Industry Trend Analysis - Localised Drug Manufacturing Will Provide Lucrative Drugmaker Revenue Growth - MAR 2018

BMI View: Multinational pharmaceutical investment into Russia over the past 10 years has been significant, and we foresee this trend continuing. Opportunities within the domestic market are considerable , while the Kremlin ' s ambitions to increase pharmaceutical exports to neighbouring markets will provide additional revenue-earning opportunities.

The Kremlin's localisation policies continue to drive the development of Russia's domestic pharmaceutical industry. Driven by the Pharma 2020 policy, launched by President Vladimir Putin in 2009, there has been a significant uptick in investment within the market. Between 2006 and 2016 multinational pharmaceutical firms have reportedly invested over USD5bn in direct investments into the market, such as M&A activity, capital expenditure projects and partnership agreements on manufacturing. When wages and other indirect effects are included, these investments were reportedly worth over USD30bn to the Russian economy.

Of course, the Pharma 2020 plan was not intended to solely attract foreign drugmakers to localise production, although the increasingly stringent state procurement legislation has clearly stimulated this trend ( see ' Domestic Pharmaceutical Industry To Continue To Expand ' , January 6 2017). In addition to the investments made by multinational firms, the Russian pharmaceutical industry has flourished with the establishment of a number of major players.

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