Manufacturing of pharmaceutical products in Russia under full cycle conditions

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Angelica Lloyd
5 years ago
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1 Manufacturing of pharmaceutical products in Russia under full cycle conditions +7 (495) Deputy director general of strategic development АО National Immunobiological company Andreeva К.V.

rub Other ~3 000 INN Import without Russia analogues Finished pharmaceutical forms of medicines is

2 State procurement of medicines in 2015 Top purchased 221 INN 103 INN 70% 207,2 bln.rub 107,1 bln.rub 60 INN? Barriers for entering the market 58 INN 66,7 bln.rub 101,9 bln.rub? Lack of manufacturing facilities 30% 88,7 bln.rub Other ~3 000 INN Import without Russia analogues Finished pharmaceutical forms of medicines is possible in Russia Full cycle is possible Direction of required manufacturing development 2

3 Local manufacturing of the certain socially important pharmaceuticals segments Most of the socially important medicines are either partially or fully imported 9,9 bln.rub. 19,7 bln.rub. 3,3 bln.rub. National prevention vaccination calendar vaccines Anti HIV-infection medicines Anti-viral hepatitis medicines 8,9 bln.rub. 12,7 bln.rub. Anti-Tb medicines Blood plasma medicines 3

4 Which direction the Russian pharmaceutical market should be developed? How to align the public and business s interests? What localization degree can be considered as optimal? Can Russia become a new driver for the global pharmaceutical market? Can Russia compete with the world leaders in the in the medium term?? 4

Public Benefits Guarantees for actual availability and price predictability Option 1 Agreements on prices with international manufacturers Option 2

Complicated activities on development of regulatory support measures LONG-TERM PROSPECTS - Drawbacks + Benefits Dependence on the foreign producers

5 Public Benefits Guarantees for actual availability and price predictability Option 1 Agreements on prices with international manufacturers Option 2 Development of domestic manufacturing, technology transfer SHORT-TERM PROSPECTS + Benefits - Drawbacks Quick-win funds saving Less savings Complicated activities on development of regulatory support measures LONG-TERM PROSPECTS - Drawbacks + Benefits Dependence on the foreign producers interests Limited prospects for Russian economic development Job creation Development of related industries Applied research development prospects in Russia 5

6 Business Benefits Cost-efficiency of manufacturing Option 1 Packaging/ Formulation of medicines Option 2 Full cycle manufacturing with synthesis of APIs SHORT-TERM PROSPECTS Benefits Requires relatively low expenses Ensures high marginality If a diversified API market is available (> 3-5 manufacturers) there are no risks of purchase of raw products Drawbacks High expenses in case of organization of own manufacturing Necessity to establish products quality control and assurance while organizing contract manufacturing in Russia LONG-TERM PROSPECTS Drawbacks There is no effective purchasing system (graded preferences for packing, formulation and the entire cycle of pharmaceuticals manufacturing) Benefits For foreign producers: no benefits without preferences For domestic producers: benefits are doubtful in view of high risks of investment. They only are warranted in the segments with high marginality of manufacturing 6

7 What Is Required Manufacturing Depth? Pharma-security: From the Stage ensuring diversified raw materials market Economic viability: From the step, ensuring max gain from the price of final product Technological reserve creating: from the stage, giving access to a critical stage in the production Manufacturing depth is the balance between all three principles MAX synthesis stages manufacturing MIN synthesis stages manufacturing Stage 7 Stage 6 Step5 Stage 4 Stage 3 Stage 2 Stage 1 Lamivudin 601,83 638,23 667,52 700, , , ,69 MAX increment of growth Stage 11 Stage 10 Stage 9 Stage 8 Stage 7 Stage 6 Step5 Stage 4 Stage 3 Stage 2 Stage 1 Entekavir 438,18 500,27 692,18 695,22 695,22 798, , , , , ,1 MAX increment of growth 7

8 Lack Of Coordination In The State Policy Price reduction policy? Support of Russian manufacturers What is the effective price that would ensure a balance between the public and manufacturers interest? The state should not operate at the cost for user but the effective cost for the state, which takes into account the overall economic effects 8

9 Dynamics of the Support From the Government Support from the state should be at max level upon organization of manufacturing as well as at products launch at the market. It should be decreasing as the industry develops, correspondingly Maximum support from the state Guaranteed sales volume Tax benefits Subsidies Independent development Increase of pharmaceutical industry contribution to GDP Basic business support measures 9

Conclusions In the context of a weakening of the national currency, the dependence on import of finished pharmaceutical forms and imported products can lead to a sharp rise in prices At the same

10 Conclusions In the context of a weakening of the national currency, the dependence on import of finished pharmaceutical forms and imported products can lead to a sharp rise in prices At the same time, capital and operating costs have decreased, making local production more attractive Russian pharmaceutical manufacturers is capable of ensuring own needs and has prospects to enter international markets In Russia it is possible and necessary to create mechanisms for long-term development that consider both public as well as business interests The diversified schemes of preferences which will ensure the attractiveness of production in Russia are needed Regulatory mechanisms must not force to localization but to encourage it 10

11 Nacimbio s Strategy of Cooperation with Market Players Local and foreign producers Using of the existing production sites as centers of excellence at maximum Modernization of plants and organization of new joint ventures Contract production License agreements with IP owners Government Fixed prices on the condition of guaranteed order 11

12 Thank you! 12

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