MEDICAL DEVICE EXPORTS TO RUSSIA: SOME MARKET INDICATORS

MARKET SIZE IN RUSSIA

Russia has a population 145 million people. Both medical device and pharmaceutical markets in Russia are very attractive for Western companies. Value of pharmaceutical sales is  21 milliard euro/year and value of medical device sales ver 15 milliard euro/year. Over 80% of medical device sales in Russia originate from the Western countries. Local manufacture in Russia is virtually nonexistent: Western medical devices are on a superior level.  There are no trade sanctions in the medical device sector: “business and trade are free”.

Medical sector of Russia realies heavily on imported medical devices and pharmaceuticals. Russian medical facilities and organizations prefer to buy medical products from Western manufacturers,  whenever there is a choice. 

MARKET STRUCTURE

Russia has 75 medical universitiess. They are the backbone for training medical doctors and introducing modern methods of medical care in Russia. Today, in the Russian healthcare system there are:

*  709.000 medical doctors

*    61.000 dentists

*  1.300.000 medical nurses and so called "paramedic personnel"  

*        5.993 hospitals with about 1.230.000 hospital beds

*        7.951 health centers

*       2.330 outpatient/polyclinic institutions

*          827 dental clinics.

PHARMACIES and PHARMACEUTICALS

There are over 50.000 pharmacy sales outlets in Russia. Market share of Top-10 largest pharmaceutical distributors is  high 82%. Russian pharmaceutical market can be divided by prescription drugs 61% and  over the counter (OTC) drugs  39% of all sales. Growth  in both categories is estimated to be about + 25 %/year. Drug manufacturers prefer to do business with distributors and avoid working directly with retail pharmacy chains or pharmacy outlets. Distributors operate vast  networks of  contacts and direct retail distribution channels. There are four major distributors and several other smaller distributors each often focusing to some specific territory or narrow special product segment. Presently there are five dominant pharmacy chains in retail sales to end users.

MODERNISATION OF MEDICAL FIELD IN RUSSIA

In recent years in the 2000`s several thousand small and inferior level hospitals  (“uchastkovovye”) and their very rustic hospital bed availability were permanently closed.  For instance in 1995 Russia still had 12.100 hospitals with 1.851.000 beds. The trend is towards larger medical treatment systems and hospitals, like is the general present trend in the Western countries.  Between 2000 and 2015 in 15 years  the number of hospitals in Russia halved, dropping from 10.700 to 5.400 hospitals, and the number of hospital beds decreased by 28%.  At the same time hospital beds are used more effectively and the overall quality level has improved significantly.  In addition to full-scale hospitals there about 10.000 municipal polyclinics, with needs for high tech medical equipment,  sophisticated pharmaceuticals and consumables from the West.

HOW THINGS WERE, IN THE SOVIET ERA 

In Soviet Union (before 1991) population of the country was 295 million people and medical and healthcare scene was as follows:

·          23.500 hospitals with 3,6 million beds

·          1,2 million medical doctors

·          3,2 million medical nurses and paramedical personnel

·         9 medical institutes were attached to the universities.

Average medical doctor`s salary was roughly comparable to that of an average blue-collar industrial worker, or even lower.

After  1992 Russia`s healthcare system continued to deteriorate substantially in the 1990`s. Since the 2000`s  and especially  in 2010`s  the situation has changed and improved significantly.

Medical personnel are not generally trained as rigorously as their contemporaries in the West. Salary levels continue to be lower than by their Western counterparts. At the same time medical devices for testing, diagnostic and treatment purposes are behind Western standard levels, and access and knowledge of Western advanced pharmaceuticals continues to be a problem.

PRODUCT CERTIFICATION INSIDE RUSSIA IS MANDATORY

Approval of medical devices and pharmaceuticals is mandatory in Russia. It means that manufacturers or distributors must obtain Russian registration for their medical devices and/or pharmaceuticals before they can place them on the Russian market. This must be done regardless the products are already registered in EU or/and USA, or in anywhere else.

Russia has not signed mutual recognition agreement with European Union or USA on one another`s  conformity assessment for medical devices and pharmaceuticals. Nor does such an agreement to be likely in the near future. Therefore medical devices and pharmaceuticals exported to Russia must be assessed in Russia for conformity with Russian standards.

In the first and most important step, medical devices are registered with the Russian Ministry of Healthcare and Social Development. Devices generally undergo technical testing for safety and biocompatibility. Registration can be applied for in either the manufacturer`s or the distributor`s  name. Registration is finally completed with registration document of Russia`s agency “Roszdravnadzdor” (“RZN”). Then medical device is free to be imported and used in Russia.

There are basically four categories of medical device certification in Russia. Class I for low risk, Class IIa for medium risk, Class IIb for  medium/high risk, and Class III for high risk. Typical examples are in Class I bandages and walking aids, in Class IIa hearing aids, in Class IIb X-ray devices, and in Class III hip implants. Classification is similar although not identical in the Western countries.

HOW FOXX CAN OPEN THE RUSSIAN MARKET FOR YOUR PRODUCTS

FOXX is a Finnish business consulting company. FOXX has it´s own subsidiaries in Russia and the other "former USSR countries" since 1992. In Moscow,  FOXX-Russia is located inside the building complexes of The Russian Academy of Medical Sciences since 1993. The Academy is responsible of medical and healthcare matters of the entire of Russia. It has its own hospitals, R&D institutes and centers, clinics, laboratories and units authorizing the certification organisations for medical devices and pharmaceutical products.

FOXX provides business services to Western companies for Russia. In medical business & industry typical services provided by FOXX are:

·   Certification of medical devices and equipment for importing and selling products in Russia

*  Providing official evaluations and quotations for price and procedure of certification

·   Sourcing and selecting distributors and importers for Western company in Russia

·  Market studies, including establishing contacts with important customers in Russia

·   Outsourced local sales personnel to enforce selling, marketing and customer contacts in Russia (without any need for establish own company in Russia)

Western medical device, equipment and pharmaceutical business and industry will increase successfully in Russia in many years to come. We would be delighted to offer and provide our business services to your company`s specific needs for business and exports in Russia.