OREANDA-NEWS. March 02, 2012. Over the past year 2011, everyone working in the out-of-pocket sector of Russia’s pharma market had a chance to get firsthand knowledge of the power of government regulation as well as variety of its forms. Indeed, there was sometime a myth that doing business in the out-of-pocket sector yields unbelievable income but today it has been by all means dispelled. Government has started regulating the maximum markups on drugs on the LED list, and manufacturers frequently have difficulties with the registration of prices for them, which has more than once resulted in interrupted sales through drugstores. Still, nobody thinks this is something disastrous. On the one hand, everybody has got used to this state of affairs; on the other hand, retailers now have more acute problems such as growth of tax burden following the repeal of the common imputed income tax and increase of insurance premiums paid to extrabudgetary funds.

Nonetheless, the new legislative developments provided a sort of incentive for the market players’ self-organization and increased emphasis on the qualitative aspects of making and expanding business. Several important trends emerged, such as the diversification of format, special attention to the improvement of own qualitative characteristics and further consolidation of the existing players. Everybody’s interest in a discounter format proved to be emblematic of the recent times. The process of consolidation, as part of which several major transactions were completed during the last year, will continue to intensify over the course of time. This is a natural process for a highly competitive market, which is proven, amongst other things, by the growing activity of investment companies. In 2012, the market is expected to see several other major transactions, such as the sale of a large interregional chain Doctor Stoletov and, probably, state-owned Stolichnye apteki.

Market shares of ТОР15 Russia’s drugstore chains in out-of-pocket drug segment, 2011

Rank by MS in out-of-pocket drug segment

Drugstore chain

HQ location

Number of outlets as of January 1, 2012

MS in out-of-pocket drug segment, %

2011

2010****

1

Rigla

Moscow

694

2.55

2.38

2

Apteki 36.6

Moscow

1005

2.33

2.47

3

А5 Group

Moscow

1371

1.99

1.61

4

Alphega Apteka***

Moscow

720

1.56

0.83

5

Pharmacor*

St. Petersburg

399

1.51

1.66

6

Implozia* and **

Samara

741

1.29

1.38

7

Pharmaimpex

Izhevsk

288

1.22

1.09

8

ASNA*** and 2

Moscow

154

1.11

0.87

9

UMG*** and 1

Moscow

397

1.00

0.86

10

Raduga

St. Petersburg

514

0.99

0.79

11

Staryj lekar*

Moscow

247

0.93

0.94

12

Samson Pharma

Moscow

20

0.82

0.74

13

Doctor Stoletov

Moscow

406

0.81

0.81

14

Vita**

Samara

370

0.74

0.79

15

Pharmland

Ufa

207

0.70

0.65

*Including franchising drugstores.

**Expert estimation.

*** Association type drugstore chains.

****The 2010 drugstore chain shares were adjusted due to the revised classification of homeopathic drugs when making settlements.

1 United Marketing Group is a marketing management company for an association of drugstore chains. Our calculations include the data for the following drugstore chains: 120/80, Antey, Artemida, Sous, Valeta, Gorzdrav, Inpharmacia, Maxipharm, Medsnab KChR, Nektar, Stolitsa Medical, Pharmateca, Tsareva Apteka, A.V.E, Zdorovie.

2 Association of Independent Drugstores. Our calculations include the data for the following drugstore chains: ASNA, Serdechko, NovaVita, Moskovskaya Apteka.

A complete version of Russia’s drugstore chain rating as of 2011 will be published in INPHARNACIA # 02-2012.