The pharmaceutical market of Central & Eastern Europe is estimated at US$59.8 billion at retail prices in 2011; it is expected to reach US$94.5 billion by 2016. The market is expected to expand by a moderate CAGR of 7.7% in US dollar terms over the next few years as the region’s economies recover from the global economic crisis.

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Dominance of generic medicines
Generic medicines represent around half of the total CEE pharmaceutical market in value terms and almost three quarters in volume terms. Generics have retained their strong position in the region due to the demand for affordable drugs and the fact that some governments favour generics when selecting products for reimbursement, as they are usually cheaper than imported products and help to keep costs down. Although rising incomes have led to increased sales of branded products, recent financial difficulties are likely to have forced patients towards purchasing cheaper generics.

Central and Eastern Europe is home to a large number of generic companies, including Krka, Gedeon Richter, Polpharma and Zentiva, which have traditionally focused on the production of generics. Pharmstandard, Russia’s leading generic company, has a small number of original drugs in its portfolio, but many companies lack the funding that is required for extensive R&D. Branded generics are particularly common in Central and Eastern Europe, especially in Russia, due to the tradition of self-medication which has encouraged companies to produce pharmaceuticals with recognisable names and the erroneous belief that pure generics are unsafe.
Different IP protection levels
Much of the pharmaceutical legislation within the region has been harmonised with that of the EU. However, the level of IP protection remains an international concern. Problems that are commonly raised include a lack of transparency in IP procedures and the lack of effective enforcement.

Health Expenditure
The countries of Central & Eastern Europe are projected to spend an estimated US$335.9 billion on healthcare in 2016, equal to 6.8% of GDP. At present, only 39.6% of spending in the region is private, but over 87.0% of this is composed of out-of-pocket payments. The area of private healthcare plans remains largely undeveloped within most markets. Slovenia, the wealthiest country per capita in the region, is the only state in which private plans have become a strong feature, representing over half of total private spending.

RUSSIA
Russia accounts for just under a third of the total Central & Eastern European pharmaceutical market, due to its population of 142 million; however, in per capita terms, Russia is also one of the smallest markets, similar to Romania. The Russian pharmaceutical market is predicted to expand at a relatively high CAGR in US dollar terms over the next few years and will continue to be driven by import growth; a heavy reliance on imports has resulted from the lack of locally-manufactured innovative pharmaceuticals. The government intends to change this through the Pharma 2020 Strategy, which aims to encourage growth in the local pharmaceutical industry for the period up to 2020. Under the plan, the government will help local producers to cover the costs of the R&D that is required to boost production of innovative pharmaceuticals. It also hopes to create new companies which will be able to attract investment, create new jobs and produce competitive, safe, good quality, affordable products that fulfil the requirements of patients and the healthcare system. If the objectives of the plan are realised, by 2020, the local industry will be responsible for 50% of drugs in circulation, 80% of which will be innovative. The Strategy will require a lot of investment which will be sourced mainly from the federal budget, but the government is also trying to encourage international pharmaceutical companies to invest. So far, companies such as AstraZeneca, Novo Nordisk and Nycomed have made plans to invest in Russia.

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