HUNGARIAN DRUGMAKERS EXPECT RUSSIA REIMBURSEMENT GAINS

According to international reports, leading Hungarian drugmakers Gedeon Richter and Egis are hoping for significant revenue gains from Russia's new reimbursement system. The RUB50.8bn (US$1.82bn) framework extends an existing free drug provision to government employees and pensioners. Officials have issued a list of some 300 active pharmaceutical ingredients that will be reimbursable under the scheme, with Gedeon Richter and Egis both having about 20 drugs on the list.

Gedeon Richter is already a leading drug supplier in Russia, with a market share of some 2.5% and third-quarter turnover of some US$81.5mn in the country, where it also operates a manufacturing unit. Egis currently has 44 products on the Russian market, and reported third-quarter revenue of US$48mn.

Nevertheless, industry observers doubt that the new reimbursement scheme will become fully functional in the near term. The framework was to be introduced from January 1, but the government has continued to negotiate with suppliers and has failed to clarify the plan's structure. Although the framework is a significant development, as Russia has previously lacked a comprehensive reimbursement system, drug supply tenders conducted by hospitals and health authorities are likely to be complex. Nevertheless, the scheme's estimated 15mn beneficiaries will receive a monthly financial package worth RUB440 (US$15.74), which could raise annual per capita spending to some US$120 from the current US$32. With the overall market valued at about US$5.4bn in 2004, further expenditure is widely expected to benefit companies already active on the local pharmaceuticals market.