2008 was the year of rise and unprecedented growth of the pharmaceutical market in Russia. Market capacity
amounted to 458 billion rubles (or 18.4 billion dollars) which is 25% higher than that in 2007.
People started to buy more goods and spend more money on their health. As a result, the volume of commercial
pharmacy segment of drugs increased by 25% and was 237 billion rubles (or 9.5 billion dollars). In 2008, the
segment growth was influenced by two factors: increase in drug prices and increase of real consumption. In
previous years, these factors had significantly lower influence. Price index of the commercial segment of drugs
was 14%. In real terms, the growth was at the level of 12% as compared to decrease of this value in 2006-
2007.
The financial crisis, which gained force in the 4th quarter, affected the market capacity in terms of foreign currencies.
While during 1-3 quarter the market growth in ruble equivalent was 10% lower than the market growth in
dollar equivalent, in the last quarter of 2008 the dollar moved up by 16% that leveled difference between growth
figures. As a result, market increased only by 28% in terms of dollar.
In 2009, the commercial market of drugs will be mainly influenced by the financial crisis. This will be expressed in
inflation with respect to drugs, particularly due to price growth the market will increase in value terms (according
to our forecasts, the growth presumably will amount to 30%). In real terms the market will decrease.
The state segment also demonstrates growth. In most cases, it is associated with the DLO program. Drug Reimbursement
Program (DLO) received new development incentive. High-priced drugs for treatment of seven
nosologies were combined in a separate program, as a result, consumption of these drugs increased almost
threefold. It was allocated a total of 73 billion rubles to finance the DLO program in 2008. According to the
monitoring data provided by healthcare authorities of the constituent entities of the Russian Federation in 2008,
medicinal products for the total amount of 66.2 billion rubles were supplied to regions (32% higher compared to
that in the same period of 2007). As a result, 61.0 million prescriptions were serviced for 57.3 billion rubles.
The segment of hospital purchases increased by 17% compared to 2007, and its volume was 54 billion rubles.
The parapharmaceutical market growth rate corresponded to the general market dynamics; in 2008, this segment
increased by 28% and amounted to 101 billion rubles. The largest segments of parapharmaceuticals are
beauty products (19%) and NS (16%). In the reporting year, growth rate of this segment was slowed, and the
market demonstrates saturation. In consideration of market trend (and financial crisis), this sector of pharmaceutical
sales will be mostly affected according to our forecasts: in 2009, parapharmaceutical sales will grow
twice slower than the market as a whole.
Drug import volume in Russia in 2008 amounted to 10 billion dollars, which is 36% higher than that in 2007.
In 2008 TOP-10 pharmacy networks grew a bit faster than the market, TOP-10 increased by 29% according to
annual results. This allowed networks to increase their market consolidation level only slightly. As a result, the
share of pharmaceutical networks amounts to 22% versus 21% in 2007. The increase in the number of outlets is
significantly lower than that in the previous years – in total, the number of outlets belonging to TOP-10 increased
only by 5%. In 2008, the pharmacy network “36.6” remains the leader of ranking. In 2008 network “A5” demonstrated
breakthrough; for the year it showed 3-fold increase in terms of turnover.
Distribution segment leaders grew commensurate with the market. In spite of lower growth, SIA retained the first
place and held more than 22% of pharmaceutical market share in Russia. PROTEK occupied the second line
with only 0.5% difference.
Mergers and acquisitions wave continues in the manufacturing segment. Manufacturers try to strengthen their
position on the market through extension of the portfolio with generic drugs. The change of the leader was the
event of 2008 for the ranking of manufacturers: due to higher growth, NOVARTIS occupied the first line by drug
sales previously held by SANOFI-AVENTIS. PHARMSTANDARD showed the best result among domestic manufacturers
occupying the fifth ranking position.
