Industry Trend Analysis - A Key Emerging Market Growth Driver In 2017 - APR 2017

BMI View: Russia will be a key emerging market pharmaceutical sales growth driver in 2017 given a reversal of the challenges facing these firms in 2016. Brent crude prices have begun to gradually increase, providing a boost to the economy and an improvement in consumer purchasing power. However, while the considerable unmet demand for medicines will buoy revenues, the growth of the domestic industry may lead to longer-term pricing pressures.

The return of Russia as a key emerging market growth driver for multinational pharmaceutical firms continues to accelerate. The reversal of the challenges posed to drugmakers in the market began to become apparent close to the end of 2016 and was visible from an analysis of multinational pharmaceutical firms' Q316 results ( see ' Return To Key Emerging Market Medicine Growth Market ' , November 28 2016). We anticipate that 2017 will provide further upticks in medicine revenues.

Many pharmaceutical firms have highlighted ongoing challenges in emerging markets. These include currency effects in Latin America, in particular Venezuela, pricing pressures in China ( GlaxoSmithKline) and reduced government healthcare expenditure in Saudi Arabia ( AstraZeneca). Russia, however, was not highlighted in this regard. Indeed, a number of multinational pharmaceutical firms have identified the strong growth of sales in Russia as a key driver to emerging market growth.

Economy Follows Oil Price Recovery
Brent Crude Oil Price (LHS) & Russia's Economic Outlook (RHS)
e/f = BMI estimate/forecast. Source: BMI

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