Trends of Growth in the Russian Pharmaceutical Industry by 2025

MAR Consult: Trends of Growth in the Russian Pharmaceutical Industry by 2025

Following the introduction of trade barriers by Western countries and the exit of some foreign drug manufacturers from the market, the Russian pharmaceutical market faced challenges, particularly in the innovative production of active pharmaceutical ingredients (API) for essential medications and insufficient funding for scientific research. The state was forced to take emergency measures to reduce the risks of supply disruptions and price increases for drugs. Dmitry Shimanov, Founder and CEO of the analytical company MAR Consult, discussed the factors changing the pharmaceutical market and the trends shaping its development by 2025.

Import Substitution and Localization

A number of measures taken by the Russian government to support the pharmaceutical industry were aimed at developing domestic production and reducing dependence on imported products as part of the "Pharma-2030" strategy. First of all, domestic manufacturers received support through subsidy programs, tax incentives, and grants for research. Additionally, the registration procedures for new drugs were simplified, allowing manufacturers to respond more quickly to current market needs and apply the latest developments. These measures are intended to increase the share of strategically important medicines produced in Russia, including the synthesis of pharmaceutical substances, to 80% by 2030.

In 2023-2024, there was an increase in production volumes in the pharmaceutical industry, with the share of high-tech products also growing due to the commissioning of several plants producing drugs from the list of vital and essential medicines. New production capacities were launched by major companies such as Pharmasynthesis, Specpharmproduction, Medisorb, R-Opera, Nizhpharm, and others. According to analysts at MAR Consult, an important mechanism for creating platforms for new production was public-private partnership, under which investment projects involving the production of priority products, including in the pharmaceutical industry, were supported.

Several international pharmaceutical manufacturers have maintained or expanded their localization of drug production in Russia, which has helped reduce the cost of medicines. Among the large foreign pharmaceutical companies, Pfizer and Sanofi are expanding existing capacities, while Bayer and Novartis have retained local production despite sanctions, although they have halted research and development activities. The effectiveness of the measures taken is confirmed by data provided by Russian Prime Minister Mikhail Mishustin, showing that drug production in Russia increased by 21.5% in 2024, with the share of domestic drugs exceeding 64%. According to forecasts by the Ministry of Economic Development, by 2027, pharmaceutical production and medical supplies in Russia will grow by 33.1% compared to 2023.

Replacement with Generics

By 2025, the segment of biosimilar drugs, which are copies of original pharmaceutical products, significantly expanded, mainly due to the need to expand the range of accessible essential medicines for treating severe diseases amid limited import of analogous drugs and lower costs. At the same time, generics often match original drugs in terms of efficacy and safety. According to "Vedomosti," in 2024, the share of permits issued by the Ministry of Health for conducting bioequivalence studies reached 71%, compared to 41% in 2021, indicating rapid growth in the domestic generics market. Further growth in the share of quality generics will help stabilize prices, as the cost of generics can be one-third of the original drug's price, with shorter research durations and faster registration processes. According to MAR Consult analysts, the generics segment, including complex-to-replicate ones, will see the most active development in Russia over the next 3-5 years. In the long term, according to MAR Consult forecasts, the pharmaceutical market will overcome its dependence on generics, given the state's focus on developing high-tech production of innovative drugs, as well as personalized and gene medicine.

Parallel Imports

According to the Association of Russian Pharmaceutical Manufacturers, by 2025, imports of medications from the USA decreased by 70% and effectively reached the level seen in 2004. However, by 2025, the shortage of drugs that were either not officially registered in Russia or had limited distribution was partially addressed not only due to the growth of domestic production within Russia but also because of increased supplies of medications from "neutral" countries. For instance, India became the largest supplier of drugs to Russia starting in 2023. India and China offer favorable licensing terms, which reduce the final cost of medications. To facilitate imports, Russia had to quickly align its standards with international ones. As a result, according to market experts, the share of foreign-produced drugs increased for the first time in 2024.

Digitalization

Sanctions have restricted access to Western innovative technologies, leading to the suspension of more than 1,300 clinical trials conducted by foreign companies, as reported by DrugPatentWatch. This has caused delays in drug approvals. However, thanks to the implementation of the "Pharma-2020" strategy, fundamental scientific, technological, and industrial foundations were established, enabling the transfer of production technologies for drugs that were previously not manufactured in Russia. In addition, under the state program "Development of the Pharmaceutical and Medical Industries," innovation competence centers for drug development have been created in collaboration with leading higher education institutions. Furthermore, training is ongoing for pharmaceutical industry personnel in advanced fields such as "Medical Cybernetics," "Biotechnology," and others.

Additionally, measures taken under the National Program "Digital Economy of the Russian Federation" directly impact the digital transformation of the pharmaceutical industry, aimed at stimulating technological progress to accelerate domestic developments that meet global standards. The program supports the development of domestic technologies and the implementation of innovative solutions in pharmacology, with a focus on the application of artificial intelligence (AI) and big data (Big Data). The creation of digital platforms and quality control systems for medications aims to simplify registration procedures and improve drug quality control, enhancing the transparency of the pharmaceutical market. Specifically, electronic prescriptions have streamlined the process of purchasing medications and improved the monitoring of prescription drugs. At the same time, measures are being introduced to strengthen the security of patient personal data and improve the handling of medical data. According to MAR Consult analysts, further integration of digital solutions into medicine will enhance diagnostic efficiency and improve treatment outcomes.

Expert Conclusion by Dmitry Shimanov, CEO of Analytical Company MAR Consult : "The pharmaceutical industry in Russia is undergoing active transformation influenced by external economic conditions, technological development, and healthcare system reforms. Despite external trade barriers, the positions of domestic players are strengthening, and the pharmaceutical market demonstrates stable growth, reorienting towards domestic production. Support for the industry from the state and business efforts will ensure favorable conditions for maintaining positive dynamics in the pharmaceutical sector in the coming years."

The company MAR CONSULT has been conducting consumer and market research since 2002 and has extensive experience studying various industries and market segments. Key areas include medicine and pharmaceuticals, commercial real estate and construction, agriculture and industry, among others. MAR CONSULT has established itself as a reliable provider of accurate information for making important business decisions. Its clients include the largest Russian and international companies.

 

Source: Russian Medical Server