sphere depends on energy import (gaz, oil, etc)
Lack of State social (healthcare) budget
Low purchaise activity
Healthcare reforms
High market volatility
Not higly developed market infrustructer
Healthcare State dotetions (subsidy). Absence of long-term capital investment in industry aimed at getting profit
Price restrictions (vital & essential drugs)
Protectionism of local manufacturers
Macroeconomics Macroeconomics
Regulation Regulation
Market Market
Russian Pharma
2009 Total Value: $15,7 bn*
*Pharmexpert
Russian Pharma Value Supply, mln $Ex-manufacturer prices
Russian Pharma Market grows fast CAGR +15%
Foreign Manufactures Dominate
State bodies try to control market more strictly as a very important social segment, which influences on politic stability
CIS Drugs Consumption Per Capita 2008-2009
127
76 77
54
37 3225 24
9
123
81
63
4635
24 2716
8
Ru
ssia
Bel
aru
s
Kaz
akh
stan
Ukr
ain
e
Geo
rgia
Mo
ldo
va
Aza
rbai
jan
Arm
enia
Uzb
ekis
tan
per capita consumption $, 2008
per capita consumption $, 2009
Pharmexpert, CISSTAT
$450 $250 $700JAPAN POLAND USA
Russian and World Pharma Infrastructure
Russia UK USA
drugstores 65 000 18 500 55 000
whalsellers 1120 10 40
manufacturers 1200 890 1800
Pharmexpert, IMS Health
Consentration for TOP 10 CompaniesMS % of TOP 10 Companies
Russia Europe USA
drugstores 19,3 70 92,4
whalsellers 78,5 98 85,6
manufacturers 34,2 42,5 46,3
Pharmexpert, IMS Health
Distributor sales dynamics
25,0
11,013,0
23,024,0
17,0
5,1
21,8
27,0
30,1 30,8 32,0
28,0
7,0
-7,4
9,6
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
gross sales growth (%, RUB) to similar period of preceding year
direct sales growth (%, RUB) to similar period of preceding year
Pharmexpert, IMS Health
Pharma market stocks:all stages of distribution chain
1st m 2nd m 3rd m 4th m 5th m
Manufacturer stage: import/manufacturing, customs etc.
Distributor stage: logistics
Drugstore, hospital stage: drug provision/sales
1.2 m 2 m 1.5 m
1 m 1 m 1 m
2008
2009
The infrastructural revolution has already occurred!
2000 2009
Market value, bn USD (retail prices) 3 510 15 700
Number of manufacturers 650 1025
MS%, TOP 10 manufacturers 29,3 33,0
Number of distributors 1800 1120
MS%, TOP 10 distributors 65,2 78,8
Number of drugstore chains 200 600
MS%, TOP 10 drugstore chains <1% 14,2
Number of drugstores 47600 65000
Pharmexpert, DSM group
Distributor concentration
45,566,6 78,8 86,3 88,7
46,4
63,275,9
83,0 85,4
ТОР3 ТОР5 ТОР10 ТОР20 ТОР40
20082009
Pharmexpert
Chain concentration
6,0 9,514,2
20,6 24,89,412,0
17,4
23,7
27,9
ТОР3 ТОР5 ТОР10 ТОР20 ТОР40
2008
2009
Pharmexpert
What is new in 2010?
Common customs tariffs for all commodity types (since 2010). An exemption (probably temporary) was made for specific commodity groups, including drugs, viz. custom duties have remained unchanged
Commodity certification regulations will harmonized
A common customs border will be in place since July 2011
This is the first stage of developing the Common economic area
Since 2010, Russia, Belarus, and Kazakhstanjoined the Common Customs Union :
Декларации - 2010The Common economic area will become operative in 2012
What will that mean for pharma market players?
Unification of the drug circulation legislation
Common drug registration system
Free drug circulation within the borders of the three countries
Development of intra-union distribution network and retail trade
Drug price control system will be in place
Expansion of sales markets for local manufacturers
State regulation of drug prices
«It goes about pharma companies and numerous intermediaries in the distribution chain striving to make super profits using imperfections of the legislation and other opportunities. The existing drug price registration system is in fact a formality. Therefore I think that it is both necessary and possible to impose a tougher regulation on part of the state. Manufacturers will have to prove that they have grounds for revising the Essential and Vital drug prices, and federal authorities will get efficient tools for checking the accuracy of their calсulations».
Vladimir Putin,Russia’s Prime Minister
*price segmentation in units.Prices fixed as of 2002.
Washing-out of cheap drugs from pharmacy product range*
11,7% 9,7% 7,9%
29,6%15,5%
20,4% 19,0%17,3% 17,4%
16,2%13,0%
13,5%30,5%
31,9% 33,3%36,9% 37,4% 40,5%
41,1%
14% 12% 18% 21% 23% 26% 28% 34%
24,1% 21,9% 18,8% 17,0% 14,5%
19,1% 19,8%10,4% 9,5% 7,9% 7,6% 5,7% 4,4%
2002 2003 2004 2005 2006 2007 2008 2009< 30 RUB 30-50 RUB 50-100 RUB 100-300 RUB > 300 RUB
ConclusionWashing-out of cheap drugs is irreversible. Regulation of Essential&Vital drug segment will speed up the process.
Pharmexpert
Potential Russian Promo Regulation
Pharma company activity
Status in new law
How to overcome
Calls to docs during their working time
Doctor could be visited in his free time (after-hours) on workplace + possibility to visit administration during working time
Presents / gifts It is possible to present something to doc officially (by contract)
Conferencies / meetings It is possible to organize conference for docs with a co-sponsor (financed by several companies)
Samples It is allowed to spread samples officially by determined quatas
DTCIt is allowed to promo OTC drugs using DTC channels
Post clinical trials It is allowed to make PCT officially in plenipotentiary clinics
Pharmaceutical Company Settlements
for violation of marketing laws
$ 1,42 billionfor improper drug
promotion
$ 2,3 billon
for violating laws relating to potential off-label
marketing and promotion of Trileptal
$ 185 mln.
2010 2010
for mislabeling Botox
$ 600 mln.
2010
2009
for illegal marketing of schizophrenia drug
Seroquel
$ 520 mln.
for improper billing and irregular pricing
practices
$ 650 mln.
2008 2009
Global Pharma Promo Activity
+ 35.3 %
- 17.2 %
+ 6.4 %
- 0.1 %
+ 10.4 %
- 3.5 %
- 14.5 %
+ 15.2 %
% change
2009 / 2008
$90.7 $91.7 $93.2
+1,1% +1,6%
GLOBAL TRENDS Spending in $ bn
Russia’s President outlined key parametersfor pharma market development
The drug market has been developing dynamically due to the state programs and funds that have flowed to this sphere. It has been growing by 10–12 percent on average year-on-year. According to expert calculations, drug sales in this country will amount to about 1.5 trln rubles in 10 years, which is quite impressive. In fact, we must reach the average European drug consumption level that will, in the long run, be translated in longer life expectancy and higher living standards. Medical equipment sales must also be growing at a high rate. The main thing is to act in the interests of Russia’s citizens and local manufacturers.
Dmitry Medvedev speaking at the meeting of the Committee for Modernization and Technological Development of Russia’s Economy, city of Pokrov (Vladimir region), 31 Aug 2009
Experts’ estimationsbln USD, consumer prices, Rx+OTC, incl VAT
23 00019 25015 700
+22,5% +19,5%
Thank you!www.davidm-g.ru
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