Russian pharma experiencing difficulties due to rising raw material prices
Last year, the Russian pharmaceutical industry saw a jump in prices for imported active pharmaceutical ingredients (APIs) by almost a quarter, an absolute record in the modern history of the local pharmaceutical market.
Russian drug manufacturers are faced with a sharp rise in prices for active ingredients, reports The Pharma Letter. According to a recent study conducted by local analytics company RNC Pharma, domestic drugmakers’ costs have increased significantly in recent months due to rising prices for imported pharmaceutical substances. In 2020, APIs grew by 24% in Russia compared to the previous year, mainly because of the devaluation of the ruble.
As some 75% of all drugs produced in Russia are made from foreign APIs, the country is heavily dependent on ingredients imports. Local manufacturers state that the production of some drugs is unprofitable for them due to the ongoing growth of prices. The largest increase was registered among active ingredients used in the production of drugs against COVID-19. Most of these components are imported from India and China, and some supplies from these countries have been restricted in recent months to benefit local drug manufacturers.
In April 2020, a number of companies including Pharmstandard, Dalkhimpharm and Biosintez informed the Russian Ministry of Industry and Trade about the possible termination of production of more than 50 drugs including those from the list of vital medicines. According to Russia’s legislation, manufacturers of vital medicines can raise prices annually in accordance with the inflation rate but not more than by 6%. In November 2020, the government relaxed this rule allowing raising the prices in case of a shortage. Nonetheless, several sources in Russian pharmaceutical companies reported that the situation had not changed dramatically.
This year, the government has made a new attempt to solve the problem. In March, the Ministry of Industry and Trade started working on a legislative act in favour of suppliers of medicines produced in Russia on a full-cycle basis, which means APIs must be also produced domestically. While the ministry believes that such a measure will contribute to the development of the production of active ingredients within the country, the initiative caused criticism among market participants and consumers. Several organisations including the National Association of Manufacturers of Pharmaceutical Products and Medical Devices and the All-Russian Patient Union asked Prime Minister Mikhail Mishustin to block the proposal, as they believe it may hinder healthy competition in the domestic market.