The $350m state-of-the-art Minsk Arena Complex is going to be one of the main venues of the 2014 World Ice Hockey championships. But even before the world's ice hockey elite arrive in the venue, the great and good of an entirely different field will descend upon it, and in March 2012 the complex will host Belarus Medika and in October the Medicine Minsk trade shows intended to facilitate new relationships between pharmaceutical and medicine equipment producers.

Mikhail Gavrilov, director of Academfarm, a Belarusian producer of drugs and supplements, is planning to be present at both industry events. "We are constantly looking for foreign partners and relationships that will help us increase the number of products we offer,” he says. Managed by Mr Gavrilov, the company was established in 2009 as a spin-off of the National Belarusian Academy of Sciences.

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Prescriptive approach

Academafarm already has a positive experience of international co-operation, as it forged a deal with Cipla, one of the key players in the Indian pharmaceutical industry, and bought drug-making equipment from Italian and South Korean companies. "Currently we are also in talks with Indian companies Ranbaxy and Sun Pharma and Israeli Teva Pharmaceutical Industries. What we need at the moment is the components, which with the use of our equipment we can turn into pills, especially now that we have been awarded Good Medical Practice certification," says Mr Gavrilov.

At present, Academfarm produces 1.5 million pills a month, but at full capacity this figure could potentially be increased to 100 million pills a month. Mr Gavrilov says that Academfarm is reliant upon both foreign co-operation and the production of generic drugs, as a lack of financial resources gives little room from the company to develop its own drugs, especially because pharma-related operations are both time-consuming and costly. The company itself was established precisely for that reason.

In addition to this, authorities at the National Academy of Sciences of Belarus decided that rather than counting on state-awarded funds, a more market-oriented approach was needed, and that profits from its spin-offs could fund the academy’s R&D in the Belarusian pharmaceutical sector. Another spin-off, focused on producing injections used in cancer treatment, will start its operations in 2012. 

On the up

If Academfarm manages to reach full capacity, the supply of 100 million pills will probably exceed demand in Belarus, a country with 9 million inhabitants. However, Belarus's participation in a customs union with Russia and Kazakhstan – which came into force in January 2010 – gives companies such as Academfarm free access to a market of more than 150 million customers.

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Another boost to Belarus's pharmaceutical sector will come in 2013, from which time all drugs produced in the Belarus/Russia/Kazakhstan union can be sold in pharmacies without country-specific certification, as long as certification has been awarded by the ministry of health in the country in which the drugs originated. However, this could be a double-edged sword, as it also means that Russian and Kazakh companies will have easier access to the Belarusian market, which is already saturated with imported drugs. Additionally, prices of the drugs manufactured in Belarus are still state controlled, and imported drugs can be sold without such restrictions.

Notwithstanding that, in recognition of the Belarusian pharmaceutical industry, Business Monitor International (BMI), a leading research company in the sector, added Belarus to its reporting portfolio in 2009. On its first appearance in a BMI report, Belarus occupied 59th position out of 71 markets covered.

Barbara Obstoj-Cardwell, editor of The Pharma Letter, a London-based pharmaceutical, generics and biotechnology news service, is very positive about the pharmaceutical market in Belarus. "Although Belarus is facing a period of prolonged economic and political upheaval, the pharma market retains significant long-term potential," she says. BMI’s 'Belarus Pharmaceuticals and Healthcare Report Q4 2011' notes that projected growth in pharmaceutical expenditure will rise from $720m in 2010 to $752m in 2011, which gives 4.4% annual growth. 

Signs of change

Belarusian authorities see the pharmaceutical industry as one of the country’s most promising areas of economic growth. Two major local pharmaceutical producers – Belbiopharm and Borimed – are among the most profitable state-owned enterprises. Furthermore, in 2009 Borimed, which generates 58% of its revenues from exports, was turned into a joint stock company and is seeking investors, targeting mainly European and Asian investors, while PharmLand, a part of Belbiopharm established in 1998, is a Belarusian-Dutch joint venture.

Changes are also seen in the way drugs are distributed in Belarus. In 2006, about 90% of pharmacies were still state-owned. Five years later state involvement decreased to 50%, and in 2011 Bulgaria's largest drugmaker, Sopharma, acquired two Belarusian pharmacy chains – Tabina and Interfarm, which gives the company a total number of 33 pharmacies in Belarus, with a turnover of $10.3m.

Visitors may be drawn to the distinctly modern look of the Minsk Arena, which breaks the mould of the traditional communist-era architecture that largely dominates Minsk’s city centre, but aesthetically pleasing architecture aside, its importance to Belarus in providing the country with the means to host such events as the Belarus Medika events is invaluable. And, according to Dr Wim A Timmermans, a partner at Brussels-based legal practice Timmermans & Simons, which specialises in advising customers wanting to enter eastern European markets, establishing strong links in this sector could be beneficial for future activity in the country. “Many regulations in the pharmaceutical sector may be in line with EU regulations, since Belarusian authorities endorse exports of drugs manufactured in Belarus. At the same time, Belarusian law can often be unclear to the foreign businessmen, so finding a local partner is strongly advised,” he says.

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