Domestic medicine went into growth

Domestic medicine went into growth

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Currency fluctuations and the reduction of the pharmaceutical market help sales of Russian generics

Photo: TASS/Vladimir Smirnov

Russian pharmaceutical companies on the results of nine months of 2016, demonstrate significant financial growth. Analysts draw attention to the fact that this occurs against the background of reduction of the pharmaceutical market and increase prices for medicines. Better than others in this situation feel the Russian analogues of existing certified manufacturers of generic drugs: they can afford to slowly raise prices on their products, which increases their competitiveness.

One of the leaders of the domestic pharmaceutical industry, JSC “PROTEK” at the end of nine months, nearly one third of net profit, which follows from statements of the company for the company. Thus, the net profit of the company for the first nine months of this year amounted to almost 4.9 billion against RUB 3.7 billion rubles for the same period last year. The revenue of PROTEK has grown less significantly — by 17.8%, to 4.7 billion rubles.

Similar dynamics is demonstrated by another leader of the Russian pharmaceutical market — PJSC “Pharmstandard”. In the first half net profit of the company increased almost twice — from 1.66 billion to more than 3 billion rubles. The sales of “Pharmstandard” in the same period rose more than double to over 12 billion rubles, as against 5.4 billion for the first half of 2015.

As experts explain, largely the financial success of pharmaceutical companies may be due to increased drug prices. So, according to the Agency “Investkafe”, in the first three months of the current year increase in selling prices was 1%, and from April to June, this figure rose to 4%. While sales of medicines in Russia from January to June declined both in money terms — from 648 billion to 620 billion rubles, and in natural — from 2.6 billion to 2.4 billion packages. In value terms the fall was the first time in many years.

Financial analyst CC “Finam” Timur Nigmatullin said that in the first half of the pharmaceutical market decreased by 4.2 percent to 621 billion rubles. The reduction in the number of packages made up 9%, to 2,367 billion. “Thus, the decline in units was partially offset by a rise in prices”, — concluded the expert.

Analysts point out that the main business forms associated with the distribution (at the end of six months he brought the company more than 80% of revenue). According to Nigmatullina, since a little less than three-fourths of the supply falls on imports, the company is heavily dependent on currency fluctuations.

However, he notes, in recent years in the segment of production is observed the policy of import substitution. According to experts, the most actively growing sales of vehicles produced in Russia (mostly generics — analogues of imported drugs), since the cost structure allows manufacturers noticeably slower to raise their prices even with the procurement of imported raw materials. This is increasing the demand because of cost competitive advantage.

— Consistently given the weak ruble, you can expect that the segment will continue the process of import substitution. It is already clear, as manufacturers are aggressively increasing investment in new lines, the analyst said.

So, in September, Abbott and “Veropharm” (part of Abbott Laboratories) announced the opening of a new plant for the production of soft gelatin capsules at the plant in Belgorod. The new production line will produce drugs for use in neurology. In early September, Abbott opened a new pharmaceuticals plant in the Vladimir region. The company will produce almost the entire range of finished dosage forms. A few days ago the Russian pharmaceutical company “R-Pharm” has declared the beginning of the development of import-substituting vaccines of the third generation.

The head of the Eurasian division of JSC “Bosnalek” Valentine Buchneva believes that the pharmaceutical market is directly linked to the solvency of the population. And the growth of the pharmaceutical market will begin when “the real incomes of Russians will start from the bottom”.

The company estimates, in 2017 the market growth can be from 2 to 5%.