Russia and parts of Central Asia have made the most significant regulatory changes in their history in 2021. They have almost completed the steps needed to form a unified market like the EU. These changes would have a widespread effect on the way pharma business is done in the region.
When the Soviet Union broke down in the 1990s, ex-soviet republics formed the Commonwealth of Independent States (CIS). However, CIS never gained any practical relevance due to huge differences between various states. Thus, it never achieved its initial objectives of staying more or less integrated, despite the fallout of the union.
Nonetheless, some ex-soviet states felt a greater need for integration. In 2020, Russia, Belarus, and Kazakhstan formed the Eurasian Customs Union. Later, it was superseded by Eurasian Economic Union (EAEU). EAEU is slowly emerging as a homogeneous economic block, quite like the EU. Its member states are Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan. It may also expand in the near future.
Five nations are generally accepted to be in Central Asia that are Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan. Among these countries, Turkmenistan is practically closed for business. Tajikistan is often viewed as a high-risk country due to its proximity to Afghanistan. Thus, for most businesses, Kazakhstan, Uzbekistan, and Kyrgyzstan are countries of interest. Among these nations, Uzbekistan is not part of the EAEU but appears to be moving towards it.
The market size of the Central Asia & Russia pharma market
In ex-soviet space, Russia is the most significant market. It has more than 70% of the market share, with the rest of the countries having a market share of below 30%. Russia also has considerable local production and a considerable market share in the neighboring countries.
In recent years EAEU and Central Asian republics have been aggressively promoting local production of pharmaceutical goods and biological pharma products. It means that Russia and Central Asian countries are dominated by products made in the zone (EAEU). However, their dominance is in volume, not value. Still, more than 70% of the products by value are imported.
Russia is the most attractive market in the region with estimated market size of 21.5 billion USD, Kazakhstan 1.5, Uzbekistan 1.3, and Kyrgyzstan 0.2 billion USD (market size in 2020). Thus, Russia, along with Kazakhstan and Uzbekistan, are markets of particular interest.
Main contributors to sales volume
When it comes to the sales contribution by therapeutic class, EAEU follows the global trend. Thus, market is dominated by (value/volume) antineoplastic and immunomodulating agents (16%/1.68%), followed by alimentary tract and metabolism (15%/15%), anti-infectives (14%/11.5%), cardiovascular (10%/12.5%). The nervous system and respiratory drugs are other major segments.
Here it is worth noticing that antineoplastic is the premium segment. Alimentary and metabolism is another growing segment, primarily due to the rise in diabetes in the region. The anti-infective segment can be divided into injectables (hospital) and solid drugs (ambulatory). EAEU local manufacturers dominate in injectables, whereas imports dominate in solid anti-infectives.
In recent years, segments like cardiovascular (10%/12%) and especially respiratory (8%/13%) have lost their charm. Cardiovascular is generally dominated by low-value products produced locally, or innovator brands, thus leaving little scope for other players. Respiratory is a competitive, low-price segment dominated by generics.
In recent years, smaller segments like blood and blood-forming organs (8%/7%) and the musculoskeletal system (6%/6%) have witnessed exciting trends. Though these segments might be smaller, they remain attractive. New blood-thinning agents (rivaroxaban, apixaban) and certain painkillers (etoricoxib) have shown robust growth in the last few years.
The genitourinary system and sex hormones (4.5%/1.7%) is another segment to look for. It may be small but remains a premium segment, second only to oncology.
Dermatology (4%/10%) is the...
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