Vadim Muzyaev, Protek JSC: ‘Medicine will turn upside down within 10-15 years’
Russian factories have set up conveyors for the production of generics of original drugs from Western companies
“Import substitution is taking place not only at our factories, but also at all Russian pharmaceutical enterprises to its full extent," Vadim Muzyaev, the president of Protek JSC, told Realnoe Vremya. In the interview with our publication, the head of the largest group of pharmaceutical companies in Russia said that already more than 70% of medicines in the country are of domestic production. Read more about how the industry is “mastering” import substitution, whether there will be cheap medicines in our pharmacies, and where medicine is heading around around the world — in our material.
“Import substitution is in full swing”
Mr Muzyayev, the situation is now known: in all spheres, various restrictions have been introduced and continue to be imposed on Russia and companies from our country. How is the situation in the pharmaceutical industry being in this regard?
I can assure you: not a single foreign supplier, and we work with all the world's leading pharmaceutical companies, the so-called “Big Pharma”, has broken contracts with us for the supply of medicines. They are proceeding as planned. We supply virtually all of Russia, from Vladivostok to Kaliningrad and Crimea. Everything is operating normally. Not only Protek group of companies, but also other major distributors and pharmacy chains in our country. I think everything will be fine in this regard.
Protek, as you know, has factories Rafarma in Lipetsk Oblast and Sotex in Sergiev Posad near Moscow, which implement a programme for the production of generics. These are the first or second generics after the fall of patent protection of original drugs of Western companies. Import substitution is taking place not only at our factories, but also at all Russian pharmaceutical enterprises to its full extent.
Are these the tasks that the state sets for you?
The Ministry of Industry and Trade, headed by Mr. Manturov, and the Ministry of Healthcare with Mr. Murashko, as well as Roszdravnadzor, work very closely with businesses, solve issues of providing all kinds of assistance — we are constantly present at these meetings.
They ensure the investment attractiveness of the development of the pharmaceutical industry through a guarantee of the procurement of medicines that will be produced by one or another enterprise. Today, colossal steps are being taken by the federal government to help businesses with both money and regulation in terms of speeding up registration and clinical trials. As much as possible is being done. Including as part of the adoption of new laws by the State Duma.
For example, the government decided to change the legislation regarding the registration of medicines. It lasts 1,5-2 years, now this process is being accelerated — this is very important for medicines. In particular, we are working closely in the field of oncology, neurology, etc. And all Russian companies are doing it. Now more than 70 percent of the medicines used in our country are already domestic.
Is there a question of a one-hundred-percent substitution?
It will probably be difficult to make a one-hundred-percent substitution. The minimum required for original drugs produced by Western companies has patent protection.
Basically, we import original drugs for the treatment of rare orphan diseases. The work of charitable foundations is often shown on television in situations where one injection for a child sometimes costs 150 million rubles. Yes, unfortunately, such medicines are not produced in Russia. Therefore, while patients use foreign ones. But I emphasise once again: health is not subject to sanctions. This was the case in 2014 and now: none of the foreign manufacturers refused us — medicines are medicines.
“The construction was started with one contractor, finished with another”
“The new warehouse centre in Kazan was built longer than the stated time. Dmitry Pogrebinsky, CEO of Protek, told reporters that the project needed to be improved.
Yes, it was so. We started the construction with one contractor (National Engineering Corporation PLC (NIK) of the son of former Prosecutor General of Russia Igor Chaika, to which the inspection of the State Construction Supervision of the Republic of Tatarstan had claims — editor's note), finished with another one. The government of Tatarstan helped in many ways. The old contractor didn't have enough resources. I had to be changed. Aurora company successfully completed the warehouse complex.
Protek refers to those companies that constantly develop. We have never stopped — neither in 2008, when the global crisis broke out, nor in 2014, nor now: we continue to invest. An example of this is the wonderful largest pharmaceutical warehouse, which has opened recently in Kazan. This is really a whole technological production. It's clean, almost like in a medical facility, and beautiful. The complex is made both outside and inside in our brand colours: it is white and blue. Medicines from production facilities are delivered to the distribution centre of Moscow, and from there to Kazan, and from it all the regions bordering Tatarstan are provided.
Previously, the nomenclature of medicines at our branch in Tatarstan consisted of 7-8 thousand positions, and now it is all 15 thousand positions or more — a significant increase. We are generally developing warehouse capacities. Now we are building two warehouses in Moscow for 43 thousand square metres — each three times larger than the Kazan one. We have already built key centres all over the country. Russia is a special country, a huge territory. There is no other such in the world.
Once the directors of European factories came with a visit. They ask: “What types of transport do you have?" We reply: “All of them. There are even some that you don't have. For example, cartage.” We deliver medicines by air, by cars, and by rail. But there are villages that are sometimes impossible to reach by transport, since there are no roads, and the AN-2 plane does not fly everywhere. But people live there: one thousand, five hundred and even two hundred people. These are Krasnoyarsk Krai, Yakutia, Chukotka, Magadan Oblast. Therefore, in some cases, we send medicines even on dog and deer sleds.
We continue our development, including in the field of production. We are building new workshops. Medicines, including oncological ones, are also produced in the form of a syringe. It is very convenient.
Are they intended for medical institutions?
Yes, ampoules are for prevention and treatment facilities, this is free provision of beneficiaries within the framework of the compulsory medical insurance. Naturally, such drugs can be bought at a pharmacy. But probably 95-98 percent of them are paid for by the federal and regional budgets. I think that in Tatarstan, where huge funds are also allocated for the purchase of medicines, they also fall under preferential provision.
We are also opening pharmacies. We plan to expand the retail network in Kazan and Naberezhnye Chelny. Tatarstan is one of the priority regions.
Profitability of retail pharmacy chains is less than that of grocery chains
I will say as an ordinary consumer: medicines are very expensive now. Are there any hopes for a reduction in prices, or will they, on the contrary, only grow, since imported substances from India and China are used for the manufacture of drugs?
And Germany. There are original drugs — those that were the first to enter the market, and generics (equivalents — editor's note). If you go to our online service “ZdravCity” or any other and click on the name of the drug that you need, it will light up and analogues where there is the same active substance. But analogues will already cost much cheaper. The price does not always correspond to the quality, you can find both a Western drug and its equivalent of Russian production.
Those medicines that were imported into our country from abroad and registered, naturally, keep the price like a Mercedes or BMW, which have never been cheap. Therefore, ask the doctor. For example, there is blood-thinning Xarelto: in the pandemic, it was a super-drug — its cost reached up to 10 thousand rubles per package. Millions of women take No-spa, but it has about 30 analogues. One of them is Drotaverine.
Healthcare is very conservative. If people get used to some drug, then they believe that others do not work. And it's even psychologically very difficult for them to switch to an analogue: “This one helps, what if that one won't help?" These are those who have been takeing the same medications for years, decades — for heart, kidneys, etc. If an old woman comes to a pharmacy to buy medicine not under a benefit, but at her own expense, then the pharmacist is obliged to offer her two or three drugs at different prices and explain why this one costs 200 rubles, this one 150 rubles, and this one 100. Let her decide which one to buy.
There is another nuance here. There is a large component of imported drugs in Russia, and they depend on the dollar or euro exchange rate. There were fluctuations. The ruble fell sharply, and everyone began to focus on the high cost. And when the domestic currency begins to move in the opposite direction, drug prices follow it, but more slowly. Only they rose up rapidly, but they do not tend to fall back Because everyone is making a reserve and thinking: what if this situation continues? All these fluctuations also affect drug prices.
But I want to draw your attention to that pharmaceuticals in terms of pricing is very tightly controlled by the state. It should be borne in mind that the profitability of retail pharmacy chains is less than that of grocery chains. Many do not know this. There are drugs from the list of vital (VED), which is formed by Roszdravnadzor. It contains about 48% of all medicines. There are approved prices for the manufacturer, distributor and pharmacy. If such a medicine costs more than the approved price, then the regulatory authorities, starting from Roszdravnadzor and up to the prosecutor's office, punish pharmacies for this up to license withdrawal. We have no right to inflate prices. Even when there were fluctuations in the exchange rate, we could not do this.
“Medicine will simply turn upside down within 10-15 years”
What, in addition to import substitution of medicines, is now on the agenda of your group of companies?
We are starting to actively develop the medical field. And we are not talking about classical medicine. Private medical services in Russia are already developed. We are trying to master preventive medicine. Of course, there is no escape from traditional medicine either. People get sick, and they need to treat their “sores”. Our task is to make sure that the human immune system is in order, so that our compatriots lead a healthy lifestyle and determine their problem areas in advance. Now the whole world is moving towards this.
I have already heard that medicine in our country deals with the consequences of diseases, and not with their prevention.
I am sure that within 10-15 years medicine will just turn upside down, because there are such technologies, first of all IT, that allow you to include the person himself in the process of taking care of your health. Basically, we used to have a form of preventive medicine. My generation, even in kindergarten and school, had a preventive examination every year, we were vaccinated, etc. There was a whole system in the Soviet Union. Then it collapsed, but it was advanced at that time.
Of course, if we evaluate it from the standpoint of today, it seems rather primitive, because examinations were carried out once a year and according to certain standards. Now technologies allow at different levels and with different time characteristics and breadth to conduct examinations for the person himself. If he wants to take care of his health, including beauty, he is given tools. Now many tests can be carried out independently in the laboratory. . In a word, preventive medicine doctors have a different goal and a different psychology. They do not earn money from that a person is sick. Their task, on the contrary, is to ensure that he is healthy.
Of course, in this case, both the quality of specialists and their mentality should be different. As a mother takes care of a child, takes care of him so that he does not get sick, so the task of such a doctor is to “supervise” his patient, not to allow him to have any health problems. And even if he comes to them, then with the least catastrophic consequences. We already have three such small clinics. In December of this year, we are launching a large preventive medicine clinic in Moscow.
Protek GC is a holding company headed by Protek JSC, which was founded in 1990. It is represented in the pharmaceutical and medical industries. This is the production of medicines and distribution of pharmaceuticals and products for beauty and health.
The production segment of the Group includes Sotex Pharmfirm JSC and Rafarma JSC. According to the IQVIA analytical company for 2021, it is in the top 10 of the domestic medicines market, occupying a share of 2,66% of the market.
The Protek Implementation Centre is one of the leading distributors of pharmaceuticals and health and beauty products in Russia (10,6% of the market). It develops the ZdravCity marketplace for ordering and delivering medicines.
The warehouse network is represented by 42 branches in 85 subjects of the Russian Federation. The total area of warehouses reaches 145 thousand sq. m.
The retail segment of the Group is the Rigla pharmacy chain (over 3 thousand pharmacies, the leader of the pharmaceutical market of the Russian Federation with a share of 6,62%), operating in four formats (Rigla pharmarkets, pharmacies near the house format Bud Zdorov, discounters Zhivika and pharmacies of low prices ZdravCity).
The main owner of Protek JSC is entrepreneur Vadim Yakunin (Forbes estimated his fortune at $1 billion in 2021). Revenue of the group of companies at the end of last year amounted to 293,8 billion rubles.