Russian pharmaceutical and health care market expected to rise 10.5% in 2007

At the end of 2006, Russia remained one of the most dynamic of the large pharmaceutical markets in the world, according to Business Monitor International, but recent policy moves by the government have taken some of the shine off the market, impacting BMI's previous growth forecast going forward.

The government's decision last fall (Marketletter October 2, 2006) to severely cut the number of higher priced, imported medicines covered by the state drug program, the DLO reimbursement scheme, will hit market numbers in 2007. A decline in the value of the US dollar versus the rouble, from 27.7 in 2006 to 26.0 in 2007, according to forecasts by BMI's Country Risk Service, will mask the slowdown in dollar terms.

However, it will also encourage the government to tighten prices in the DLO system, as occurred in March 2006, when the government introduced across-the-board drug price cuts. On top of these developments, a major corruption scandal unfolded in November 2006, forcing the resignation of the Minister of Health and posing serious questions about the management of the DLO and insurance funds. BMI forecasts 10.5% market growth in 2007, compared to more than 20% in 2006 and 33% in 2005. Market growth is expected to steady at 10% per annum between 2008 and 2010.