Annual report DSM Group 201805/17/2019
If to describe the current situation in the pharmaceutical market in one sentence, probably, the famous "to be or not to be?" will suit most. This expression applies both to government initiatives and to the processes the participants are involved in. Some issues are resolved with the resolution "to be", while others are put aside with the "not to be" signature. Yet is it going to last long?
In 2018, the issue with the expansion of channels for the medicines’ sale in the grocery retail was closed. Another one – permission of online trade in over-the-counter drugs — arose and became acute. Moreover, it is clear that the economy development in all sectors is moving towards e-commerce, while a large pool of legal requirements is imposed on traditional pharmacies — they regulate the work of pharmacies: from obtaining a special license for their activities to the qualification of their employees. How can the simple "to be" avoid breaking the system, which was being built over the years, and thus, on the contrary, avoid reducing drug availability?
Yet the pilot project on RTU drugs labeling has come to the next level. And it is clear that there is no way back. There is a Federal Law that regulates the timing of implementation and distribution of the system to the entire market. There are a number of questions left — crypto coding and its cost for the manufacturer, but the process is started anyway, and the maximum that can be counted on is the next postponement.
Another initiative has remained a pilot project. In this case, we are talking about medical compensation. For several years, possible schemes of its implementation were being discussed. But no new decisions were made in 2018. The regions themselves conduct various "experiments". For example, in Moscow, from March 1 to December 31, 2019, benefit-entitled citizens with a Moscow residence permit may apply for a compensation payment for the purchase of a drug in exchange for receiving a free drug or purchasing drugs with a 50% discount, if the required drug is not available under the Federal Program. Again it means that the experiment involves a limited list of persons.
It is worth noting that all initiatives that are marked as "to be" can lead to significant changes in the market. Since 2019, a new pricing system for vital and essential drugs has been operating. The method is designed to ensure that the prices of medicines included in this list should decrease. Will all manufacturers take this step or will they just choose to leave the market?
Such system-forming laws are adopted in economic conditions which are not very favorable for the pharmaceutical market. Therefore, its participants are looking for new ways of "survival".
In 2018, the volume of the Russian pharmaceutical market reached 1,682 billion rubles, which is 2.6% higher than the previous year. Sales of medicines increased by 1.5% in real terms and amounted to 6.4 billion packages.
The main contribution to market growth was made by the commercial segment of drugs. The dynamics of the retail market continued the positive trend of 2017 in packaging. Market growth in rubles is lower than in 2017. This was influenced, among other things, by the low incidence of influenza and SARS, which did not lead to an increase in demand for "seasonal" drugs. In 2018, the market was dominated by two trends: a decrease in the share of over-the-counter drugs; market growth due to two price segments — "up to 50 rubles" and "over 500 rubles". Thus, the structure of consumption varies depending on the consumers’ income.
In 2018, the state segment, in money, remained at the level of year 2017, but in packages it decreased. The main reason is the redistribution of purchased drugs in 2017 to the needs of the previous year. There is also a continuing growth in the segment of preferential drug provision financed from the regional budget.
The share of imported drugs in the overall market in the end of 2018 was 70.2% in rubles and 39.4% in packages. The first places in the manufacturers’ rating were kept by foreign companies: Sanofi, Novartis, Bayer. There are three Russian manufacturers in the TOP-20 rating: "OTCharm", "Pharmstandard" and "Biocad" which appeared in the list for the first time.
Consolidation in the pharmacy market is taking new forms: there are partnerships with "medium" and large (more than 1,000 points) networks, associations for individual pharmacies are organized, and this is in addition to the already established companies. The share of the TOP 20 players accounted for 58%. "ASNA", taking 13.2%, has achieved the best results in the association of pharmacies and pharmacy chains. Among the "traditional" networks, the pharmacy chain "Rigla" has the largest share (5.6%). “Erkafarm” group with a share of 5.3% rose to the third place. TOP 5 marketing associations occupy 12.5% of the market.
In 2018, distributors have changed their relationship with pharmacy chains towards tightening the process of goods’ shipment. They began to demand additional guarantees for the return of accounts receivables from pharmacies (insurance or bank guarantees). Changes in the principles of distributors' work affected the results and dynamics of the leaders. TOP 10 companies took about 72%. In 2018, the first place was kept by the "Protek" distributor, taking 16%. "Katren" distributor occupied the second line with a share of 15.5%. These two companies showed a negative turnover trend judging by 2017. In 2018, TOP 3 is closed by "Pulse" distributor with a share of 14.6%.