The chemical technology and bioengineering department of the Russian Ministry of Industry and Energy has begun to develop a new development strategy for the Russian pharmaceutical industry that will help protect the players from “unscrupulous” Western competitors according to Russian daily Kommersant. Russia plans to promote a gradual replacement of foreign medicines by raising administrative barriers and forcing foreign drugmakers to form a Russian legal entity. According to a Russian market research agency RMBC, foreign drugmakers accounted for 78% of total pharmaceutical sales on a retail level, and their participation was 92% in the DLO program in 9M07.
Our view: We see the news could have negative impact on those CEE generic drugmakers who do not have Russian drug manufacturing factories like (922 CZK, -6,44%) and Krka. However, we believe such measures could have neutral or even positive impact on (37 650 HUF, -1,95%) and (18 200 HUF, 1,11%) whom have already operating manufacturing capacities in Russia, which qualifies them as "domestic producers".