What Can Russian Drug Producers Offer to the Arab World?

28 February 2020

GMP News

The Middle East and North Africa in 2020 will be the center of attention of Russian pharmaceutical companies focused on their products export development. The largest enterprises consider the region as one of the priority, counting on sales of vaccines and drugs for cancer treatment in these countries.

Drugs export will become the topic of 2020 year  for Russian pharmaceutical companies – during this period, the “Pharma 2030” industry development strategy by the Russian Ministry of Industry and Trade should be approved, and its main vector is aimed at developing innovations and bringing them to foreign markets. And if until now the CIS countries have traditionally been considered as the main sales territory of domestic pharmaceutical products outside Russia (they account for the bulk of export deliveries in monetary terms), now enterprises are increasingly developing new regions, primarily paying attention to Arab countries. According to a study conducted by the State Institute of Medicines and Good Practices (GILS and NP) based on the data from the Federal Customs Service of Russia, from January to October 2019, the total volume of drug deliveries from Russia to the Arab region amounted to about $14.5 billion, that is less than 2% of total export. However, the growth of this indicator compared to the previous similar period reached 84%, which made the countries of the Middle East and North Africa one of the fastest growing territories in terms of drug deliveries from Russia (for comparison: the dynamics of the total volume of drug exports to all countries over the same period was 8%).

“Russia has well-established economic relations with many countries of the Middle East, including food supplies, the automobile industry, and weapon after all. These relations can and should be developed, especially since many countries of this region are “solvent” and actively developing. Russia, in turn, is now producing quite competitive products, including biosimilar drugs that may well be in demand in these areas”, explains the RNC Pharma® director Nikolai Bespalov.

As the GILS and NP study showed, Sudan ($6.13 billion), Morocco ($3.6 blllion) and Iraq ($2.86 billion) are leaders in terms of drug supplies. The largest dynamics of drug purchases from Russia was recorded in Iraq — the volume of exports to this country from January to October 2019 increased 40 times from $0.73 to $2.86 billion compared to the same period in 2018, as well as the volume of exports to the Syrian Arab Republic — from January to October 2019 this country grew 10 times from $26.4 thousand to $264.7 thousand compared to the same period in 2018. However, representatives of pharmaceutical companies explain that considering the Middle East and North Africa as potentially promising regions for export, they primarily plan to enter Saudi Arabia and the United Arab Emirates.

“The Arab world takes an example from Saudi Arabia and the UAE. If you register a drug in these countries, then registration in other parts of the Middle East is much simpler”, says the head of “Pharmasyntez” export department Vitaly Miller.

Table. Export of medicines from Russia to the countries of the Arab region (in money terms) – Source: Federal Customs Service of Russia (data indicated as of 26.12.2019)

COUNTRY

JANUARY TO OCTOBER 2019, BILLION $

SHARE IN TOTAL EXPORT, %

DELIVERY DYNAMICS, JAN-OCT 2019/JAN-OCT 2018

1 MOROCCO 9,00 1,38 182,82
2 IRAQ 6,67 1,02 103,20
3 SUDAN 6,13 0,94 66,32
4 SYRIAN ARAB REPUBLIC 1,26 0,19 83,97
5 EGYPT 0,65 0,10 189,18
6 BAHRAIN 0,63 0,10 107,00
7 SAUDI ARABIA 0,41 0,06 -80,71
8 UAE 0,29 0,04 8171,83
9 YEMEN 0,22 0,03 -30,13
10 IORDANIA 0,17 0,03 -63,91
11 LIVAN 0,14 0,02 576,48
12 MAURITANIA 0,06 0,01 26,91
13 QATAR 0,06 0,01 155,49
14 KUWAIT 0,06 0,01 -10,16
15 OMAN 0,01 0,00 -57,61
16 ALGERIA 0,00 0,00 -5,87
Total export from Russia to the Arab region countries 25,75 3,96 78,41
Total export from Russia 650,96 6,05

The Russian manufacturer of yellow fever vaccines, Federal Science Center for Research and Development of Immunobiological Preparations named after M.P. Chumakova RAS, became the leader in the drugs export to the Middle East and North Africa in the first three quarters of 2019 – states the analytical report of RNC Pharma®. The company sold $6.2 billion worth of products in the Sudan, Mauritania, Egypt, and Syria over this period. The head of the Department of International Relations of the Federal State Unitary Enterprise SpbNIIIVS FMBA of Russia Andrei Egorov notes that the supply of vaccines from Russia to this region is logical, since the problem of infectious diseases in many countries has not been solved, for example, in some of them bursts of coronavirus infection have been recorded in recent years.

“The region is promising for Russia as a market for the supply of immunobiological products, as well for manufacturing organisation and technology transfer. There is undoubted interest in this territory, we are considering local production of vaccines following the WHO recommendations, as well as the development of relevant vaccines and biological products for the region”, he says.

According to RNC Pharma®, another leader is BIOCAD, which supplied medicines to Iraq alone for a total amount of $ 2.8 million in the first III quarter of 2019. At the same time, the company’s representatives estimate the total supply of their products to Arab countries for the whole year at $ 10 million. “The Middle East is an important point on the way to strengthening the position of BIOCAD as an international pharmaceutical company. The main goal of the company’s presence in this market is to provide access to high-quality vital medicines for the entire population of the region. Many Arab specialists in the field of oncology and autoimmune diseases show a high interest in our company and its innovative products” says Commercial Director for International Markets at BIOCAD Dmitry Pasechnik. According to him, now in the MENAT region, apart from Iraq, the company exports its products to Yemen and Morocco, where a technology transfer project was launched focusing on company’s drugs against oncological diseases, rituximab and bevacizumab.

The next goal is the leading countries, including the UAE, KSA and Egypt. “We are already working productively with the largest local companies, we are implementing integration projects of various sizes – from simple sales to the local production. In addition, it is planned to develop the potential for a checkpoint inhibitor (PD-1), a drug with an innovative mechanism of action aimed at restoring a normal antitumor immune response and the original Russian inhibitor (Il-17) for the treatment of immuno-inflammatory rheumatic diseases”Pasechnik said. The total market capacity in 23 countries of the region for those INNs (rituximab, trastuzumab, bevacizumab) is estimated by the company at no less than $500 billion. Other Russian companies, including “Sotex” and “Pharmasyntez”, are also planning to bring the oncology portfolio to the Middle East. “In our opinion, these territories are attractive for export. In the Arab countries, there is a high incidence of cancer and diabetes, and we have a strong portfolio in these areas, so we are ready to offer quality products at a competitive price” said Vitaly Miller from “Pharmasyntez”.

Representatives of Russian pharmaceutical enterprises believe in the market prospects of the Middle East and North Africa. According to estimates by Andrei Yegorov from SpbNIIIVS, the pharmaceutical industry in this region will grow and reach $30-60 billion by 2025. Dmitry Pasechnik notes that the absence of a diversified product portfolio  in these areas makes them especially attractive for Russian pharmaceutical companies.

“The Middle East is the most complex, but also the most interesting region from the business standpoint. Significant differences in country mentality, business culture, level of state and internal political structure push us to develop unique market entry strategies for each specific case. The unstable situation, in addition to the undeniable difficulties, gave many players the opportunity to apply a flexible business approach, so to speak, to “adapt” to the local specifics to satisfy their own interests. Nevertheless, the reality is that today, unfortunately, many countries in this region suffer from a shortage of high-tech vital medicines, for a number of factors, the main of which are high prices due to the monopolization of the market by one international player. So, we have something to offer to these territories”, he said.

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