In the geopolitical environment after 2022, foreign companies in Russia have tried to balance between maintaining their market share and dealing with sanction pressures. Some succeed, some fall into the trap of overcompliance, and others (mostly Western) give up and cease their Russian operations.
The situation in the life sciences industry remains relatively stable. There has been no avalanche of pharmaceutical or medical device companies exiting Russia. Most market players continue to operate in the country, while Asian and local companies are assessing opportunities to take over market share vacated by Western companies.
The authorities form the regulatory landscape that encourages Russian and foreign companies to create local production, preserves “soft” launch options for unauthorised products, balances the interests of generic and innovator companies, and unifies the requirements across the Eurasian Economic Union (EEU), which comprises Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.
Incentives for local producers
The public procurement market is of importance for pharmaceutical and medical device companies in Russia since the most significant part of local medical institutions is state-owned. Locally made (produced within the EEU) medicines and medical devices enjoy preferences in public tenders, and from 2025, such preferences have become more significant.
When procuring medicines from an essential drug list (EDL) or medical devices from a government list, clinics should reject any bids to supply foreign products if there is at least one bid offering products that originates from the EEU (the “second out rule”). Additionally, EDL medicines having full cycle production within the EEU enjoy a 15% pricing privilege over the ones with partial localisation of production.
This means that, for bidding purposes, the price of fully localised medicine has a 15% discount, but if the bidder wins, the contract is concluded at the offered price. The same applies to most medical devices with a slight modification: it applies to devices originating from the EEU over those that are foreign. These factors, together with further described features of the EEU single market, force some companies to consider Russia as an advantageous logistics and manufacturing hub for the CIS region.
EEU single market
Treaties among EEU states stipulate a common market for circulation of medicines and medical devices, potentially with a unified regulatory landscape (not all legal requirements across member countries are unified, but most are).
The main benefit of a unified regulatory landscape is the common market authorisation procedure that medical devices may, and medicines must, pass through. Once the product is authorised for the EEU market, it may be sold in any EEU member states at the marketing authorisation holder’s discretion.
Unauthorised products
Generally, medicines and medical devices must obtain a marketing authorisation before being sold. Usually, it is a long and complex procedure. For companies wanting to “test” the Russian market, the legislation provides an option of importing unregistered medicines and medical devices on a named-patient basis. Such supplies are possible with permission from the healthcare authority, granted on the decision of a council of physicians who prescribe an unauthorised product for a particular patient. This mechanism is powered with significant state financing through the governmental charity fund “Circle of Kindness”.
Innovator vs generic
The Russian legal system seeks to balance the interests of producers of original and generic medicines, trying to ensure both the proper protection of intellectual property rights and the availability of medical care to the wider public (not possible without the availability of inexpensive generics). Courts and the Federal Antitrust Service (FAS) typically support innovators in patent infringement cases. For instance, in 2024, the FAS deemed the early market launch of generics for several well-known innovator medicines to be unfair competition. The total fine for companies indicted exceeded RUB1 billion (USD10.9 million).
The regulator also strives to prevent shortages of medicine. If supplies of innovator medicines do not satisfy demand, the government (unilaterally) or the courts (after a fair trial) may grant compulsory licences to generic manufacturers or importers.
Even though only a few compulsory licences have been granted, the availability of this mechanism motivates both parties. Innovators should ensure uninterrupted supply of their products, while generics manufacturers should keep their products ready for launch, knowing that at some point they may seek a compulsory licence and take significant market share.
Originally published in Asia Business Law Journal.
The situation in the life sciences industry remains relatively stable. There has been no avalanche of pharmaceutical or medical device companies exiting Russia. Most market players continue to operate in the country, while Asian and local companies are assessing opportunities to take over market share vacated by Western companies.
The authorities form the regulatory landscape that encourages Russian and foreign companies to create local production, preserves “soft” launch options for unauthorised products, balances the interests of generic and innovator companies, and unifies the requirements across the Eurasian Economic Union (EEU), which comprises Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.
Incentives for local producers
The public procurement market is of importance for pharmaceutical and medical device companies in Russia since the most significant part of local medical institutions is state-owned. Locally made (produced within the EEU) medicines and medical devices enjoy preferences in public tenders, and from 2025, such preferences have become more significant.
When procuring medicines from an essential drug list (EDL) or medical devices from a government list, clinics should reject any bids to supply foreign products if there is at least one bid offering products that originates from the EEU (the “second out rule”). Additionally, EDL medicines having full cycle production within the EEU enjoy a 15% pricing privilege over the ones with partial localisation of production.
This means that, for bidding purposes, the price of fully localised medicine has a 15% discount, but if the bidder wins, the contract is concluded at the offered price. The same applies to most medical devices with a slight modification: it applies to devices originating from the EEU over those that are foreign. These factors, together with further described features of the EEU single market, force some companies to consider Russia as an advantageous logistics and manufacturing hub for the CIS region.
EEU single market
Treaties among EEU states stipulate a common market for circulation of medicines and medical devices, potentially with a unified regulatory landscape (not all legal requirements across member countries are unified, but most are).
The main benefit of a unified regulatory landscape is the common market authorisation procedure that medical devices may, and medicines must, pass through. Once the product is authorised for the EEU market, it may be sold in any EEU member states at the marketing authorisation holder’s discretion.
Unauthorised products
Generally, medicines and medical devices must obtain a marketing authorisation before being sold. Usually, it is a long and complex procedure. For companies wanting to “test” the Russian market, the legislation provides an option of importing unregistered medicines and medical devices on a named-patient basis. Such supplies are possible with permission from the healthcare authority, granted on the decision of a council of physicians who prescribe an unauthorised product for a particular patient. This mechanism is powered with significant state financing through the governmental charity fund “Circle of Kindness”.
Innovator vs generic
The Russian legal system seeks to balance the interests of producers of original and generic medicines, trying to ensure both the proper protection of intellectual property rights and the availability of medical care to the wider public (not possible without the availability of inexpensive generics). Courts and the Federal Antitrust Service (FAS) typically support innovators in patent infringement cases. For instance, in 2024, the FAS deemed the early market launch of generics for several well-known innovator medicines to be unfair competition. The total fine for companies indicted exceeded RUB1 billion (USD10.9 million).
The regulator also strives to prevent shortages of medicine. If supplies of innovator medicines do not satisfy demand, the government (unilaterally) or the courts (after a fair trial) may grant compulsory licences to generic manufacturers or importers.
Even though only a few compulsory licences have been granted, the availability of this mechanism motivates both parties. Innovators should ensure uninterrupted supply of their products, while generics manufacturers should keep their products ready for launch, knowing that at some point they may seek a compulsory licence and take significant market share.
Originally published in Asia Business Law Journal.
Contacts:
- Vsevolod Tyupa, Partner, Head of Life Sciences & Healthcare, vsevolod.tyupa@sl-legal.ru
- Ivan Zaraiskiy, Senior Associate, Life Sciences & Healthcare, ivan.zaraiskiy@sl-legal.ru