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Pharmaceutical market: Belarusian medicine versus imported medicine

The Republic of Belarus is determined to change the current situation regarding the pharmaceutical market by getting rid of imported drugs. Administrative regulations remain the main instrument so far.

The aim is to increase the market share of Belarusian drugs up to 50% in terms of value by 2015, this was included in the industry programs and the government is determined to adhere to it and achieve this set percentage. This notion was announced at the recent press conference on the ‘Development and Productions of Medicines’ and a special council at the Ministry of Health, and was attended by the representatives of pharmaceutical firms, distributors and managers of pharmacy chains.

 

Domestic Drugs go on Schedule

Those on board the council told the ‘Belarusian and Market’ newspaper that it was made clear to them that they have the task of ensuring that in terms of value there is a 50/50 split between domestic and imported drugs. The Ministry of Health does not plan to wait for an initiative from pharmacies as it has already designed a mechanism of interaction between wholesale/retail trade firms and Belarusian pharmaceutical companies until the end of this year and the start of the next year.

Those representing the pharmacy chains on the council stated that their point of view in regards to this issue was not taken into consideration. They further stated they believe that a large number of pharmacies will not be able to achieve 50% margin since the financial share of domestic medicines in some private pharmacies is just 16-25%.

Never the less, the figures for the country as a whole are more promising. The reporters at the press conference were assured that in the first two quarters the share of Belarusian medicines increased to 48.5% in value terms. In comparison, in 2014 it was at the level of 37.6%  , in 2013 – at 32.7%, in 2012 – at 30.6% and in 2011 it was only at 23.8%.

Earlier this year a stir was created by the Ministry of Health order № 196 ‘On Promotion of Domestic Medicines in Health Care Organizations’ that got into the media. It dealt with control over recipes for drugs that doctors give patients and type of medicines the pharmacies sell. Rhe supposed monitoring was planned to be carried out on a monthly basis.

Perhaps, the results were inevitable since the relation between the domestic and imported drugs in physical terms and not in terms of value is about 70 and 30%. Most of the domestic drugs cost less than a dollar while the imported ones are much more expensive. This explains the structure of the market.

Domestic pharmaceutical industry is developing at a rapid pace. Victor Shein, the deputy director and the head of the department of economics and marketing of the pharmaceutical industry at the Ministry of Health has made the following statement at a press conference:

“For the past ten years Belarusian pharmaceutical industry has matured a lot, its products are competitive on the domestic and foreign markets in both quality and quantity”

In 2015 the pharmaceutical industry plans to increase the output volume to 512.2 million dollars.

He further continued, “The government has established the growth rate and the index of physical volume of industrial production at 130% for the Ministry of Health and pharmaceutical industry”

Through this statement Shein has highlighted the direction in which the success of the pharmaceutical industry is going in and assured that the industry complies with the imposed indicators. In particular, Borisov plant of medicines told a correspondent of ‘Belarusians and Market’ that the output growth rate for half of the year was 156.4%.

 

Seller and Consumer dissatisfaction

They are not very happy about the situation on the other side of the barricades, to say the least. Distributors anonymously confessed that the Ministry of Health does not just prohibit the purchase of those imported drugs which have domestic substitutes, but also forces distributors to buy more Belarusian medicines than they are able to sell.

“Applications for Belarusian drugs are made on a regular basis, but officials constantly increase it against our will and regardless to our needs. Nowadays every wholesaler has got such a large number of the stock of domestic drugs that it’s hard to decide what to do with them and as a result businesses suffer enormous losses. There are also plans to reduce the supply of a number of foreign drugs by the end of the year, but what is even worse is that we face problems with certification of imported medicines as well”– stated a distributor.

If the situation does not change, specialists predict a deficit of some imported medicines in October – January. Representatives of pharmacy chains admit that there is often consumer dissatisfaction as a result of such rules as consumers come to the pharmacy and are unable to purchase the medicine they need.

The pricing system, which is harshly regulated by the Ministry of Health, is a core reason for the monetary losses faced by the wholesalers and retail organizations, as they cannot make sufficient amount of money because of low prices and restrictions on margins. On the 21st May 2015 a moratorium was declared on the increase of prices on domestic drugs. It was stated that the price could only be raised by no more than the value of their imported counterparts and even then after an agreement with the regulator.

Council members have also shared that under the other devaluation of the Belarusian ruble the regulator has actualized instructions on restraint of retail prices for medicines. The Ministry of Health has instructed retailers to lower wholesale and retail margins, forbiden the revaluation of unpaid inventories on pharmaceutical warehouses and pharmacies, and also demanded providing population with the discounts for domestic drugs.

According to officials, currency fluctuations should not affect the price of medicines. They recommend to stop cooperation with foreign producers that have raised their prices, as it stands 15 foreign producers have already announced a price increase of 150 different medications

 

Balance of Interest

It appears that equilibrium has not been reached yet between the distribution of imported drugs and domestic drugs. Both sides of the argument are reasonable and have substance. Victor Shein has made the following statement

“Every single state is interested in supporting its domestic producers and protects the internal market. We offer the distributors belarusian products and focus attention on their quality and price”

According to his words, there is also no import deterrence.

Foreign drugs should be imported as per usual and not to be stopped completely. Many citizens have gotten used to purchasing a particular brand of foreign medicine or just have to buy drugs of a particular manufacturer from a particular country”– Shein stated.

At the same time the officials suggest that distributors to keep the value balance at 50:50 and avoid making a great amount of imported inventories.

“We analyze inventories in warehouses and have come to the conclusion that the supply is enough not just for two or three months, but for a few years. Why do we import so many  drugs if we produce them  ourselves? So for now we must equalize the situation, keep parity”  Victor concluded.

The Ministry of Health plans on domestic drugs promotion – those that the media have been discussing from the beginning of the year – did contain progressive measures that are popular with foreign manufacturers to promote Belarusian medicines. It’s quite possible that Belarusians have got a prepossession towards domestic manufacturers which can be eliminated by an information campaign, but for now the familiar administrative pressure prevails.

 

Source: Belarusians and Market

Photo: Wikipedia Commons

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