Russian pharmaceutical market: stability in unstable environment

According to DSM Group, in 2017, the Russian market was worth 1629 billion rubles, which 8% higher than in 2016. For the first time in three years, the market grew in dollar- and euro-denominated terms.

In physical terms, the market growth is similar to the dynamics in value terms. Therefore, the factor of higher prices played virtually no role in expanding the market volume. In 2017, the main driver was the increase in the actual consumption of medicinal products, i.e., the growth in terms of sold packages.

The state (market share generated by the state funds, including subsidized provision of drugs and hospital procurement) accounts for about 32% of the drug market (this share is slightly lower (27%) when we also consider the market of parapharmaceuticals). In 2017, the share of government spending in consumption of medicinal products increased by 1%. The highest growth (17%) was reported in the procurement of medicinal products for medical institutions (260 billion rubles). Federal state-financed procurement of drugs for recipients of benefits increased by 7% (up to 115 billion rubles). The financing of benefits by regional authorities reached 72 billion rubles, which is 2% higher than in 2016.

Over the past few years, the growth in the commercial segment of medicines did not exceed 10%. In 2017, 5066 million packages of drugs worth 941 billion rubles (in retail prices) were sold through the pharmacies. This is 6.5% more than in 2016 in value terms and up 3.5% in physical terms. Positive trends observed in 2017 in terms of sold packages is the evidence of improvement in the purchasing power of households and reduced impact of financial and economic factors on the pharmaceutical market.