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People in Russia spend each an average $37 on medications annually
In the West, this figure is ten times as much. But the Russian pharmaceuticals market is now one of Europe's fastest-growing. Its current volume is $4 billion, and experts expect it to double in four or five years' time. "The pharmaceuticals market grows by an annual 10% to 15%, on the average," says Oleg Mikhailov, Acting Chief Executive Officer of the National Association of Pharmaceuticals Producers. All segments of Russia's pharmaceuticals market posted growth at the beginning of this year. Imports increased by 23%; domestic production, by 36%; exports, 55%. Russian-made pharmaceuticals' share in the market's $4bln volume is 30% in monetary terms and 70% in terms of quantity. New medications keep coming to the market, pushing older ones to the sidelines, Mr. Mikhailov says. The production of generic drugs is currently on the rise. These are no inferior to European brand-name originals in terms of quality, but cost much less. The segment brings in big profits. But there's a shadow market here, which takes away 7% to 12% of the proceeds. Government inspectors have now been mobilized to crack down on illegal dealings at the pharmaceuticals market. According to our interviewee, one other reason for the ongoing growth of Russia's pharmaceuticals market is that the Russian government follows the example of Western welfare states, increasing spending on public health. It now allocates some $2 billion to meet the medication needs of the least advantaged of the population groups. As for imported drugs, most of them come from pharmaceutical heavyweights, and are quite expensive. The major suppliers of pharmaceuticals to the Russian market include Western European countries (most notably, Germany), the United States, Canada and Japan. In 2003, the combined share of these countries in total imports was as much as 62.7%. Russian-made drugs are exported mainly to other former Soviet countries. But Russia's pharmaceutical industry has all it takes to conquer the European market, Mr. Mikhailov believes. Russia's large pharmaceutical companies are now preparing for the staged introduction, starting in 2005, of the universally accepted Good Manufacturing Practice standards. They invest in programs to build new production facilities, replace outdated equipment, and upgrade personnel.
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