Page 126 - RusRPTJul21

9.1.13 Other sector news
In 2020, prices for imported medical substances used by Russian pharmaceutical producers rose 23.9% vs. a 15% increase in 2019. That breaks the record from 2015 of 19.9%. Put another way, the squeeze on demand for medications in Russia and globally was so tight that it produced more extreme price increases than when the ruble lost over half its value against the USD and 33% of its value against the Euro after it was floated at the end of 2014. 69.4% of payments for imported medical substances were invoiced in dollars against just 15.8% in rubles — hard to see how de-dollarization can really change that dynamic for now. Russia relies on foreign substances and inputs for 75% of its pharmaceutical production. Russian firms take the value-added stage of production before selling it to wholesalers who then sell drugs onto retailers. 53% of all the drugs produced are included on the state’s price control list, which can then make production unprofitable as import costs rise. Basically, the system as currently designed results in both consumer price inflation and underinvestment into production because there’s not enough domestic capacity making the base components of everyday medications like paracetamol (acetaminophen for us Americans). That’s not news, but the scale of the price increases last year and the current price inflation problem make that all the more acute.
126 RUSSIA Country Report July 2021 www.intellinews.com