Fight between lobbyists destabilises Belarusian pharmaceutical market
Private pharmacy chains and wholesale distributors dominate Belarus’ pharmaceutical – the largest of them control most medical imports. From time to time, lobbyists of domestic drug producers clash with large private importers, who often have close links with the nomenclature. The Belarusian authorities attempt to relieve tension by creating favourable conditions for Belarusian drug manufacturers on the EAEC pharmaceutical market.
The Belarusian Health Ministry has established full control over whether doctors prescribe Belarusian drugs.
In recent years, the Belarusian drug market has been growing rapidly and bringing high profits. In 2014, the market’s sales volume was over USD 1 billion and the authorities anticipate its further growth in the coming years. The retail segment of the pharmaceutical market was particularly profitable. Pharmacies mushroom in Minsk and large cities as the market share of private companies increases.
The Health Ministry reported that in January 2015, the share of Belarusian drugs on the domestic pharmaceutical market was 39% (37.6% in 2014). President Lukashenko has ordered to raise this share up to 50% by the year-end; Health Minister Zharko, however, said that would be an extremely challenging task.
Large private business is reluctant to invest in the drug production, however, it is broadly represented in retail and wholesale trade. Specialists estimate, that ten private wholesalers control about 75% of drug imports in Belarus. In addition, many pharmacy chains are owned by or have connections with the nomenclature. For example, the owner of "Iskamed", leading Belarusian pharmaceutical wholesaler and retailer, is Sergey Shakutin, half-brother of senator and prominent businessman Alexander Shakutin. In addition, the company often participates in public tenders as a mediator between foreign manufacturers and state pharmacy chains and hospitals.
In Belarus, more than 28 industrial drug producers, including two state-owned companies and three with state share over 50%. Among the five largest Belarusian drug producers, two are companies with foreign capital. In addition, one of the most prominent Belarusian businesspersons Yury Chizh also owns the "TriplePharm" pharmaceutical company, which has a negligible market share.
Belarusian drug producers are interested in simplified access to the EAEC pharmaceutical market, which will be launched on January 1st, 2016. The original plan was to open the market by 2025, but that did not suit the Belarusian representatives. In particular, former Vice-Prime Minister Sergei Rumas said, "the Health Ministry has assured us that there are no great dangers for our market. Therefore, we are approaching the creation of a single market in this area, and we were able to shift the launch on January 1st, 2016”. By that date, the Health Ministry should create favourable conditions for Belarusian producers to secure their positions on the domestic market.
If Belarusian drug producers enter the EAEC market tension between domestic producers and importers over domestic market might be relieved. Until then, the Health Ministry will continue to issue and abolish its orders, because neither lobbying group has a decisive advantage.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.