Is it business as usual for Pharma in Russia?
Updated: Jul 29, 2022
What impact is the Russian invasion of Ukraine having on the biopharmaceutical industry?
Post by Rachel Galloway, Senior Consultant
As more and more international companies join the exodus from Russia, companies from one industry are sticking around: global biopharmaceutical companies.
Biopharmaceutical companies are permitted to continue trading in Russia because they are exempt from US and EU sanctions. The rationale is that international humanitarian law requires them to continue operations in the country and maintain Russian civilian access to medicine1.
Exiting the Russian market is not a simple task for many biopharmaceutical companies. Russian legislation has required international companies to relocate the production of medicines intended for the Russian market to Russia, resulting in many companies now having local production facilities in-country. Furthermore, conducting clinical drug trials in Russia is relatively low cost and it’s estimated that approximately 3,000 multinational clinical trials are currently underway there1.
While it looks for now like multinational biopharmaceutical companies will continue to maintain drug supplies in Russia, it will be interesting to see how recent events will impact future foreign investment and contracting in the country.
What about Ukraine? Many multinational pharmaceutical companies are bolstering efforts to ensure essential medicines continue to be made available in Ukraine or to Ukrainians that have fled the country. For example, Novartis is donating its inventory of essential medicines directly within the country and to surrounding countries hosting Ukrainian refugees2.
Russia has reacted to Western sanctions with export bans that apply to foreign-manufactured medical products and equipment3 to avoid shortages in the face of importation challenges and rising prices. The export ban and restrictions do not apply to Russian-made goods or to several “friendly” countries in the Eurasian Economic Union (Russia, Kazakhstan, Belarus, Kyrgyzstan, and Armenia).
Since the medicines and medical equipment banned from export were most likely intended for the Russian market the impact on the West is likely to be minimal, especially when compared to the impact of US and EU efforts to reduce coal, petroleum, natural gas, and precious metal imports (i.e. platinum) from Russia.
Watch this space for more updates as the situation evolves.