Russia – Plans to Modernize Russia’s Healthcare Industry Could Be Derailed by the Financial Crisis

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The global financial tornado is threatening to disrupt Russia’s plans to reform its crumbling healthcare sector. Major reforms of the healthcare and the Russian pharmaceuticals industries had been planned before the crisis hit with full force in September. The healthcare reform program, called “Russian Healthcare 2020,” is still being secretly developed by the Health Ministry, but with the government struggling to make ends meet, healthcare may once again end up on the backburner.

Link to the article:
Article was in 3 November PHM Emerging Markets Healthcare News Feed


We know of one PE firm that has already pulled out of Russia’s healthcare sector, and it had nothing to do with Russia’s healthcare sector.

This is not to say Russia’s healthcare status is a positive example for private investment.  The country’s per capita spend on cancer is lower than Poland’s.  Its population growth rate is negative with an unsustainable government promotion to increase it by 50%.  Inbound immigration is not happening.  The country’s pharma sector is decaying, with only nine percent of the plants conforming to international GMP standards.

The response from the government? More central planning.  Central planning in pharma development and central planning in healthcare finance.

The reason why the PE firm pulled out of Russia?  Lack of clarity of ownership. 

One example, from this article: “…A special government program to modernize the nation’s pharmaceuticals industry has been developed before the crisis. It projects that by 2020, Russian companies will have captured at least 50 percent (or $30 billion) of the Russian drugs market, valued at $60 billion per year. All low-cost generic drugs, not covered by international patents, will be manufactured in Russia at modern plants that would be built under the GMP standards. No less than 50 percent of the drugs manufactured in Russia will be high-premium innovative drugs that could be marketed outside of Russia. The government projects to have at least 200 of such blockbuster Russian drugs by 2020, with annual sales exceeding $50 million for each drug.”

Does this sound like the government has held back the potential for a pharma company to be designated a “natural monopoly and strategic asset?”

A strategic asset?  What lender is going into such an unknown?…………HK

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On November 26, 2008
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