The year 2022 was a turning point for Russian pharmaceutical manufacturers. Executives of a number of major domestic companies have announced plans to enter new foreign markets. Among them is Binnopharm Group, whose products are currently exported to 14 countries. Also at the end of last year, the manufacturer announced plans to open a representative office in China, in particular, to establish supplies of Russian medicines, purchase equipment and substances for domestic production. Which of the Eurasian markets are proving to be the most promising right now? What are the advantages of the "turn to the East" for Russian pharma? And what strategy will help maximize profits? Rustem Muratov, CEO of Binnopharm Group, tells us in an exclusive interview.
– Rustem Bulatovich, if we summarize the results: what was the year 2022 like for the company? What were the indicators that closed this period?
Overall, successful. Binnopharm Group's revenues grew by 12.2% to 20.2 billion rubles in the first nine months of the outgoing year, despite the fact that sales of drugs used in the treatment of COVID-19 declined significantly and sales of the Sputnik V vaccine stopped completely.
The reason for the growth was the expansion of the company's presence in the retail segment – we became one of the ten largest manufacturers in terms of sales of medicines in Russia, according to the DSM rating for September 2022. Another significant factor contributing to revenue growth was the sale of export products, primarily in CIS countries. This was facilitated by the opening of six official representative offices and the start of the promotion of the company's products in the countries of the region. Binnopharm Group is now Russia's largest supplier of medicinal products to neighboring countries.
– Of particular note last year was the growing popularity of e-commerce for domestic pharma. What about pharmacy chains, the traditional sales channel?
Until recently, Russian pharmaceutical companies were "off the radar" in pharmacy sales – only one of them was in the top 10, and all others remained well below the top 10.
Now the situation is changing. In September 2021, Binnopharm Group held the twelfth position in the DSM ranking, and a year later it moved up to the eighth position. I think that this is just the beginning, and in the near future we will be followed by several smaller Russian companies in the top 10. The growth of domestic pharma has always been closely tied to pharmacy chains – local companies generally have a much better understanding of how to operate in this segment.
– What development strategy did your company choose last year? What decisions have helped keep the numbers up?
2022 was a year of expansion for us, with representative offices in six CIS countries – the Republics of Belarus and Moldova, as well as Armenia, Azerbaijan, Uzbekistan and Kazakhstan. Binnopharm Group ranked first in sales of packages among all pharmaceutical companies represented in the Republic of Kyrgyzstan. In the first eight months of 2022, the group's market share was 13.8 %, according to data from analyst agency IQVIA.
We see these events not only as an opportunity to increase revenue from export sales, but also as the first step towards building international infrastructure. At the beginning of 2023, we will take another and very important step – we will open a representative office in China.
– How has the domestic pharmaceutical market in general changed over the past year, what challenges has it faced, what has it overcome and what has it failed to overcome? Was your company prepared for the substitution of foreign drugs and foreign substances?
The major challenge for the domestic pharmaceutical market in 2022 was logistics and supply chain issues. We have an extensive portfolio of more than 450 medicinal products. In order to produce them, about 4-5 thousand items of different materials are needed.
Therefore, a particular challenge for us was to replace the materials that were no longer being supplied to Russia with alternatives. It's not easy – both in terms of sourcing and supplying them, and in terms of regulation. But we made it through. There was not a single day of downtime at our production sites and we did not lose a single product for this reason. I understand that not all companies have had a similar experience.
– How do you see 2023? What plans does the company have for this period?
We see a positive year ahead for the company. There are lots of interesting ideas and opportunities to build on the existing portfolio. Our sales and promotion team is one of the strongest in the market, so the withdrawal of some foreign competitors from promotion will give us the opportunity to develop faster.
We have a large diversified portfolio in several sales channels, and we have already developed expertise in cross-border supply to the CIS countries, which we will deepen in other countries. The new R&D center will enable us to produce more complex products faster, including for foreign markets. We plan to invest about RUB 5 billion in production upgrades in 2023.
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– Rustem Bulatovich, if we summarize the results: what was the year 2022 like for the company? What were the indicators that closed this period?
Overall, successful. Binnopharm Group's revenues grew by 12.2% to 20.2 billion rubles in the first nine months of the outgoing year, despite the fact that sales of drugs used in the treatment of COVID-19 declined significantly and sales of the Sputnik V vaccine stopped completely.
The reason for the growth was the expansion of the company's presence in the retail segment – we became one of the ten largest manufacturers in terms of sales of medicines in Russia, according to the DSM rating for September 2022. Another significant factor contributing to revenue growth was the sale of export products, primarily in CIS countries. This was facilitated by the opening of six official representative offices and the start of the promotion of the company's products in the countries of the region. Binnopharm Group is now Russia's largest supplier of medicinal products to neighboring countries.
– Of particular note last year was the growing popularity of e-commerce for domestic pharma. What about pharmacy chains, the traditional sales channel?
Until recently, Russian pharmaceutical companies were "off the radar" in pharmacy sales – only one of them was in the top 10, and all others remained well below the top 10.
Now the situation is changing. In September 2021, Binnopharm Group held the twelfth position in the DSM ranking, and a year later it moved up to the eighth position. I think that this is just the beginning, and in the near future we will be followed by several smaller Russian companies in the top 10. The growth of domestic pharma has always been closely tied to pharmacy chains – local companies generally have a much better understanding of how to operate in this segment.
– What development strategy did your company choose last year? What decisions have helped keep the numbers up?
2022 was a year of expansion for us, with representative offices in six CIS countries – the Republics of Belarus and Moldova, as well as Armenia, Azerbaijan, Uzbekistan and Kazakhstan. Binnopharm Group ranked first in sales of packages among all pharmaceutical companies represented in the Republic of Kyrgyzstan. In the first eight months of 2022, the group's market share was 13.8 %, according to data from analyst agency IQVIA.
We see these events not only as an opportunity to increase revenue from export sales, but also as the first step towards building international infrastructure. At the beginning of 2023, we will take another and very important step – we will open a representative office in China.
– How has the domestic pharmaceutical market in general changed over the past year, what challenges has it faced, what has it overcome and what has it failed to overcome? Was your company prepared for the substitution of foreign drugs and foreign substances?
The major challenge for the domestic pharmaceutical market in 2022 was logistics and supply chain issues. We have an extensive portfolio of more than 450 medicinal products. In order to produce them, about 4-5 thousand items of different materials are needed.
Therefore, a particular challenge for us was to replace the materials that were no longer being supplied to Russia with alternatives. It's not easy – both in terms of sourcing and supplying them, and in terms of regulation. But we made it through. There was not a single day of downtime at our production sites and we did not lose a single product for this reason. I understand that not all companies have had a similar experience.
– How do you see 2023? What plans does the company have for this period?
We see a positive year ahead for the company. There are lots of interesting ideas and opportunities to build on the existing portfolio. Our sales and promotion team is one of the strongest in the market, so the withdrawal of some foreign competitors from promotion will give us the opportunity to develop faster.
We have a large diversified portfolio in several sales channels, and we have already developed expertise in cross-border supply to the CIS countries, which we will deepen in other countries. The new R&D center will enable us to produce more complex products faster, including for foreign markets. We plan to invest about RUB 5 billion in production upgrades in 2023.
Connect to stay up to date!