"Enormous Potential" In East And Central Euro Drug Market

9 June 1996

There is enormous potential in the eastern and central European drug markets, says Ulrich Vorderwelbecke, director of the German research-based drug industry association, the VFA. However, problems facing drugmakers include the lack of a firm market structure and an inadequate regulatory background, and the market still has little significance for German drug firms, he says.

Out of 10 cooperation agreements originally planned by Berlin-Chemie with Russian firms, for example, only one remains in place, says Berlin-Chemie chairman Hansjurgen Nelde. Several German drugmakers have already withdrawn from Russia, but Berlin-Chemie expects to achieve 40% of its anticipated 1996 sales of 250 million Deutschemarks ($161.6 million) there. Mr Nelde says that while state intervention makes investment planning difficult, together with import taxes and registration barriers, Berlin-Chemie has a 2.5% share of the Russian market and 3% in the Ukraine; eastern European business is contributing positively to the company's results, he says.

Market Values Mr Vorderwelbecke also says several of the countries are progressing towards European Union entry, and drug industry privatization is well advanced in the Czech Republic, Hungary and Poland. Based on prices in France and Spain, the VFA puts Russia's drug market at $4 billion, based on pharmacy sales, with 40%-50% of requirements covered by domestic enterprises. Market volume in Poland is put at $1.2 billion and this is expected to double by 2000. Sales in the Czech Republic were about $400 million in 1994, and efforts are being made to create a self-medication sector; local drug prices are about 50% below those of imports.

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