Indian pharma faces hurdles in $45 billion Russian market despite growing interest

While several Indian pharmaceutical companies are aiming to penetrate the $45 billion Russian pharmaceutical market, various regulatory and business hurdles are making the entry challenging, indicated the Pharmaceuticals Export Promotion Council of India (Pharmexcil).

"Compliance with Russia's strict pharmaceutical standards and complex registration procedures poses significant challenges for Indian companies. Ensuring conformance with these standards is not only necessary but also time-consuming and costly, making market adaptation harder," said Divesh Kumar, Representative of Pharmexcil in Russia.

"Market access, a common challenge for Indian companies, is no exception in Russia. Navigating through a vast network of diverse distribution channels can be complex, especially without local connections. Moreover, language and cultural barriers often exacerbate these complexities, leading to difficulties in communication and understanding local business practices," he added.

Despite these obstacles, numerous Indian companies are striving to establish themselves in the Russian market.

"Pharmaceutical companies like Micro Labs, Zydus Lifesciences, Sun Pharma, Akum Drugs, and Dr. Reddy's are in discussions with various regions across Russia, indicating a growing interest and investment in the market," said Kumar.

Also, Safecon Lifesciences from Agra also exemplifies the trend, having inked an MOU at SPIEF 2023. They are investing $120 million to construct a pharmaceutical plant in Murmansk, encompassing three lines for finished medicines (Oncology, Hormonal, and General medicines, including HIV medications) and an API production facility. Similarly, Trident Lifeline Ltd. from Surat plans a $20 million investment for a manufacturing plant in the Sakhalin region, while Cadila Pharmaceuticals Ltd. aims to set up an injection manufacturing site there with a $100 million investment, as per Pharmexcil.

“Cipla Ltd. is exploring joint ventures, Torrent Pharmaceuticals Ltd. is eyeing expansion, and Hetero Drug, already with a significant presence, is adjusting its strategy to comply with Pharma 2030 by seeking to manufacture 20 products in Russia. Other players like Vivimed Lab/Finnosa, Biowelness Lifescience Pvt. Ltd., Sugam Healthare LLP, and SSV Phytopharmaceuticals are also exploring opportunities in Russia's pharmaceutical landscape,” said Kumar.
The Indian pharmaceutical industry is facing issues related to patent protection, data exclusivity, and intellectual property rights legislations. Likewise, governmental intervention in pricing strategies and reimbursement policies may adversely affect these companies' profitability, thereby impacting competitiveness.

"The Russian pharmaceutical market has proven challenging due to stringent regulatory requirements. Besides adhering to Russian Good Manufacturing Practices (GMP), companies must also conduct Bioequivalence, Clinical, and Toxicology studies within Russia," said Divesh Kumar, Representative of Pharmexcil Russia. The Pharma 2030 law now grants preferences to local manufacturers, he added.

Complications also arise from local manufacturing requirements in Russia, as partnering with local entities or establishing local manufacturing facilities adds to the Indian pharma firms' expenditure.

Furthermore, the intense competition from other multinational and local Russian players presents significant hindrances in terms of market share acquisition and sustained growth. Unstable geopolitical and regulatory conditions further heighten uncertainties for businesses and long-term strategic planning, said Kumar.

"Addressing these barriers requires a multi-pronged strategic approach. It may include forming local partnerships to gain market insights and regulatory support, establishing tailored market strategies for a competitive edge, and prioritizing adherence to Russian regulatory standards to gain market credibility," said Kumar.

"Moreover, Indian pharma companies must invest in R&D for introducing innovative healthcare products tailored to Russia's specific needs, which can signify their unique selling propositions. Establishing robust relations with Russian regulatory authorities and government bodies will also facilitate smoother business operations, making the entry efficient," concluded Kumar.

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