NO MORE BEARS IN MOSCOW
Igor Kouznetsov, general director of domestic distributor Euroservice, taunts at an old stereotype. Kouznetsov tells the international
community, "Bears do not walk the streets of Moscow anymore!"
Of course, Western media is fond of this country—it has a certain talent for good scandal. However, those living here find
that this side of Russia is unequivocally exaggerated. "Don't believe everything you read in Western newspapers," dismisses
Baker & McKenzie's Paul Melling. Melling maintains that it is plausible, reasonable, and practical for organizations to conduct
ethical business in Russia. As one of the country's most prominent litigators, Melling maintains, "Compliance, ethics, etc.,
are no longer abstract issues—they are now truly critical."
Alexander Demidov, GFK Managing Director
Pharmstandard, Russia's largest domestic pharmaceutical player, illustrates the new Russian compliance. The company went public
in 2007 with an IPO on the London Stock Exchange, and has proven a valuable asset for investors. CEO Igor Krylov speaks of
reputation: "We constantly consider our reputation—and not only do we consider it, but we act accordingly. We try to operate
in accordance with people's expectations of this company." Krylov continues, "We are open, and transparent. It is not easy
to be public, especially on the Russian market—but we try to do our best for our shareholders. We constantly think of the
investors. This is why our reputation is very important." Any ethical slip would prove thunderous for the company. Is Russia
so familiar, after all?
The economy's maturation is easily visible in the diversification and increasing saturation of markets. It is visible in the
commercialization of services and mounting specialization. For example, as more companies sell more products across more sales
channels, they have an increasing need for market research service providers to explain consumer attitudes.
Arkadiy Nekrasov, Petrovax General Manager
Alexander Demidov, managing director of GfK RUS, an affiliate of the global research giant, studies consumer choice and consumer
experience. Prior to the fall of the USSR, Demidov was a pure scientific researcher. As he explains, "Historically, market
research was never a business in this country. In the Soviet Union, for example, it was a purely scientific field. In those
times, market research took the form of a sociological survey." It was only with the dawn of the capitalist era, and the internationalization
of the territory, that a company like GfK could do business in Russia.
Demidov was himself surprised at the transition. Nonetheless, as the years have gone by, his healthcare research division
has reached the fourth position globally for GfK, and continues to expand its offering. The commercial market matures further,
services become more dear; GfK will have to expand its offering to include consultation.
Not only is the political and commercial environment transformational, but the public is in many ways modernizing, as well.
Look toward the indicators of a country in transition. One aspect of Russia's modernization is practical: the demonstrable
rise of a middle class.
To illustrate, we can consider Reckitt Benckiser. The Russian affiliate's manager, Bruno de Labarre, is in the fast-moving
consumer goods (FMCG) business, in addition to the over-the-counter (OTC) pharmaceuticals business. His operations are quite
directly indebted to middle-class consumers—and business is blooming. De Labarre describes, "The middle class is indeed rising
at an exponential rate, and this rise is very palpable. Look at our own company; we have 150 people in this office. Two years
ago, we had 80 people. Five years ago, we had 50." In fact, when de Labarre joined the affiliate in 2002, the organization
numbered 32 people in total. Today, across Russia and CIS, it boasts 2,700.
"So we can see from, shall we say, our 'normal life'," de Labarre goes on, "that the middle class is growing—because it is
driving our need to expand operations. We are not simply speaking of economic figures one might read on a piece of paper—it
is the reality of business today."
Galderma's newly appointed Russia director, Denis Patrashev, describes a transition from a country largely focused on basic
disease to a country that begins to consider a more holistic health approach. Patrashev, whose business is dermatological,
tells Focus Reports, "A growing interest in pure dermatology, aesthetic dermatology, skin care, etc., is a sign of the population's
well being. Indeed, when a society is poor, it can only think about social diseases like oncology, COPD, etc.—it needs to
think about its basic health. However, when you transition toward a healthful population, and you have money to care about
something more than just basic disease, you start to think about not only health but also aesthetics. For me, Russia has reached
this stage. The economic situation is quite favorable; people have enough money to consider 'supplementary' channels of care."
Galderma experienced an astounding 82% growth in 2010, and Patrashev is categorically optimistic about the business. As ever,
the societal development propagates outwards from the great cities; and yet all of Russia modernizes, by steps.
The nation is, in exceptional cases, even innovating for the world market. Petrovax, a local enterprise, has managed an admirable
landmark: penetrating the highly regulated European Union market with innovative medicine. Arkadiy Nekrasov, Petrovax General
Manager, believes that his is quite likely the first Russian company to do so.