Russia Business Directory

Since 1991, the healthcare reforms in the Russian Federation has been aimed at the transition from a hierarchical model of healthcare provision to a more decentralised, contested and insurance-based system of public healthcare. These reforms are still ongoing.

Recent economic growth seems to have had little impact on key indicators of human welfare. Life expectancy is extremely low, compared to the most European countries, with 58 years for men and 72 for women. Healthy life expectancy is very low as well. Russians above the age of 40 are far less likely to be healthy than citizens of Western or Central Europe, and the gap is particularly large for Russian women: their average life expectancy at any given age is higher than that of Russian men, but they also tend to spend much more of their lives in ill health.

The share of deaths induced by infectious diseases, which are traditionally related to living standards, is also high for a country at Russia’s level of development, and the incidence of tuberculosis and other “poverty-related illnesses” remains high.

However, there has been a significant rise in the average life expectancy of persons diagnosed with chronic illnesses over the last five years. This suggests that the economic recovery and rising healthcare expenditure are having a positive impact on healthcare provision.

The transition to an insurance-based system led to creating of a Federal Fund for Mandatory Medical Insurance (FFOMS), as well as territorial funds in each of Russia’s constituent regions. The mandatory medical insurance (OMS) system was intended to promote both efficiency and patient choice by enabling patients to choose among competing medical insurance companies, which, in turn, would act as informed buyers of medical services.

Despite the intention of shifting to an insurance-based system, federal and regional budgets still administer about 60% of public healthcare expenditure. The remainder goes through the OMS system. OMS was initially financed chiefly via dedicated employers’ contributions to regional OMS funds, a system that led to considerable differences in the level of OMS income across regions and failed to generate sufficient revenues to finance the system’s commitments.

The largest share of household spending on healthcare is devoted to pharmaceuticals, and the gap between commitments and resources is particularly stark when it comes to financing pharmaceuticals provision. Like almost all OECD countries, Russia tries to hold down rising pharmaceutical costs via a combination of cost-sharing and regulation. Drugs are in theory provided to hospital patients free of charge, but outpatients must pay for them – an arrangement which creates incentives for unnecessary hospitalisation. In practice, however, informal cost-sharing is pervasive in the hospital sector: it is estimated that around 80% of inpatients still have to pay part of the cost of their medicines.
Source: OECD report ECO/WKP(2006)66, released 17 January 2007

Farmaceuticals
In the last few years the Russian market of farmaceuticals has been showing a strong growth. In 2005, the growth made 35% on year-to-year basis. Russia is one of world's top 10 pharmaceuticals markets with a value of USD 10,7 and makes 1% of the world market. Prior to 2020, Russia will account for at least 3% of the world market.

By the end of 2007, experts predict a market growth of 10-12% mainly stimulated by governmental purchases for the needs of the mandatory health care system. In 2006 the Russian government almost doubled financing of health care (increase by 89%) spending on this sector about USD3,6 bn.

About 60% of the pharmaceuticals market in Russia are imported. Importers are official distributors and representative offices of foreign producers in Russia.

The market leaders by mid 2007 are Sanofi-Aventis, Russian company Pharmstandard, Berlin Chemie, Gedeon Richter and Nicomed, according to the research of the DSM Group. As from January 1, 2009 Russian government is planning to prohibit sales of pharmaceuticals which do not correspond to GMP. Of 600 national producers, only 15-20 meet these requirements, reports Medportal.ru.

Pharmacy chains
This segment of market is also characterised by ongoing concentration and centralization. The 10 leading pharmacy chains account for 20% of the total turnover. According to the prognosis of DSM Group, their share on the market will exceed 60%. One of the important events in 2006 was acquisition of the OZ pharmacy chain (Alkor Holding) by the competitor Protec, owner of Rigla pharmacy chain. Russia's leading pharmacy chains are listed below.

Source: DSM group, RosBusinessConsulting

General information

The Ministry of Health and Social Development of Russia  - official site (rus)

Russian Pharma Market - downloadable report for 2006 by DMS Group (eng)

Council of the Baltic States - task force on communicable disease control in the Baltic sea region (rus/eng)

EpiNorth - co-operation for communicable disease control in Northern-Europe (rus/eng)

Facts and figures on health in Russia  (eng)

Health Care Today - one of the leading magazines for healthcare professionals (rus)