The PBN Company
Unofficial Translation

Commersant

April 26, 2002
Page 13

Pharmaceutical Companies Lost $250 Million in Russia to Counterfeiting of Medicine

By Ekaterina Lyubavina

The Association of International Pharmaceutical Manufactures (AIPM) and the Coalition for Intellectual Property Rights (CIPR) announced yesterday the results of a survey among leading pharmaceutical producers. The producers' responses are rather pessimistic. According to their estimates, 10% of the drugs on the Russian market are counterfeit, which cost pharmaceutical companies $250,000,000 last year.

The AIPM and CIPR survey was conducted with executives from forty-eight foreign and five Russian pharmaceutical companies (companies participating in the survey represent about 50% of Russia's entire pharmaceutical marketplace) - in particular, Bristol-Myers Squibb, ICN Pharmaceuticals, Gedeon Richter, KRKA, Akrikhin and Pharmakon.

According to the survey, counterfeits in Russia's pharmaceutical market have increased three times, from 3.7% to 11.9%, in comparison to last year's industry figures. Pharmaceutical manufacturers argue that one reason for growing counterfeiting is the imposition of a 10% national VAT on medicines that took effect this January, which increased medicine retail prices by about 15-20%.

One of the largest suppliers of pharmaceuticals in Russia, Aventis Pharma of France, has suffered the greatest losses, as nine series of six drugs have been counterfeited. The Croatian company Pliva was forced to recall more than 70,000 packages of the antibiotic drug Sumamed after counterfeits of the product not containing an active substance were discovered. According to representatives of the French company Sanofi-Synthelabo (ranked fifth in terms of sales in Russia), their company had to recall two series of No-Shpa, the best selling drug in Russia. Sanofi-Synthelabo's losses due to No-Shpa counterfeits totaled $500,000. According to pharmaceutical producers, counterfeiting cost them about $250 million last year.

AIPM and CIPR discovered that over 40% of counterfeit products are produced at Russia's largest pharmaceutical companies. However, the drug manufacturers completely deny this claim. According to OAO Nizhpharm General Director Andrey Molodtsov, this percentage is too high. Mr. Molodtsov believes that it is very easy to identify counterfeiters, and therefore, it is necessary to restore the system of state registration of pharmaceutical and printing equipment. He says, "We need the methodology to identify counterfeits rather than more rhetoric. AIPM's actions will scare people away from buying drugs in retail pharmacies and sales of all pharmaceutical companies will drop."

Pharmaceutical companies are also incurring losses due to "look-alikes" of well-known medicines. However, manufacturers encounter difficulties in assessing such losses. For example, according to representatives of Sanofi-Synthelabo, it is unclear how much No-Shpa counterfeits cost their company, as the counterfeit packaging is identical to that of the original but costs four times less. AIPM calls such "look-alikes" violations of intellectual property rights and asserts that 36% of companies face such violations. Pharmaceutical companies make the majority of their claims against the Russian company Ferein, which produces a large number of drugs similar to patented originals by using similar names and packages. Ferein refused to comment.

 The Most Frequently Counterfeited Medicines

 Source:  the information of the RF Ministry of Health for 1997-2001

Ratings Of Challenges Facing Successful
Operations Of A Pharmaceutical Business In Russia
(Percent Who Identified These Challenges As Most Important) 

Source:  AIPM and CIPR