Russia. The Russian pharmaceutical sales market, estimated at $7 billion and growing at double-digit rates, is dominated by foreign
pharmaceutical companies such as Johnson & Johnson (Raritan, NJ), Novo Nordisk, Roche (Basel, Switzerland), Sanofi-Aventis
(Paris), Nycomed (Zurich, Switzerland), and Menarini (Florence), as well as by foreign generic-drug companies such as Gedeon
Richter (Budapest) and Lek (Ljubljana, Slovenia) (2).
The main attractions of the Russian market are its large population, growing middle class with access to private insurance,
willingness to pay out-of-pocket for many high-cost drugs, and large demand for drugs to treat chronic conditions. Among the
challenges facing any drugmaker are the sheer size of the country and poor infrastructure outside of the most populated areas.
In addition, intellectual property enforcement in Russia continues to be lax and counterfeiting of pharmaceuticals is a major
problem, while corruption, lack of transparency, and red tape often cause delays in market approval. There are also questions
about the sustainability of the state drug program, DLO (Dopolnitelnoe Lekarstvennoe Obespechenie, which translates into the
Provision of Supplemental Medicines), launched in 2005 to make medicines more accessible to veterans, retirees, and low-income
During the past few years, a number of foreign generics companies, including Stada Arzneimittel AG (Bad Vilbel, Germany),
Polpharma (Warsaw, Poland), and Actavis (Hafnarfjordur, Iceland), have acquired Russian dose-manufacturing sites and, together
with them, instant market share. Stada, through its subsidiaray Nizhpharm in Nizhny Novgorod, which it acquired in 2004, last
year purchsased three companies belonging to the Makiz group with facilities in Moscow and Ryazan. Polpharma acquired a stake
in Akrihin in Staraya Kuparna near Moscow, and Actavis purchased a majority stake in Zio Zdorovje in Podolsk, near Moscow.
Others, among them Slovenia's Krka, have built their own manufacturing sites in Russia from scratch. Krka opened a facility
near Moscow for manufacturing solid-dose forms. It has been reported that Teva is considering building or buying a plant in
Russia by May 2009.
Generics are not the only ones looking to acquire or build manufacturing facilities in Russia. Among pharma companies that
have already built a facility in Russia is Servier (Paris); Servier's manufacturing facility is located in Sofyino, near Moscow.
Nycomed and Pfizer (New York) are speculated to be looking for construction sites or existing facilities that they can upgrade.
Setting up a manufacturing base in Russia helps foreign companies take advantage of the country's lower cost base and provide
insulation against potential protectionist measures by the Russian government.
India. India, the fourth largest pharmaceutical market by volume and 13th largest by value, is experiencing an economic boom, and
the size of its middle class is growing, giving more people access to medicines (3). Together with the growth in incomes,
the rates of certain diseases, among them diabetes and cardiovascular problems, also have been increasing.
Figure 1: The number of established, less established, and potential future active pharmaceutical ingredient (API) manufacturing
groups headquartered in India and China. Established groups have several years of experience supplying APIs to regulated
markets. Less established groups have regulated market experience with fewer products or fewer years of experience than established
groups. Potential future companies would like to start supplying to regulated markets.
Major pharmaceutical companies have been selling their older brand products in India for many years. During the past decade,
they also have launched some products in India that still enjoy patent protection in the rest of the world, among them AstraZeneca's
(London) "Nexium" (esomeprazole) and Pfizer's "Viagra" (sildenafil). Taking things a step further, Pfizer is planning to develop
several products specifically for the Indian market. Novo Nordisk also has announced growth plans for India's market and is
expanding its collaboration with Torrent Pharma (Ahmedabad), which is running a dedicated insulin manufacturing facility for