The impact of sanctions on Russia and Belarus' pharmaceutical markets.

In response to the #Russian Federation's aggression on #Ukraine, the United States and European Union imposed heavy sanctions on Russia and #Belarus (as an official Russian Union state, Belarus has been used as a base for attacking Ukraine).

Despite #sanctions not directly targeting #pharmacy or #medicine, the #pharmaceutical industry still suffered dire consequences.

Let me remind you that the Russian pharmaceutical market is the largest in the #CIS. According to various sources, it is worth 25 to 30 billion US dollars. Belarus' pharmaceutical market is worth 2 billion US dollars.

Although both countries have developed their own pharmaceutical production, it does not fully meet the demands of the population.  Prior to military aggression, Russia produced up to 61% of essential drugs; Belarus makes up a much smaller percentage.

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Since the military aggression, according to RNC Pharma analysts, 28 foreign manufacturers have completely stopped supplying to the Russian pharmaceutical market. Imports of medicines from the USA, EU countries, Canada, Israel, etc. have decreased.

BRISTOL-MYERS SQUIBB and RECKIT BENCKISER GROUP PLC transferred business to local partners and suspended clinical trials.

TAKEDA transferred business to local partners and suspended investments.

ASTELLAS suspends upcoming clinical trials.

GLAXOSMITHKLINE and ELY LILLY suspended investments, new clinical trials and supply of some drugs.

SANOFI, ABBVIE and GILEAD have limited commercial activities and clinical trials.

NOVARTIS has limited commercial activities, suspended investments and new clinical trials

MERCK and PFIZER – suspended investments and clinical trials.

BAYER and ABBOTT have suspended their investments.

MSD and ZM suspended supplies of some drugs.

MILTENYI BIOTEC suspended supplies of technologies and equipment.

The French manufacturer of medical oxygen AIR LIQUIDE also left Russia and transferred its business to local management.

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During this time, Belarus also lost a number of large pharmaceutical manufacturers. In a session of the World Health Organization (WHO), Belarusian Foreign Ministry representatives reported ceasing drug supplies to the country because of international sanctions. It is estimated that the country is 50% dependent on foreign drugs.

According to the Belarusian authorities, the Swedish company MÖLNLYCKE HEALTH CARE has stopped supplying special dressings that relieve the pain and suffering of children suffering from epidermolysis bullosa.

The Polish company TARCHOMIŃSKIE ZAKŁADY FARMACEUTYCZNE POLFA did not supply Clonazepam, Relium and other drugs for epilepsy and somatic diseases.

ORION Corporation, a Finnish pharmaceutical manufacturer, refused to supply Belarus with drugs for Parkinson's disease and cancer.

The British company PHARMANOVIA UK Limited has stopped supplying the osteoporosis drugs Bonviva and Rocaltrol.

 According to the authorities, UK regulatory authorities declined to issue a license for morphine tablets export to Belarus.

The Belarusian Foreign Ministry said that this is not a complete list: "International sanctions restrict access to a number of critically important medicines."

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  A similar situation occurred with raw material suppliers in both countries; raw materials prices increased in 2022 due to both supply disruptions and the need to find new sources, but now prices have normalized, according to local producers. The business managed to replace suppliers of raw materials and auxiliary substances with manufacturers from South Asia and India.

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Pharmacists noted an increase in prices for drugs and absence some of them, decrease in original imported drugs and an increase in generics share.

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An Ipsos study found that doctors had experienced a significant reduction in visits by representatives of drug manufacturers, as well as a reduction in online and offline specialized events.

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 The breakdown of #supplychains was another major problem for both markets. As a result of the ban on air traffic between Russia, EU and USA, refusal to book sea container lines, and ban on access for Russian and Belarusian road carriers to the EU, manufacturers not only had to look for alternative ways to supply medicines and substances to Russia, but also changed suppliers of necessary components to produce these medicines.

Even though many of these issues have been resolved, local manufacturers still face problems: the Russian Federation has banned the transit of goods from unfriendly countries, except for pharmaceuticals. There are, however, a number of items necessary for medical drug production that are not classified as pharmaceuticals, for example, cardboard, plastic, some raw materials, etc.

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Local players also face difficulties with bank payments, which complicates life even more.

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Since Ukraine stopped buying Russian and Belarusian drugs, the sale of finished products was another problem for manufacturers.

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Due to the sanctions, Russian pharmaceutical companies were restricted from accessing Western technologies and innovations, making it difficult for them to develop and improve their production capacities.

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Large manufacturers have suspended clinical trials in Russia, which has adversely affected the clinical trials market.

As we recall, Russian clinical trial service providers increased their activities in Central Asia at that time.

In 2022, the number of approvals issued by the Russian Ministry of Health for clinical trials sponsored by foreign companies decreased by 66.2% compared to 2021, and in the first half of 2023 by 92.8%.

However, Russian pharmaceutical companies have significantly increased clinical trials, according to the Ministry of Industry and Trade. According to the department, more than 50 original domestic drugs are currently at various stages of development.

A comprehensive support program for clinical trials of novel drugs has been announced by the Moscow government. During clinical trials of drugs that are "particularly significant for Moscow's healthcare," pharmaceutical companies will be able to recoup up to 50% of costs.

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In both countries, the government has taken steps to address problems and provide life-saving drugs and equipment.

According to the Belarus Minister of Health, economic sanctions have made it difficult to equip healthcare organizations and maintain their functionality. The sanctions have disrupted production and #logistics chains, limited bank capabilities, and led to equipment delivery delays.

However, the negative aspects were minimized. Endoprostheses for large joints, for example, were sourced from Switzerland, Hungary, and India instead of Germany and the USA. Furthermore, the domestic enterprise Scientific and Technological Park BNTU Polytechnic mastered the production of knee and hip endoprotheses. For high-tech equipment spare parts are now supplied from China, Russia, Iran and Turkey.

Thanks to the assistance of the World Health Organization, Belarus was included in a licensing agreement for a number of drugs for the treatment of HIV and hepatitis C. And in 2023, the Ministry of Health of the Republic of Belarus registered and purchased several new European drugs that change the course of multiple sclerosis.

In the meantime, Belarusian authorities are relying on "friendly" countries, such as Russia, the Gulf countries, Latin America, and Asia, to supply the necessary drugs, as well as on import substitution - by 2025, 70% of the drugs will be made locally.

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The Russian #regulator strives to minimize sanctions' effects on the population as well:

- As part of the state anti-crisis policy, plans for import substitution in the industry were updated, with the following key objectives:

creating own production of substances and medicines; switching to equipment made by Russian manufacturers;

optimizing supply chains through parallel imports and finding reliable foreign suppliers from “friendly” countries.

- To ensure the country's technological sovereignty, the government identified the pharmaceutical industry as one of 13 priority sectors in 2023. A total of 80 billion rubles has been allocated for preferential loans to enterprises that are systemically critical to industry and commerce.

- The Ministry of Health are reviewing prices for some vital drugs. This will alleviate medicine shortages, according to the authorities.

- As of 2022, the Russian regulator has compiled a list of 97 drugs absent or at risk of absence, including 88 INNs with different dosages or forms. According to the Ministry of Health, "the list includes drugs for which priority measures will be taken to ensure their availability."

Among them are Cisplatin, Carbmazepine, immunoglobulins, Amoxicillin, etc.

Those drugs can be imported into the country in non-Russified secondary packaging with a sticker in Russian; they are eligible for accelerated registration, accelerated changes, as well as for imports and circulation unregistered.

- As a means of minimizing systemic risks, distributors and pharmacy chains are provided with bank guarantees to cover mutual settlements under contracts for the supply of foreign pharmaceuticals.

- A new mechanism has been launched to subsidize companies developing analogs of imported drugs produced under foreign patents.

- Exports of certain goods from the Russian Federation, including medical equipment, were banned until the end of 2023.

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Despite complaints from businesses that government measures were inadequate, the regulator's quick response mitigated the consequences for both businesses and patients.

It is important for neighboring countries to study the experiences of countries with similar systems in overcoming severe crises. It is not only for the risk of sanctions, but also to understand the economics of the pharmaceutical market.

 It is unfortunate that in some countries, not directly affected by the war and sanctions, regulators creates a crisis in the market through its uncalculated actions and desire to regulate everything.