INDIAN FIRMS TARGET CENTRAL EUROPEAN MARKET

Already faced with the costs of harmonisation with EU directives, Central Europe's generic drug manufacturers have acknowledged a growing threat from Indian drugmakers. In recent months, a growing number of mid-sized firms have followed the lead set by Ranbaxy in Western Europe and aggressively targeted high-growth markets in countries, including Poland and Russia.

Russia's retail drugs market is currently dominated by export-focused regional manufacturers such as Slovenian leader Krka and Hungary's Gedeon Richter, but sales in home markets are increasingly under threat from lower-cost competitors, as financially troubled governments look to source generics at the lowest possible price.

In August, JB Chemicals announced plans to buy a Russian manufacturer, while fellow Indian manufacturer Sun Pharma is currently completing a strategic acquisition in Hungary. The country has long been an important resource for leading global generics makers. However, the government is extending flat-sum reimbursement to nearly all pharmaceuticals, and cost-conscious consumers could welcome the entry of cheaper products manufactured by rivals to Hungary's leading manufacturers.

Nevertheless, it remains to be seen how governments will react in order to protect homegrown drug firms. With tough European rules on manufacturing standards and bioequivalence already in effect in the countries opting not to delay harmonisation, Indian companies rehabilitated by their home market's improving regulatory environment could still find Eastern Europe a genuine challenge.