Local Sector Dominates Russian Manufacturing

Although drug multinationals dominate the Russian market in value terms, very few have opted to manufacture in the country, largely due to an inhospitable regulatory environment. With exceptions such as Slovenia's Krka, which opened new manufacturing facilities in Russia in September 2003, the vast majority of foreign companies opt to import their products.

However, recent developments in company activity indicate that there is room for manoeuvre on Russia's fast-growing drug market. Following its acquisition of leading local drug producer Nizpharm early this year, German generics maker Stada AG has announced that the two companies will begin joint promotion of three of Stada's products on the Russian market. The German firm has also announced that it will launch more products in the near future, with the two companies also moving toward a single products list.

Stada's move is significant, as it follows up the acquisition of a relatively sophisticated local drugmaker with plans to combine manufacturing and imports, effectively maximising market share. The German firm's purchase was widely seen as a major step towards greater direct foreign company involvement in an emerging market still in need of substantial modernisation.