James Dudley Management

James Dudley Management

New Report Identifies Growth Opportunities for OTC Consumer Healthcare in Russia, Poland, Ukraine, Romania and Bulgaria

Today five markets - Russia, Poland, Ukraine, Romania and Bulgaria stand out as offering the highest potential growth for non-prescription consumer healthcare in Europe. With a combined population of nearly 255 million these five countries represent €14.7 billion worth of non-prescription medicine sales and are projected to grow 13.4% to €16.7 billion by 2015. So says a new market report from James Dudley Management published this month - "OTC Distribution in Central and Eastern Europe's Growth Markets - Grasping the Opportunities in Russia, Ukraine, Poland, Romania and Bulgaria"

The non-prescription medicines' market in Russia, Poland, Ukraine, Romania and Bulgaria has continued to perform better than most other European markets. The forecast based on current trends shows an average of over 6% a year for the five markets to 2014. While Russia and Ukraine's non-prescription consumer healthcare markets are expected to show the strongest growth to 2015, only Romania will perform below the five country average.

Figure1. Annualised Growths of European Non-prescription Medicines Markets Russia, Poland, Ukraine, Romania and Bulgaria

Territory 2008 2009 2010 2011> 2012> 2013 2014 2015
Bulgaria 21.5 7.8 8.2 16.5 6.6 6.4 6.1 4.2
Romania 4.1 -5.0 4.9 14.3 3.0 4.8 4.7 2.9
Poland 13.0 6.1 23.1 1.4 3.2 6.1 6.2 3.5
Ukraine 24.8 10.0 10.0 5.8 9.4 7.1 6.7 5.0
Russia 8.2 10.7 10.9 16.3 7.5 7.0 6.3 4.5
Average 10.4 8.9 12.8 12.3 6.7 6.7 6.3 4.3

Source: OTC Distribution in Central and Eastern Europe's Growth Markets James Dudley Management 2013

Pharmacies Dominant Channel of Distribution for Non-prescription Medicines in Russia, Poland, Ukraine, Romania and Bulgaria

Pharmacies dominate the distribution of non-prescription OTC medicines in Russia, Poland, Ukraine, Romania and Bulgaria.

Compared to Western European averages pharmacy density is much higher in the five Central and East European countries under study. The average number of citizens served per pharmacy in Western Europe is 3,536 compared to the equivalent average in the five CEE counties of 2,666.

Bulgaria has the highest density of pharmacies serving just 1,890 citizens per pharmacy on average compared to Romania with the lowest density serving over 3,000 citizens per pharmacy.

Importance of OTC and Personal Care to Pharmacies in Russia, Poland, Ukraine, Romania and Bulgaria

Whereas, prescription business represents almost 70% of the turnover and OTC sales 9% of the average Western pharmacy, prescription medicines account for less than half of the average pharmacy turnover in Russia, Ukraine and Bulgaria. In all five CEE countries under study the share of turnover taken by OTC non-prescription medicine sales are much higher than in the west. Sales of high quality personal care products especially dermo-cosmetics are also important sources of turnover in Russia, Romania and Bulgaria.

Figure 2: Average Pharmacy Turnover by Category for Russia, Poland, Ukraine, Romania and Bulgaria

Country Prescription only Medicines Non-prescription Medicines (OTC) Other Personal care and cosmetics
Russia 48% 33% 19%
Ukraine 45% 39% 16%
Poland 65% 24% 11%
Romania 62% 14% 24%
Bulgaria 44% 16% 40%

Source: OTC Distribution in Central and Eastern Europe's Growth Markets James Dudley Management 2013

Pharmacy Chains Growing in Importance in Russia, Poland, Ukraine, Romania and Bulgaria

There are few restrictions affecting the growth of pharmacy chains in the five CEE countries under study.

In Russia the top ten chains represent some 15.5% of the retail pharmacy market. Among the leaders are the wholly owned chains Rigla with 805 outlets, Apotheka 36.6 with 842 outlets and A5 with 1,371 outlets.

There are also a few significant virtual pharmacy chains in Russia. Theses are independent pharmacies affiliated to a group which behaves like a chain. These include Alphega, a group formed around the distributor Alliance Boots with 720 outlets, and two smaller groups Asna and UMG.

In Ukraine the top ten chains represent 17.6% of the retail pharmacy market. By and large Ukraine pharmacy chains are smaller on average than in Russia for example Med-service has 314 outlets, Pharmastore has 131 outlets and Bazhaemo Health with just 95 stores.

In Poland the largest pharmacy chain is Doz SA which controls over 2,000 pharmacies under its trade name Dbam o Zdrowie in Poland. These include wholly owned stores, franchise outlets and over 1,200 partner pharmacies. DOZ S.A. also runs the largest online pharmacy in Poland – www.doz.pl.

ACP Pharma, the Polish wholesaler owned by Mediq in the Netherlands, has become the second largest private retail chain, Mediq Apteka. The company is also establishing a number of franchised outlets within its pharmacy chain.

Other significant pharmacy chains in Poland are Dr Max (Penta) and Euro Apteka (EBA Grupe). Both chains are run by investment companies with international retail development ambitions across Central and East European States.

Significant virtual pharmacy chains in Poland include the previously mentioned mixed format group Dbam o Zdrowie (Doz SA) and also groups affiliated to the big distributors Farmacol and Neuca (Torfarm). According to author of the Report James Dudley - "53% of pharmacies in Poland are members of virtual marketing chains".

In Romania the top three pharmacy chains are Sensiblu, Catena and Farmaciile Dona.

In comparison to the other four markets under study pharmacy chains in Bulgaria are made up of small numbers of pharmacy branches. The largest is Mareshki with 170 outlets but others such as Astra and Apteka 36.6 have less than 20 branches each.

Pharmaceutical Distributors in Russia, Poland, Ukraine, Romania and Bulgaria

Historically there have been large numbers of pharmaceutical distributors and importers in the five countries under study. In Russia for example there are some 1,500 wholesalers and 700 importers and in Poland there are over 600 pharmaceutical distributors.

That said, intermediary pharmaceutical distribution channels have concentrated around a handful of players in all five CEE countries covered by the Dudley report as the table below shows.

Figure 3: Market Shares of the Leading Pharmaceutical Distributors in Russia, Poland, Ukraine, Romania and Bulgaria

Country % Market Share Top 3 Distributors % Market Share Top 5 Distributors
Russia 53 77
Ukraine 73 87
Poland 71 83
Romania 48 67
Bulgaria 59 86

Source: OTC Distribution in Central and Eastern Europe's Growth Markets James Dudley Management 2013

Details

"OTC Distribution in Central and Eastern Europe's Growth Markets - Grasping the Opportunities in Russia, Ukraine, Poland, Romania and Bulgaria" is published in PDF format by James Dudley Management May 2013. Visit report or email information@james-dudley.co.uk

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