Russia: The Rise (and Fall) of Healthcare - Pharmaceutical Executive

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Russia: The Rise (and Fall) of Healthcare


Pharmaceutical Executive


Despite its frustrations with the DLO, Lilly is committed to the program. "Access to innovative, often life-saving medicines is still limited in this country," asserts Jentzsch. While Lilly has historically focused on diabetic care in Russia - and these treatments still account for 50% of Russian sales - diabetes takes a back seat to the Russian unit's leading role in Lilly's global multilayer philanthropic initiative on multidrug-resistant tuberculosis (MDR-TB) in partnership with the WHO.

The initiative supports essential activities in the world's MDRTB hot spots - China, India, Latin America, South Africa and Russia, where the WHO states that 86 new cases of tuberculosis are recorded per 100,000 people per year, more than six-and-a-half times the EU average.

Jentzsch explains the Russian role: "We started by funding training activities in a specialized treatment center in Tomsk which have greatly decreased mortality. This now forms the basis of training conducted in specialized research centers throughout Russia. We also transferred drug manufacturing technology for two MDR-TB antibiotics - capreomycin and cycloserine - to SIA International, one of Russia's top-two diversified distributors and pharmaceutical holdings. Their personnel will be provided with the specific training required to best utilize this technology in accordance with good manufacturing practices and to help ensure the quality and sustainability of drug manufacturing."

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The Russian Psyche


Jostein Davidsen sees Russia as a Top Five European pharma market in five years and as the biggest in Europe in ten years
The most successful foreign managers in Russia agree on some basic principles - beyond the preference for a Russian bride. A Russian proverb illustrates the Russian reality: "People know each other when they have eaten one pud (35 lbs) of salt together. It would take a lot of time for the two of us to eat a pud of salt together." Close relationships are not easy to cultivate with the Russian people; it takes time, but if a Russian trusts you, he will trust you until the end.

Accordingly, 5 to 10 years is the best length of stay in Russia. This is the view of Jostein Davidsen, managing director, Russia-CIS for Denmark's Nycomed, who has probably worked longer than any other foreigner in the Russian pharmaceutical industry - since 1988.

Davidsen, the leader of the consistent top-10 market player, believes that while Russia is still an emerging market with a system that is not completely transparent or in compliance, things have changed since the early and mid-1990s. "No longer is it a jungle where you need to build your home for yourself," says Davidsen.

The companies that historically have been the most successful in Russia - Sanofi-Aventis, Gedeon Richter, Berlin-Chemie Menarini and Nycomed - have had mixed portfolios that are adapted to the market, including many products not sold in the West. Nycomed, which has the largest field force in Russia (with a headcount of 800), still benefits from the strength of some Soviet-era products while also building on innovative, high-tech hospital products, branded generic beta blockers, type 2 diabetes and pain generics, and a large over-the-counter (OTC) portfolio.

Before the acquisition of the much larger Altana, which gave Nycomed research and development capabilities, Nycomed derived 26% of its 750 million ($975 million) in group revenues from the Russia-CIS region, its biggest market. Even following the acquisition, Davidsen is confident that his region will still be the second-biggest market after Germany. "While the new Nycomed will be less dependent on the Russia-CIS market," says Davidsen, "I'm very doubtful that the focus will be less."

The question now is whether or not Davidsen will set up a Greenfield factory in Russia. "From both a capacity and cost perspective, it's probably easier and cheaper to import products into Russia at the moment," reflects Davidsen. "Greater participation in reimbursement programs will never be the sole criterion in a decision to produce locally; however, given a strategic five- or 10-year plan, when I believe that Nycomed and all the top-10 or top-15 companies probably plan to exceed the $1 billion annual revenue mark in Russia, it might become quite beneficial from a logistics point of view."


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