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Economic Analysis for the Russian Healthcare Industry
Frost & Sullivan, Dec 2009, Pages: 31
Between 2003-2008 Russia witnessed robust economic growth, attributed mainly to strong Ruble and high oil prices in the international market. The growth was also supported by surge in domestic demand and increased investment in the country. All this had a positive impact on the healthcare industry which experienced strong growth over these years. However, in 2009, the domestic and global slowdown began to affect the healthcare industry as well. There was a drastic increase in the prices of drugs. The Country Industry Forecast gives an in depth analysis of how Russia's recent changes in the economic environment have affected the Healthcare Industry and created opportunities for it.
Russia’s stable macroeconomic growth in the last couple of years can be mainly attributed to high oil prices in the global market. The economy benefited from a spurt in output, driven by the rise in domestic demand, increase in investments, and political stability. However, the global economic downturn of 2008 caused the economy to shrink in the first and second quarter of 2009. In response to this situation, the Russian Government allocated more than $90.00 billion in stimulus package in 2008 and 2009 to strengthen the financial sector, support the economy, and protect the most vulnerable sections of the society. The economy is on the path to recovery and consequently, the Russian healthcare industry is also experiencing significant growth. The government’s drug reimbursement program encouraged an increase in drug consumption and drug sales and this trend is expected to continue in 2010. The healthcare industry will also benefit from the country’s aging population as well as an increase in disposable income, consumer spending, demand for healthcare products, and government funding for drugs through a new health insurance system.
As imports account for nearly 60 percent of the total volume of the Russian pharmaceuticals market, the government has been trying to lower the reliance on western drugs by giving an impetus to the local production, mostly of generic drugs, which is a market with tremendous potential. Russia is also an attractive location for conducting clinical trials as it offers cost advantages (45.0 to 50.0 percent less expensive than western countries), a huge pool of patients, a centralized healthcare system, and large hospitals, each specializing in a therapeutic area. Moreover, the regulatory system is being increasingly streamlined and is becoming transparent. The country has a substantial pool of talented scientists and offers a wide market for manufactured drugs due to a large population and a continuous rise in the demand for health products. However, strong competition from developing countries is likely to challenge the Russian clinical market in the future.
The government is actively encouraging the biotechnology sector, as part of the country’s economic modernization plan. In 2006, the government prepared a ten-year ‘Biotechnology Development Plan’ for promoting the sector, laying emphasis on the establishment of special economic zones (SEZs) for innovative biotechnology. The Russian medical technology market is underdeveloped, although initiatives have been taken to incorporate information technology (IT) in healthcare since the 60s. Several telehealth networks have been developed and a 'National Health Program' has been initiated to provide significant funds to build specialized health centers in the country. There is also rising demand to replace obsolete medical equipment, which bodes well for the manufacturers of high-end medical devices. The country’s ascension to the World Trade Organization (WTO) will further attract investments to its healthcare industry.
Frost & Sullivan’s Healthcare Country Industry Forecast service provides vital inputs for evaluating the attractiveness of a country and its healthcare industry. Besides enabling decision makers to assess the impact of non-market forces, it also helps in identifying new market opportunities. This service provides a strong base for preparing contingency plans. In addition, investors can assess industry-specific risk factors as well as conduct a more in-depth micro research.
Benefits
Expert Frost & Sullivan analysts thoroughly examine the following benefits in this research:
- Identifying New Market Opportunities
The future trends and developments in the Russian healthcare industry have been identified by taking into consideration the economic environment of the country and analyzing global trends. This analysis will provide valuable information to industry participants, which will aid in seizing strategic market opportunities.
- Understand Future Industry Trends
The research gives an insight into the Russian healthcare industry’s policies and their implications. This will enable industry participants to gauge the trends in their respective markets and thereby, devise appropriate market strategies.
- Comprehend the Economic Environment
A detailed analysis of the economic framework of the Russian healthcare industry provides insights into the economic environment as it exists and the future direction of the same.
- Evaluate Industry Segment Potential
The analysis of the sectors of the Russian healthcare industry along with a discussion of its vertical market segments provides an insight into the key industry indicators and resources. This will help corporate planners in developing accurate business plans and planning company resources.
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