Developed World Players Buy In
After the azithromycin breakthrough, PLIVA changed its strategy to focus exclusively on its generics business. Barr Laboratories
saw tremendous value in the company's long-standing presence in Central and Eastern Europe and acquired PLIVA in late 2006
to create the third-largest generic pharmaceutical company in the world, with revenues in excess of $2.5 billion. PLIVA will
remain the name of Barr's generic business outside of the United States, and the company will continue to focus on Europe
Top-20 Manufacturers in 2006
Alojz Pungarsek, PLIVA's country manager – representative office in Russia, is excited about the situation: "There is minimal
overlap between the two companies, something very difficult to find in the industry," he says. "This is a pure synergy - it
is one of the best acquisitions ever made in the history of pharmaceuticals." Pungarsek aims to move from top-25 status in
Russia to the top-10 as a leading market in the combined group within five years, in part through the introduction of a broader
range of value-added products from Barr.
Paying a Premium for Trusted Brands
Since the quality of drugs is a concern, Russia is a market where people will pay more for recognized brands and quality.
Even though generic prescribing by international nonproprietary name (INN) is mandated by law, it is not fully applied. Tavinder
Jit Singh Vasudeva, country head for Ranbaxy, forecasts: "The Russian market will stay brand-oriented for a minimum of five
years, simply because medical professionals know more about brand names than INNs."
Pungarsek adds, "the concept of marketing in the branded generics industry is absolutely the same as it is in the innovative
industry in Russia. From time to time, it happens that branded generic products are even more popular than the originals against
which they compete."
President Vladimir Putin (center) and Jerzy Starak(left), owner of Polpharma, during Putin's visit to Poland in 2002.
"In Russia," says Pungarsek, "brand promotion and marketing policy are in fact the most important consideration, more even
than a company's pricing policy. As a result," he says, "we will continue to invest heavily in PR and branding and promotion
of the PLIVA name and products." This makes particular sense since many people believe that the price of branded generics
in Russia, one of the few true premium-price markets left in the world across a wide range of consumables, is among the highest
in the world.
Plus, the expectation that Russia will shift back to a commercially driven market in the next few years, especially as private
insurance becomes more prevalent, certainly bodes well for concerted marketing efforts in Russia.
Buying Russian Market Share
Many international companies are intent on picking up a suitable local player as a way to gain a foothold in Russia. Most
real interest has come from generics companies looking to be first to the Russian market with first-generation generics. Oleg
Feldman, general manager of COMCON-Pharma, a leader in ad hoc studies, sees buying local manufacturing capacity as the equivalent
of buying market share.
This year, Iceland's Actavis acquired ZiO Zdorovie, and Polpharma -Poland's largest producer of pharmaceutical substances-won
the contentious bidding process for Akrihin. Many companies clearly believe that Russia's pending World Trade Organization
(WTO) succession talks will not keep authorities from looking favorably upon domestic producers.