The Russian pharmaceuticals sector.
In 2014-15, rising prices for medications pushed up household healthcare expenditure. Domestic producers of cheaper medications, whose prices are set by the government owing to their inclusion in the essential drug list (EDL), found their margins squeezed by rising costs of production. The economic downturn also made it difficult for the Kremlin to keep its commitment to the programme of modernising the pharmaceuticals industry, while maintaining social healthcare expenditures. Although the Russian market is dominated by the commercial segment, government purchases still represent a substantial 25.5%.
Current economic volatility impedes the progress of Pharma-2020 programme aimed at import substitution in the pharmaceuticals industry.
Declining incomes will lower demand and lead to the substitution of generic equivalents for more expensive branded products.
Margin pressures in distribution and retail will push distributors to diversify away from core business and increase M&A activity.
To contain inflationary pressures, further centralisation of state procurement will be undertaken along with allowing parallel imports.
