Translated material
License exception
The Ministry of Health and Social Development threatens outdated pharmaceutical enterprises with new technical regulations
Financial difficulties caused by the crisis will not save the Russian pharmaceutical industry from the need to transfer production to the international quality standard GMP (good manufactured practice). On the contrary, this transition will begin next year, and not in 2010, as previously planned. This was recently stated by Deputy Head of the Department for Development of the Pharmaceutical Market and Medical Equipment Market of the Ministry of Health and Social Development Marat Sakaev. “A draft technical regulation on the safety of medicines is currently being prepared. We expect that by 2010, GMP standards will be an indispensable requirement when obtaining a license to produce drugs,” an official warned representatives of the Association of Russian Pharmaceutical Manufacturers (ARPM).Such plans of the Ministry of Health and Social Development mean that the pharmaceutical market is facing a new wave of consolidations. A year ago, when another department claiming to oversee the pharmaceutical industry, the Ministry of Industry and Trade, began work on the concept of reviving the domestic drug industry, ARPP experts calculated that as a result of the transition to GMP, out of 550 Russian production facilities, only about 50 could remain. The remaining factories, which in most cases still operate on Soviet equipment and discharge wastewater into nearby bodies of water, simply will not be able to find funds for modernization and will not receive licenses.
“The industry will be able to completely switch to GMP only when the last issued license expires, which, as is known, is issued for five years,” the Ministry of Industry and Trade told Vremya Novostei. According to Sergei Tsyb, director of the department of chemical-technological complex and bioengineering technologies of the Ministry of Industry and Trade, they will first stop issuing licenses to enterprises that do not meet the new standards. This, according to the official, can begin to be done as early as 2009. Then, by 2014, all outdated industries will “die off” naturally.
But the state promises support to all viable people. “Our ministry is also developing measures to stimulate the transition of enterprises to new quality standards, for example, targeted loans at low interest rates from the Development Bank, priority purchases at the expense of the budget from enterprises with GMP production, and a number of others,” said "Vremya Novostey" Mr. Tsyb.
Washing outdated production facilities from the market will have virtually no effect on the range of drugs in pharmacies, experts say. Only the cheapest medicines familiar to older people will disappear from sale. True, the price tags will most likely have to be rewritten upward. “The transition to a new quality standard is an expensive process, so cheap drugs will either become more expensive or will be discontinued,” Alexander Itin, executive director of the Domestic Medicines holding, told Vremya Novostey. This opinion is confirmed by the calculations of the marketing agency Remedium: drugs whose packaging now costs less than one dollar will move to the next price category - from 1.5 to 5 dollars.
Another question is whether Russian manufacturers, after modernization, will be able to expand their share of their own pharmaceutical market. As Maria Denisova, an analyst at the research company IMS Health, calculated, based on the results of the first nine months of 2008, the share of domestic manufacturers in terms of sales in monetary terms was 23%. This is 1% less than the same period in 2007. IMS Health estimates the entire market of finished medicines at end-user prices at $9.7 billion today (in 2007 this figure was 7.1 billion rubles).