Lydia Narkaitis interviewed by Pravo na Zdorovye channel

"The pharma market conditions have become even tougher in the recent years, due, to a significant extent, to interest rates than make borrowing difficult for companies. In an environment like that, pharma distributors postpone their expansion plans more easily. You need investment to develop, and that is extremely expensive currently while ROI is basically non-existent.

We can see small companies struggling, and the probability of only largest players coming through is very high. But the finance conditions are so tough that even large companies need government support.

That is important for the government as well, as they get a chance to keep working (in the public procurement sector, most of all) with trusted and reliable suppliers.

There are now lots of discussions being held and measures adopted to support Russian pharma manufacturers. That is important and necessary. However, manufacturers almost never supply their products directly: distributors are always involved in pharma shipments in one way or another. If we are talking about drugs being widely available to the population, we are necessarily talking about large distributors.

Importantly, these measures are needed by not only specific companies, but for the market development as a whole: if we want to develop our pharma market, including online sales, that is only possible if we have large players. Small companies just cannot afford an investment like that. Furthermore, there are too few large suppliers in the public procurement market now: in order for it to be stable, you need more anchor companies.

What are these supposed support measures? First of all, these are preferential loans, minimal interest rates or bank guarantees.

We would also like to recall the supplementary drug supply system that was in use in the early 2000s, when public-funded drug supplies in regions were virtually entrusted to the five large distributors. We probably have to re-think that practice and decide which solutions could be implemented in the current conditions.

Another aspect of government preferences is the pressing need to make the public distribution market more transparent. If we look at the bidders now, we can see that often companies present in that market have neither direct supplier contracts nor real capabilities to provide the product. Research supports that. That situation is even present in the retail market. We probably have to develop criteria for distributors to be allowed to participate in bidding.

So, in order to make our pharma market evolve, we have to approach the issue in a holistic way, by granting preferences to domestic distributors along with manufacturers and developing government support programs for anchor players. That would make companies have a skin in the game and ensure that patients have medicines provided to them to the fullest extent."

Source: https://t.me/right_to_health/2840