Industry Trend Analysis - Pharmaceutical Company Investment Momentum To Continue - FEB 2018

BMI View: We maintain our view that the Russian domestic pharmaceutical industry will expand, driven by government policy . Increasingly protectionist policies will increase the need for full-cycle production facilities located within Russia in order to navigate public tender regulations. Despite a lack of transparency in the business environment, multinational firms will continue to invest given the lucrative opportunities for revenue growth in the market.

The Kremlin's increasingly protectionist rhetoric continues to drive the rapid expansion of the Russian pharmaceutical industry. Driven by the Pharma 2020 plan, the government has sought to incentivise investment into local medicine production to increase self-sufficiency and to utilise the industry as a means to drive economic activity. Investment has indeed accelerated in response to this policy ( see 'Domestic Pharmaceutical Industry To Continue To Expand ' , January 6).

Given Russia's position as an emerging market revenue growth driver, it will continue to attract investment from multinational firms despite the prevailing risks from the regulatory environment, notably poor enforcement of intellectual property protection. Moving into 2018, the country will enter the third phase of the plan (2018-2020), which aims to boost Russian medicine exports as well as the production of innovative medicines. While there have been a number of developments that may signify an improvement in the operating environment, and therefore an improved outlook for patented medicines ( see 'Outside Risk Of Transformative Changes For Drugmakers', November 23), growth in the domestic pharmaceutical industry is likely to remain almost exclusively within the generic medicines sector.

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