Frost & Sullivan Finds That Government Support Will Open Up Lucrative Opportunities in the Russian Healthcare Markets

LONDON, January 5 - Despite uncertain economic environment, Russia still represents a
promising healthcare market with strong potential for further growth. The
growth will be primarily driven by strong governmental support, which aims at
reversing the gloomy state of the Russian healthcare system and deteriorating
demographic situation. The positive market outlook is also based on the
expectation that the incomes of an increasingly health-conscious Russian
population will resume an upward trend.

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New analysis from Frost & Sullivan (www.medicaldevices.frost.com),
Overview of Pharmaceutical and Medical Devices Industry in Russia and CIS,
finds that despite a tumultuous 2009, the Russian healthcare markets will
continue exhibiting respectable growth rates. Having shrunk by 6% in
USD-terms, the pharmaceutical market has grown at 28 per cent in RUB, while
the medical devices market has expanded at 4-5 per cent. In the forecast
period 2009-2013 both segments will grow at above world average rates,
explained by under-satisfied home demand for healthcare goods and services.

"Governmental initiatives aimed at modernising medical equipment in
Russian hospitals is sending positive signals to foreign investors - 60 to 70
per cent of the medical inventory in hospitals is outdated and needs to be
replaced," notes Frost & Sullivan Research Analyst Vitaliy Lehkyy. "Also, the
pharmaceutical state segment, covering the Federal Reimbursement Programme,
coupled with hospitals' rising demand for expensive, specialised drugs will
continue to contribute to market growth."

Russia is facing severe demographic challenges with the population's
health deteriorating rapidly, due to an inefficient healthcare system and
harmful lifestyles. On the other hand, GDP has grown steadily over the past
few years and state coffers are relatively crisis-proof.

"This situation has prompted the Russian government to gradually augment
public expenditure on healthcare and pronounce it an area of strategic
priority for development," explains Lehkyy. "Thus, financial support from the
government has been the principal growth engine for the mainly public Russian
healthcare system."

However, the slow pace and incoherency of healthcare reforms will hamper
market prospects. An ambiguous legislative framework will further intensify
efforts at revamping the market.

Bureaucracy and cronyism are commonplace in the Russian healthcare
industry, inhibiting market growth. For instance, all the healthcare products
to be marketed in Russia are subject to obligatory registration, resulting in
lengthy and costly procedures. FDA-approved or CE-marked medical equipment is
not recognised either, which implies delayed market entry for foreign
products.

"The healthcare industry in Russia will benefit from the close
cooperation of all stakeholders active in the market: governmental
authorities, manufacturers/distributors, medical establishments, insurers and
consumers," advises Lehkyy. "The importance of such cooperation particularly
increases against the need to formulate an effective policy to manage
healthcare system amidst a challenging economic situation."

If you are interested in more information about this study (Overview of
Pharmaceutical and Medical Devices Industry in Russia and CIS), then send an
e-mail to Katja Feick, Corporate Communications, at katja.feick@frost.com,
with your full name, company name, title, telephone number, company e-mail
address, company website, city, state and country.

Overview of Pharmaceutical and Medical Devices Industry in Russia and CIS
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Overview of Pharmaceutical and Medical Devices Industry in Russia and CIS
(M417)

    Contact:
    Katja Feick
    Corporate Communications - Europe
    P: +49(0)69-7703343
    E: katja.feick@frost.com

www.frost.com

Katja Feick, Corporate Communications - Europe, Frost & Sullivan, +49(0)69-7703343, katja.feick at frost.com