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The Secret of Russian Pharmacists

Russia still has vast resources for a breakthrough in the pharmaceutical industry
At first sight it seems that Russia's pharmaceutical industry is lagging far behind the pharmaceutical industries of the West and even less developed Asian countries. Foreign medicines make up over two thirds of the Russian market. The remaining 30% of medicines are not of Russian origin either as they are produced of imported ingredients. One can hardly believe today that the USSR was the world's second best in antibiotic production in the 1980s. However, Russia still has vast resources for a breakthrough in the industry.

The desire of transnational corporations to get settled in Russia is quite understandable because the volume of Russia's pharmaceutical market makes up $2.5-3 billion. Analysts say that the growth rate is 10-20 per cent a year at that. The state of the Russian population's health is constantly growing worse, the share of ill aged people is increasing. The situation is similar in the West, but the problem is settled in a different way there. Foreign governments do not allow pharmaceutical companies send prices up to keep the governmental social spending reasonable. That is why importers are so eager to work in Russia where the authority is more market-oriented than in France or Germany. It is an open secret that importers bribe Russian officials to have the green light for foreign medicines; all attempts made in Russia to get rid of medicinal dependency are ignored at that. It is unlikely that domestic pharmaceutical industry may develop quickly and properly under the present-day economic line.

Development of one medicine and its introduction into the market costs hundreds of millions of dollars in progressive countries. This is in fact comparable with the annual turnover of all domestic medicines that amounts to $700-800 million. Neither the RF Government nor Russian producers can allow such large-scale investment into the national pharmaceutical industry.

Fortunately, there are still enough brilliant enthusiasts in this country. Experts of the State-run Research Institute of pure biologicals and the Defense Ministry's Research Center for Medico-biological protection have developed a medicine for treatment of radiation sickness and chemical injuries on the basis of interleukin-1-beta. The Farmsintez enterprise produces Segidrin, a unique medicine that is effective even for grave cancer. The State-run Research Virology and Biotechnology Center Vektor practices a unique approach in production of artificial immunogenes to fight against the HIV infection; it also has technologies for production of components for antineoplastic and immune simulative medicines based on genetic engineering technologies. The Defense Ministry's Microbiology Research Institute has developed recombinant vaccines against hepatitis B, encephalitis and other bugs. Researchers have partially used the genetic construction of the virus for development of the vaccines. These vaccines are safer as compared with the traditional vaccination with weaker virus cultures. The St.Petersburg State Chemical and Pharmaceutical Academy and the St.Petersburg Vaccine and Serum Research Institute have developed Aubazipor, the sponge for healing wounds, and the Katacel antiseptic medicine. The Zheleznogorsk Mining and Chemical enterprise produces Algipor and Kollahite, preparations for healing wounds. There are lots of other enterprises and research institutes developing and producing unique medicines and preparations in Russia.

Russia could have derived great profits from production of insulin. Unfortunately, lack of financing and other obstacles do not allow implementing of the above mentioned achievements.

About a year ago the RF Chamber of Industry and Commerce and the Ministry for Industrial Science announced a plan for creation of a national complete cycle pharmaceutical corporation to develop new medicines and introduce them into production. It was suggested that the corporation must be a state-run holding with the controlling interest held by the Ministry for Industrial Science and the Ministry for Economic Development. The corporation was to be based on the Moscow enterprise Moskhimfarmpreparaty, Khimprom (Volgograd) and about ten well-known research institutes. 

This project is hardly likely to be a success under the present-day conditions. Russian officials cannot run corporations effectively. The government may refuse to invest in the corporation, but private investors are rather cautious as for investing in state-run companies. What is to happen next? Money can be borrowed on the security of the holding's shares. But the structure risks to become a private one soon because officials are ineffective in running business of this kind. Finally, the corporation will be bought by Western pharmaceutical giants that will try to do away with the rival.

The St.Petersburg company Farmsintez is another organization planning to make a breakthrough in the national pharmaceutical production. Unlike other successful domestic medicine producers making medicines identical to foreign analogues, Farmsintez sticks to the principle of producing original Russian medicines. The idea sounds really proud, but the enterprise's portfolio so far includes just few original preparations little known to the population. But the sound ambitiousness of businessmen following this hard path for realization of their long-term strategy deserves respect. The company plans to earn money for realization of the project by executing orders of foreign partners. If this plan turns out to be a success, it is not ruled out that other Russian enterprises may follow the company's example.

A year ago, the Association of Russian Pharmacists was created in Russia to join Akrihin, Verofarm, Nizhfarm, Otechestvennye Lekarstva (Domestic Medicines), JSC Ufa Vitamin Enterprise and Farmsintez. The association pursues less ambitious objectives: members of the organization want to resist the inrush of imported medicines to Russia. Majority of the association members are rather experienced and hold a great share of the domestic market which in its turn supposes that the alliance may have good prospects.

This is a hard task to revive the national pharmaceutical industry, but a feasible one indeed. Russian research centers and enterprises must be really active to oobtain budgetary financing and to make the authorities stick to a protective policy.

Andrey Afonin

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