API production in Russia: scarce but slowly developing

Over the past few years a trend toward slow development has been observed on the part of producers of pharmaceutical substances in Russia. Domestic manufacturers of substances have not only resumed production but also broadened the range of manufactured substances. However, API production in Russia is still not a particularly substantial component of the business of pharmaceutical companies. It has been estimated that only 15% of API consumed in Russia are produced on the domestic market, according to the latest PMR Publications report “Pharmaceutical contract manufacturing and API sourcing in Russia, Ukraine and the Baltic States 2011”.

China and India constitute stiff competition for Russian API companies
After 1991, production of pharmaceutical substances in the Russian Federation was reined in because of the limited profitability of the produce, in addition to the abolition of tax allowances for manufacturers of medicines. At present, most of the market is accounted for by substances made by Chinese and Indian producers. The quality of the substances produced by Asian companies does not always meet international requirements, but these countries constitute stiff competition in terms of, for example, export costs – with inexpensive exports from China posing the most serious threat. “Interestingly, however, the differences between China and the other countries have become significantly less substantial over the last three years – in 2008 exports from China cost half as much as those from the cheapest country in Central and Eastern Europe but they have been becoming more expensive in recent years” says Monika Stefanczyk, PMR’s Head Pharmaceutical Market Analyst and the report’s coordinator.
 
Lack of GMP standards impedes development of Russian pharmaceutical industry
The implementation of GMP standards by Russian manufacturers is slow, and the deadline has been moved several times. However, all companies in Russia must comply by January 2014. This could enable the country to join the WHO Pharmaceutical Quality Assurance System. Many small Russian companies which currently produce APIs at very low prices will have to stop production if they do not succeed in implementing GMP rules before the deadline.
At the same time, knowledge of GMP rules is limited and many companies misunderstand them, even when they pertain to ISO standards.
 
Russian pharmaceutical industry innovative in future?
The Federal Target Programme (FTP) “Strategy for the development of the pharmaceutical industry of the Russian Federation between now and 2020” (Pharma 2020) is designed to encourage the transition of Russia’s pharmaceutical industry to an innovative development model. Approximately RUB 36bn (€900m) is to be spent on this, and the construction of about 200,000 m² of facilities will be funded to produce sterile and non-sterile pharmaceuticals. Russian companies might, therefore, be more attractive partners in the future. In all, to achieve the goals of Pharma 2020, the Russian prime minister, Vladimir Putin, has promised that RUB 120bn (€3bn) from the federal budget will be invested before 2020 in the modernisation of the Russian pharmaceutical industry. Private investments by Russian and international drug producers could come to as much as RUB 68bn (€1.7bn). Of the total sum of RUB 188bn (€4.7bn), RUB 154bn (€3.8bn) will be set aside for research and development. The government strategy also envisages the production of domestic substances sufficient for the production of 50% of all drugs in terms of value, along with an eightfold increase in exports in comparison with those of 2008. This might encourage foreign companies to produce their drugs in Russia through local companies.

This press release is based on information contained in the latest PMR report entitled "Pharmaceutical contract manufacturing and API sourcing in Russia, Ukraine and the Baltic states 2011".



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