Changes in reimbursement to bring profits for branded generics in CIS markets
Most of the Commonwealth of Independent States (CIS) markets do not have modern reimbursement policies, but the countries in question have recently been working in order to improve their drug policies, notes Poland-based market research firm PMR.
In Russia, the Pharma 2020 plan is being implemented in order to improve the quality and accessibility of locally produced drugs. Ukraine has implemented a pilot program for reference pricing which is regarded as a major step toward reforming the system. Kazakhstan has also updated its lists of reimbursed drugs. As a result, PMR expects further growth in the generic drug subgroup, along with healthy development in the arena of original drugs, with compound annual growth rate (CAGR) figures of 15 and 14%, respectively, between 2012 and 2014 for these groups.
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Ukraine and Kazakhstan witness most substantial increases in generics
According to PMR forecasts, presented in a report titled Generic and innovative drugs market in CIS countries, there will be a reduction in the growth of the overall group of generics in the CIS region because of the gradual saturation of the market but it will remain relatively robust – in double figures. Interestingly, in all of the countries, there will be an increase in year-on-year growth on the branded generics market but this will not be visible in the overall generics group because of a decline in the rate of growth of unbranded and traditional medicines (these still account for substantial proportions of the generic drug markets in Russia, Ukraine and Kazakhstan). In all, according to our forecasts, the generic drug market (including other drugs not classified as innovative) will be worth 23.024 billion euros ($28.75 billion) in 2014.
The generic drug subgroup is expected to develop at a rate of around 20% in Kazakhstan and Ukraine between 2012 and 2014. According to PMR forecasts, this subgroup in Russia will grow by 14% on average per annum. In PMR’s opinion, the Russian market is the most heavily saturated in this arena (among the three countries analysed in the report). In Kazakhstan considerable growth is possible because the country is at an early stage of development. In Ukraine and Russia significant changes in reimbursement are planned, which PMR believes will stimulate growth on the generic branded markets in particular.
Innovative drugs could sell better in the CIS countries
The innovative medicines subgroup is also expected to grow at a double-figure rate in all the countries with the exception of Ukraine (8%): 15% in Russia and 16% in Kazakhstan, on average per annum. More vibrant growth on the innovative medicine market in the CIS will be impeded because of the lack, for the time being, of appropriate solutions developed by governments to stimulate access to innovation.
The Pharma 2020 program in Russia might have a positive effect on the market, but this will be in the longer term (after 2014), because innovative projects are at an early stage of development. PMR also believes that restrictions in drug advertising recently implemented in Russia and Ukraine will affect the innovative drug and branded generic groups more than any others because these groups are more frequently promoted by pharmaceutical companies - the companies will have to reconsider their marketing strategies. In all, the combined market value of innovative medicines in Russia and Ukraine will reach 9.948 billion euros, with a CAGR of 14% in 2012-2014.
Pharma 2020 may not prompt revolution in innovation
If the CIS region is taken into consideration, Russia accounted for almost 80% in terms of value of the generic drug subgroup in the region in 2011. In PMR’s opinion, Good Manufacturing Practice (GMP) rules, which have to be implemented by 2014, will bring a new level of quality to the generic market and will lead to an increase in the proportion of superior branded generics. At the same time, there will be a year-on-year reduction in the share of local cheap unbranded generics – the production of many drugs might come to an end because of the lack of appropriate production standards.
In both subgroups – generic and innovative medicines – there will be an increase in domestically-manufactured medicines on the market, in line with Pharma 2020 program assumptions. Many global pharmaceutical manufacturers are planning to establish their production facilities in Russia. These include Novartis, AstraZeneca and Novo Nordisk, in the innovative subgroup, and Krka and Teva in the generic subgroup. Russian manufacturers also intend to expand their production facilities in the country.
However, PMR believes that domestic production will focus mainly on biosimilars, high-standard generic equivalents of original medicines or the so-called “me-too” projects (the manufacture of drugs which have an original patented formula which is similar in structure to the molecule of the class founder).
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