ОЭИУФП_ОрловАС_1

Name: ОЭИУФП_ОрловАС_1
Uploaded: 2020-09-09T11:46:45.000Z
Duration: 3 h 16 min 29 s

Introduction to the Pharmaceutical Industry

Overview of the Lecture

The lecture begins with an introduction to the economic characteristics and unique features of the pharmaceutical industry.

It outlines the agenda, which includes defining industrial sectors, discussing the pharmaceutical industry specifically, and examining its structure and impact on economic indicators.

Importance of Industrial Sectors

The speaker emphasizes that various sectors, including agriculture, transport, trade, and construction, are crucial for national economic development.

Industry is highlighted as a foundational element of the economy that supports reproduction and development across all sectors.

Role of Pharmaceuticals in National Economy

Significance of Pharmaceutical Industry

The pharmaceutical sector is described as vital for ensuring public health through access to medications.

The definition of an industrial sector is provided: a collection of enterprises characterized by specific traits such as product purpose and technical base.

Characteristics Defining Pharmaceuticals

The discussion addresses whether pharmaceuticals qualify as a distinct industrial sector based on established criteria.

Unique equipment used in drug production (e.g., tablet presses) illustrates the specialized nature of this industry.

Economic Role and Social Responsibility

Key Functions of Pharmaceutical Sector

The pharmaceutical industry plays a critical role in meeting societal needs for high-quality medical products.

It also focuses on innovation aimed at developing new medications while addressing social issues related to healthcare access.

Structure within Medical Industry

The pharmaceutical sector is part of a broader medical industry framework that includes three sub-sectors:

Production of medicinal products (e.g., tablets).

Biopharmaceutical production (e.g., vaccines).

Herbal medicine production (e.g., plant-based drugs).

Current State and Challenges

Overview of Manufacturing Landscape

There are approximately 550 enterprises involved in producing pharmaceuticals in Russia.

Additionally, around 3,000 companies contribute to manufacturing medical devices and related products.

Overview of Medical Device Production in Russia

Structure of the Medical Device Industry

The production of medical devices is divided into three sub-industries, highlighting the complexity and specialization within this sector.

Impact of Industry Characteristics on Economic Indicators

Unique features of the Russian pharmaceutical industry significantly influence economic performance, including technical and organizational development.

The primary product, medicinal drugs, is classified as socially significant, necessitating stringent quality standards due to its critical role in health care.

Quality Requirements for Medicinal Products

High-quality medicinal products must meet specific requirements such as safety, sterility, prolonged action, selectivity, and shelf life.

Meeting these quality demands increases production costs due to the need for specialized equipment and facilities.

Regulatory Environment and Its Effects

State regulation plays a crucial role in drug production through licensing and certification processes that ensure compliance with established standards.

Various norms govern the organization of drug manufacturing and quality control; these include technical standards and pharmacopoeial articles relevant to specific enterprises.

Financial Implications of Compliance

Compliance with regulatory requirements leads to increased operational costs for pharmaceutical companies, impacting overall drug pricing.

Government oversight includes price regulation for medications, which adds another layer of complexity to cost management in the industry.

Workforce Qualifications and Training Needs

There are heightened qualifications required for personnel involved in pharmaceutical production; ongoing training programs are essential but costly.

Continuous professional development is necessary to maintain high-quality standards in drug manufacturing.

Production Challenges: Stability and Efficiency

Many pharmaceutical products have lengthy production cycles characterized by multiple stages that can lead to inefficiencies.

The multi-stage nature results in low equipment utilization rates and necessitates substantial inventory management efforts.

Material Costs in Pharmaceutical Manufacturing

Material costs constitute a significant portion (70%-90%) of total expenses in drug production due to high material consumption at each stage.

Key Features of Pharmaceutical Production

Cost Factors in Drug Manufacturing

The use of deposit funds increases the cost of drug production, impacting overall pricing.

Over 50 types of organic solvents and various reagents are utilized in the production of pharmaceuticals, highlighting the complexity and diversity in raw materials.

Different methods can produce the same drug; for example, caffeine can be derived from tea leaves or synthesized from urea and acetic acid.

Production Technology Variability

The choice of technology affects costs; selecting more efficient methods can lower expenses.

Specialized equipment is essential for pharmaceutical manufacturing, including tablet presses and autoclaves, which leads to higher acquisition costs due to limited suppliers.

Small Scale Production Challenges

Many drugs are produced in small batches due to market competition and the presence of alternatives, increasing per-unit costs.

Small-scale production necessitates frequent equipment adjustments for different drugs, further driving up costs.

Research and Development Costs

High scientific intensity characterizes drug development; creating a new drug can cost billions and take 5–10 years.

Not all developed drugs reach production due to regulatory hurdles like clinical trials.

Market Dynamics and Economic Impact

Frequent updates in drug assortments lead to rapid changes in available products, requiring ongoing market analysis that adds to operational costs.

The unique characteristics of the pharmaceutical industry often result in increased product costs despite some factors potentially lowering them.

Current State of the Russian Pharmaceutical Industry

Economic Context

The state of Russia's pharmaceutical industry cannot be separated from broader economic conditions affecting it.

Economic Indicators

Oil prices fell compared to previous years while inflation rates were relatively low at 3%, indicating mixed economic health.

Economic Impact of Oil Prices and COVID-19 on Russia

Fluctuations in Currency and Oil Prices

The value of the Euro reached 87 rubles, while the dollar surpassed 80 rubles. Currently, the Euro is nearing 90 rubles, and the dollar approaches 80 rubles as oil prices stabilize around $40-$45 per barrel.

Causes of Oil Price Decline

The primary reasons for falling oil prices include a decrease in global consumer demand due to the COVID-19 pandemic and a lack of agreement between Russia and OPEC regarding production cuts in early March.

Agreement on Production Cuts

On April 9, Russia and Saudi Arabia agreed to cut oil production by 20 million barrels per day starting from April, reducing total output to approximately 80 million barrels daily.

Recovery of Oil Markets

Following these agreements, there was a gradual recovery in global oil markets; however, economic conditions within Russia remain challenging due to ongoing issues related to the pandemic.

Government Response to COVID-19

The Russian government implemented various measures to combat the spread of COVID-19 which significantly impacted both economic conditions and public sentiment.

Legislative Initiatives for Healthcare

A series of legislative initiatives were introduced including allowing remote sales of over-the-counter medications and establishing lists for essential medical supplies exempt from certain regulations.

Vaccine Development Efforts

Significant resources were allocated towards developing a vaccine against COVID-19, with an emphasis on supporting medical industries through substantial funding (23 billion rubles).

Remote Pharmacy Regulations

New regulations were established for online pharmacies that allow remote sales of medications. These rules specify requirements for pharmacy operations including licensing and delivery methods.

Requirements for Online Pharmacies

Pharmacies must have been operational for at least one year, possess their own website with payment options, and utilize temperature-controlled delivery systems.

Overview of Remote Pharmaceutical Trade Regulations

Key Procedures for Medication Collection

In the absence of a buyer, medications can be collected by an individual presenting a copy or original receipt. Buyers must verify packaging integrity and contents upon delivery.

Couriers are required to demonstrate compliance with temperature regulations during the delivery of thermolabile medications. Customers may refuse medication until payment is made, in which case only delivery fees apply.

Current State of Remote Drug Sales

As of August 11, 132 pharmacies in Russia received approval from Roszdravnadzor for remote drug sales; similar numbers faced rejection due to incomplete or false information.

The majority of applications came from Moscow and surrounding regions, with refusals primarily due to non-compliance with established website requirements.

Compliance Issues and Legal Actions

Non-compliant websites will likely see reduced refusal rates once they meet regulatory standards. Some companies have been found selling drugs illegally without proper authorization.

A control purchase was conducted by Roszdravnadzor in Moscow at a pharmacy (Rus Pharma), which sold chronic disease medications without special permission, leading to legal action against them.

Public Perception and Usage Statistics

According to Romir Monitoring's survey involving 1,500 respondents, 47% do not use online drug purchasing services at all; only 13% exclusively shop online.

The demographic most engaged in online purchases are individuals aged 25 to 34 years; older populations show significant reluctance towards this method.

Reasons for Reluctance Towards Online Purchases

Common reasons for avoiding online medication purchases include convenience and speed associated with physical pharmacies, as well as the opportunity for direct consultation with specialists.

Government Measures During Health Crises

In response to the pandemic, Russian authorities temporarily lifted certain regulations on drug sales to ensure public access during health emergencies.

Decisions were made regarding customs duties on medical supplies and drugs amidst economic challenges posed by COVID-19.

Penalties for Non-compliance

Stricter penalties were introduced for selling unmarked medications; fines range significantly based on the severity of violations.

Serious offenses involving large quantities can lead to substantial fines or imprisonment ranging from three to five years depending on circumstances.

Regulation of Drug Prices in Russia

Overview of Price Regulation Decisions

A decision was made to regulate prices for medications not included in the essential drug list (EDL), which is crucial for addressing public health needs.

The government has been granted authority to set maximum retail prices for these non-listed drugs, indicating a stricter regulatory approach.

Conditions for Price Regulation

Price regulation can occur under three specific conditions: during emergencies, when there is a threat of disease spread, or if prices rise by 30% within 30 days after monitoring begins.

This regulation aims to ensure accessibility to medicines, particularly those used in treating COVID-19 related illnesses.

Vaccine Development and Production Plans

On August 11, the Ministry of Health issued registration for a vaccine against COVID-19 developed by the Gamaleya Research Center.

Production is expected to start in September at three facilities, with initial demand estimated at several hundred thousand doses and plans to scale up production significantly by early next year.

Clinical Trials and Funding

A contract was signed with the Vector Institute for clinical trials of another COVID vaccine, costing approximately 146 million rubles funded by the federal budget.

Volunteers participating in trials may receive compensation up to 148 thousand rubles; two-stage vaccination is planned before official registration.

Industry Response and Social Responsibility

Companies like Salo Farm are committed to maintaining stable pricing and supply conditions despite economic challenges such as currency fluctuations and global market changes.

Many companies have joined this initiative, emphasizing that pharmaceutical firms must balance profit motives with social responsibilities during crises.

Importance of Pharmaceutical Sector

The pharmaceutical industry plays a critical role in healthcare and economic stability; thus, it receives focused attention from the government regarding investment and quality drug production.

National Healthcare Project Overview

Funding and Allocation

The national healthcare project is a significant initiative in Russia, with total expenditures projected to reach 1.725 trillion rubles by December 31, 2024, funded through federal budgets and regional sources.

A substantial portion of the budget (approximately 1 trillion rubles) will be allocated for combating oncological diseases, while around 211 billion rubles will focus on enhancing children's healthcare services.

Additional funds are earmarked for creating a unified digital healthcare framework and addressing cardiovascular diseases.

Regional Programs and Support

The project includes various regional programs aimed at ensuring access to medications for vulnerable populations, including those with chronic or rare diseases.

Specific initiatives target individuals infected with HIV and hepatitis B/C, as well as preventive vaccination programs under the national immunization calendar.

Resource Distribution Insights

Financial Commitment Despite Economic Challenges

In 2018 alone, approximately 72 billion rubles were allocated to regional programs, representing nearly one-third of all expenditures in this area despite economic difficulties.

The government continues to prioritize funding for socially significant sectors within the economy.

Regulatory Measures in Pharmaceutical Procurement

Key regulations include the "third-party rule," which restricts foreign companies' participation in state procurement if two or more local bids are submitted.

Compliance with GMP (Good Manufacturing Practice) certification is mandatory for both domestic and foreign pharmaceutical manufacturers operating in Russia.

Combatting Counterfeit Medications

Strategies Against Counterfeiting

Recent efforts have focused on reducing counterfeit drugs through stringent regulations that require compliance from all pharmaceutical companies within the Eurasian Economic Union.

Effectiveness of New Regulations

Since implementing these rules in 2016, there has been a notable increase (2%) in domestic drug procurement during state purchases due to restrictions on foreign supplies.

Quality Control Standards

Definition of Domestic Products

As per government decree from August 2, 2016, only medicines produced within Russia or EAEU member states that meet specific technological criteria can be classified as domestic products starting from January 2017.

Quality Assurance Requirements

Manufacturers must demonstrate compliance across multiple stages of production to qualify their products as domestically produced; merely packaging drugs in Russia is insufficient.

GMP Certification Importance

Mandatory Compliance

From January 2017 onwards, obtaining GMP certification became essential for producing and selling pharmaceuticals within Russia. This requirement applies equally to all pharmaceutical firms across EAEU countries.

Inspection Outcomes

COVID-19 Impact on Pharmaceutical Regulations

Overview of Regulatory Changes Due to COVID-19

The spread of COVID-19 has significantly affected the pharmaceutical industry, particularly in 2020 when travel restrictions prevented representatives from attending international events.

To manufacture and sell medicines in Russia, companies must obtain a GMP compliance certificate, which is issued by designated organizations.

Anti-Counterfeiting Measures

A key initiative against counterfeit medical products is the introduction of drug labeling, which began in 2017. By July 1, 2020, all manufacturers were required to comply with this labeling system.

Import Substitution Strategy

The Russian government prioritizes import substitution as a strategy for developing the pharmaceutical sector while also showcasing its growth through regulations like the "third extra" rule limiting foreign company participation in public procurement.

Preferences for Domestic Producers

As of January 1st, certain medications are no longer classified as local products solely based on packaging; they must also meet comprehensive production criteria.

The government introduced price preferences of up to 25% for domestic producers who manufacture drugs through a full cycle process (from production to packaging).

Venture Financing Initiatives

Special investment contracts have been established between investors and the Russian Federation to ensure stable regulatory conditions and provide incentives for local manufacturers.

These contracts aim to boost production capabilities across various regions in Russia by supporting companies like Veropharm and others involved in innovative drug manufacturing.

Price Preference Mechanism Explained

The price preference mechanism allows Russian manufacturers to offer their products at prices up to 25% higher than foreign competitors during public tenders.

This pricing strategy enables domestic producers to remain competitive while ensuring that state contracts favor local manufacturing efforts over imports.

Government Support for Innovative Drug Production

The Russian government has allocated significant funding (6 billion rubles over four years) aimed at co-financing innovative drug development initiatives within the country.

This funding is intended to motivate businesses towards producing cutting-edge pharmaceuticals and medical devices that address pressing health needs.

Examples of Successful Investment Contracts

Notable examples include Sanofi-Aventis's investment in Orlovskaya Oblast for producing advanced insulin and AstraZeneca's modernization efforts exceeding one billion rubles focused on technology transfer for essential medicines.

Other projects include Geropharm's establishment of a facility near St. Petersburg dedicated to producing non-insulin substances under long-term investment agreements initiated back in 2017.

Overview of Pharmaceutical Developments in Russia

Challenges and Responses in the Pharmaceutical Sector

The crisis period has hindered the ability to meet obligations, leading to project terminations and operational difficulties for companies.

Despite challenges, new pharmaceutical production facilities are being established, including collaborations with major firms like AstraZeneca and Sanofi-Aventis.

New Manufacturing Initiatives

A new plant for producing the hormonal drug Utrogestan was opened in Yaroslavl, aimed at enhancing obstetrics and gynecology services with a capacity of 105 million packages annually.

Another facility in Obolensk focuses on gastrointestinal and cardiovascular disease treatments, with a maximum output of 120 million packages per year.

Expansion of Natural Medicine Production

In Bisk, Altai Krai, a complex for natural herbal medicines is being developed; while Penza has initiated solid oral dosage forms production.

Companies like Ford and Petrovax Pharm have expanded their production lines for anesthetic preparations used in various medical fields.

Innovations in Drug Manufacturing

Polysan has launched a full-cycle pharmaceutical manufacturing facility adhering to GMP standards in St. Petersburg.

Vertex has completed an innovative production complex that includes laboratories and high-storage warehouses to enhance drug development capabilities.

Government Role in Localizing Production

The government plays a significant role in promoting local manufacturing through initiatives that encourage foreign companies to establish operations within Russia.

Examples include Bayer's contrast agent production facility and Biocad's localization efforts for hemophilia treatment drugs.

Impact of State Regulation on Pricing

Government regulations have been implemented to control drug pricing, particularly focusing on reducing costs associated with essential medications listed under specific programs.

Overview of Recent Developments in the Russian Pharmaceutical Market

Regulatory Changes and Price Control Measures

A new regulation has been introduced to simplify the registration process for medications priced at 200 rubles, ensuring their availability in the market and maintaining a budget-friendly segment.

Proposed changes include mandatory price registration for essential medicines costing less than 100 rubles, based on non-indicative parameters, aimed at enhancing accessibility.

The Ministry of Health and the Federal Antimonopoly Service have developed a bill to expand the definition of interchangeable medications, with a target of 70% interchangeability by 2021, up from only 16%.

New pricing regulations will be established for interchangeable drugs to prevent excessive price increases during state procurement processes.

Introduction of New Legal Framework

A federal law was enacted in late November regarding the introduction of pharmaceuticals into civil circulation, mandating that manufacturers submit quality assurance documents to Roszdravnadzor.

This law introduces additional requirements for each batch or series of medication entering civil circulation.

Current State of the Russian Pharmaceutical Market

The Russian pharmaceutical market's volume reached 1581 billion rubles as of 2019, showing stable growth despite economic challenges.

Russia ranks 12th globally in terms of pharmaceutical market size; however, it has experienced significant growth rates compared to other countries.

Global Market Context and Trends

In comparison with leading global markets (USA and China), Russia's pharmaceutical consumption per capita remains low despite being one of the fastest-growing markets.

The global pharmaceutical market was valued at $1200 billion in 2017, with major companies like Roche leading sales figures.

Challenges and Innovations in Pharmaceuticals

The industry faces challenges due to patent expirations on traditional synthetic blockbuster drugs but is also seeing growth in biological segments that offer innovative therapies.

There is an emerging trend towards biotechnological production methods over traditional chemical synthesis, indicating a shift towards more effective treatments with fewer side effects.

Future developments are expected to focus on biologically derived medications that could revolutionize treatment options for previously incurable diseases.

Market Dynamics of Pharmaceutical Products in Russia

Overview of the Pharmaceutical Market

The implementation of pharmaceutical strategies has resulted in a financial outcome of $16 trillion, highlighting significant economic implications.

The market shows a challenging balance between domestic and imported drugs, with 30% being local products and 70% imports in monetary terms.

Comparison of Domestic vs. Imported Drugs

In terms of packaging, domestic drugs account for 60.5%, while imports are at 39.5%. This discrepancy raises questions about pricing strategies and market dynamics.

The hospital segment shows a higher share for domestic products (37.5%), indicating potential support from government policies aimed at promoting local production.

Trends in Commercial Segment

In the commercial sector, the share of domestic drugs has increased slightly from 23.8% to 28.5% since 2012, suggesting a positive trend despite slow growth.

The volume of sales remains dominated by foreign companies, with Sanofi leading the market followed by Novartis and Bayer.

Leading Companies in the Market

Only one domestic manufacturer, Oki Farm, appears among the top ten pharmaceutical companies operating in Russia.

Notable shifts include GlaxoSmithKline moving up to fourth place from ninth due to increased sales performance.

Financial Performance Insights

Domestic companies like Belcat have improved their rankings significantly over two years due to enhanced roles in state procurement processes.

Major global players such as Novartis report high net profits (around $12 billion), contrasting sharply with lower figures from Russian firms struggling with funding for innovation.

Production Dynamics and Growth

A comparison reveals that major oil companies like Lukoil also report substantial profits ($9.9 billion), indicating potential parallels between sectors if managed effectively.

In recent years, production volumes for pharmaceuticals have risen significantly; last year’s output reached approximately 386.67 billion rubles.

Sector Distribution Analysis

Overview of Pharmaceutical Production in Russia

Market Share and Production Statistics

The overwhelming majority of pharmaceutical production is attributed to enterprises producing medications, accounting for 90% of the market. Immunobiological preparations represent 8%, while specialized pharmaceutical factories contribute only 2%.

A circular diagram illustrates that the Central Federal District leads in production volume with 57.2%, followed by the Volga Federal District, and the Northwestern Federal District at just 8.4%.

Sales Distribution by Therapeutic Area

In terms of sales volume in packaging, drugs for treating nervous system disorders dominate at 22.47%. Cardiovascular treatments follow with an 18.6% share, while gastrointestinal and metabolic disorder treatments rank third.

When considering ampoule production, nervous system treatment drugs again lead with a significant share of 34.2%, followed by gastrointestinal treatments and cardiovascular medications.

Leading Domestic Pharmaceutical Companies

The focus shifts to leading Russian manufacturers as previous data included both domestic and foreign companies; this section exclusively ranks local producers based on recent sales data from early 2020.

Biocad emerges as the top seller among Russian companies, known for its research and development in pharmaceuticals and biopharmaceutical products, employing over a thousand staff including around 350 researchers.

Office Farm ranks second as Russia's largest producer of over-the-counter medications, established in 2013 after spinning off from Pharmstandard; it boasts well-known brands like Arbidol and Pentalgin.

Additional Notable Companies

Pharmstandard holds third place; it comprises four drug manufacturing facilities and one medical equipment plant across various locations including Tomsk and Ufa.

Genfarma is fourth, specializing in non-prescription medicines; fifth place goes to a group under the international company Stada AG which includes several domestic producers like Nizhpharm.

Government Policies Impacting Pharmaceutical Manufacturing

State policies aim to reduce imports while favoring local drug production; government procurement favors domestic companies if at least two are available, limiting foreign participation.

Many foreign firms are relocating their production to Russia due to these policies; examples include Fazer collaborating with various local manufacturers on different projects aimed at enhancing local capabilities.

Market Dynamics in the Pharmaceutical Sector

Overview of Market Participants

The diagram illustrates interactions among various market participants, highlighting that both domestic and foreign manufacturers are involved in producing pharmaceuticals.

Foreign producers distribute their products through wholesale companies to medical organizations and pharmacies, while consumers obtain medications from pharmacies or during hospital treatments.

Trends in Distribution Segment

Four main trends are identified within the distribution segment: business diversification, changes in leading distributors' composition, active development of warehouse structures, and growth of online pharmaceutical sales.

Diversification involves expanding company activities across multiple directions; for instance, Protect has its own production alongside distribution operations.

Examples of Diversification

Companies like R-Farm have established manufacturing complexes, while others like Novosib Him Formpart also engage in pharmacy network ownership.

BSS plans to supply laboratory reagents for immunochemistry and biochemistry research as part of its diversification strategy.

New Product Lines and Market Changes

R-Farm is set to sell Japanese cosmetics and dietary supplements under a new registered entity, indicating a trend towards product line expansion.

Protect leads the distribution market but faces competition from Pulse; several distributors have exited the market due to high pressure.

Infrastructure Investments

Pulse has successfully increased its market share through strategic regional expansion and automation of warehouses without developing its own pharmacy chain.

Distributors are investing heavily in logistics infrastructure; for example, Protect is opening a new logistics complex worth 1.5 billion rubles in Tatarstan by late 2021.

Online Trading Growth

The online trading segment is rapidly growing; Protect signed an agreement with internet retailers to enhance product availability via e-commerce platforms.

In 2019 alone, online sales reached 34 billion rubles—four times higher than in 2018—indicating significant growth potential for online pharmaceutical retailing.

Trends in Pharmacy Segment

Consolidation Trends

The pharmacy sector is experiencing consolidation through mergers and acquisitions as networks combine efforts across regions.

Recent Mergers

Trends in the Russian Pharmacy Market

Regional Networks Entering Capital Markets

The trend of regional pharmacy networks expanding into major cities like Moscow is becoming more pronounced, indicating a shift in market dynamics.

Major alliances among pharmacies aim to enhance business efficiency, with organizations acting as intermediaries between manufacturers and pharmacies for better negotiation leverage.

Key Associations and Their Impact

The Association of Independent Pharmacies (ASNA) has grown significantly, increasing its number of locations to 9,345 last year, uniting independent pharmacies under a common structure.

Another notable association is IRIS, which includes several pharmacy chains and operates across 17 regions with a logistics center in Moscow.

Innovations in Pharmacy Formats

There is a growing trend towards multiformat development where pharmacy networks operate under various brands; discount formats are particularly popular during economic downturns.

Discount pharmacies have emerged as key players within the top 20 pharmacy networks, catering to consumers seeking lower-priced medications amid financial constraints.

New Retail Concepts and Collaborations

Innovative retail concepts are being tested by pharmacy chains such as therapeutic cabinets within stores that allow for on-site consultations and prescriptions.

Collaborations between pharmacy networks and grocery retailers are increasing; for instance, contracts have been established to open numerous new points of sale within existing grocery store frameworks.

Future Directions in Pharmacy Retail

The first multiformat retail point opened by ASNA combines food products, household chemicals, cafes, and pharmacies into one location since August 2010.