Pharmacies in Russia

2024: How the digitalization of the pharmacy business is taking place in Russia

The digitalization of the pharmacy business continues in Russia, which significantly changes the market and forms new consumer habits. Analysts at Sber Eapteki, SberMarketing and media holding Rambler & Co conducted a joint study in the summer of 2024, the results of which confirm the high pace of digitalization of the sector. In particular, the share of the pharmacy segment in e-commerce continues to grow, and in 2023 increased by 12.7%. In 2024, an increase of 25% is predicted.

According to the study, most Russian pharmacies are small and micro-enterprises, which account for 96% of the market. However, the big players are leading in terms of revenue, generating 67% of the total turnover. The average business accounts for 2.4%, and the large one - 1.8%.

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Freepik

Digitalization of pharmacies in Russia is taking place with varying degrees of intensity. A quarter of pharmacies already have a high level of digital maturity, introducing more than 10 digital tools. 44% of pharmacies have an average level, using six to 10 tools, while 31% have a low level, which indicates the beginning of digital transformation.

The most important digital tool for the pharmacy business remains the site, which is used by 71% of the surveyed companies. At the same time, 59% of pharmacies already sell goods via the Internet. Mobile applications are less popular - only 12% of pharmacies use them.

The online range of most pharmacies is dominated by dietary supplements, vitamins and over-the-counter drugs, which are offered by 87% of market participants. Prescription drugs and medical products occupy 70% of the assortment, and medical equipment is represented in 65% of pharmacies.

It is interesting that integration with marketplaces is still poorly developed: only 24% of large pharmacies use this sales channel, while among medium and small businesses this figure is much lower - 10% and 3%, respectively.^[1]

2023

The largest pharmacy chains in Russia are named

At the end of 2023, Rigla (Moscow) is the largest pharmacy chain in Russia with revenue of approximately 135.24 billion rubles. This corresponds to a share of 7.2% of the total pharmacy market, as stated in the AlphaRM study, the results of which were published on February 7, 2024.

As of the end of December 2023, there were 77.7 thousand pharmacies in Russia. This is 4.6% more compared to the previous year, when their number was estimated at 74.3 thousand. The total revenue of pharmacies in 2023 reached 1.88 trillion rubles, showing an increase of 7% on an annualized basis. The average monthly revenue per point was recorded at 2.06 million rubles - plus 2% year-on-year. The share of chains in total revenue was 91.7%, single pharmacies accounted for 8.3%. The revenue of the chain pharmaceutical retail exceeded 1.7 trillion rubles, and for single pharmacies it amounted to 155 billion rubles.

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AlphaRM

The second place in the ranking of the largest pharmacy chains in Russia after Rigla is occupied by April (Krasnodar) with revenue of 124.18 billion rubles in 2023: this corresponds to a share of 6.6%. Closes the top three "Implosia" (Samara) with 106.16 billion rubles and 5.6% of the pharmacy industry. Fourth place was taken by Planet Health with 5.5%, and in fifth is Erka & MZ (the combined network of Erkafarm and Melody of Health) with 4.6%. In addition, the top ten included Neopharm (4%), Pharmacy Chain 36.6 (3.9%), Iris (3.7%), Vita (3.4%) and Farmland (3.3%).

The study notes that the April network leads in the number of outlets, the number of which was 7434 as of the end of December 2023. In second place is Implosia, which has 4,508 pharmacies. Closes the top three "Rigla," operating 4080 outlets. All these networks cover from 60 to 70 Russian regions.

Pharmaceutical Market Analysis, 2023

In Russia, federal networks are displacing single pharmacies. The last in 5 years has become a quarter less

In Russia, federal networks are displacing single pharmacies. The latter have become about 25% less in 5 years. This is evidenced by the data of the analytical company DSM Group, which were released in December 2023.

As RBC writes with reference to the materials of the DSM Group, by the end of 2022 there were 12.2 thousand independent pharmacies in the Russian Federation against 13.2 thousand and 14.1 thousand units a year and two years earlier, respectively. By the end of 2019, their number was measured at 16.6 thousand units, about the same number of points then included in large federal networks. By the end of October 2023, there were 11.9 thousand non-network pharmacies in the Russian Federation.

Federal pharmacy chains push out single pharmacies

According to DSM Group CEO Sergei Shulyak, small points cannot withstand competition with large players. Since a significant part of the closed points is located in small towns, where business profitability is lower, such territories often remain without a single pharmacy.

According to a study by the DSM Group, by the end of 2023, there are 51 pharmacies per 100 thousand people in Russia. The authorities are trying to solve the problem with the lack of retail outlets in small settlements by opening feldsher-obstetric centers (FAP), but often feldsher is loaded with specialized work, the range of FAPs is scarce, and waiting for specialists takes a long time, analysts say.

From the materials of the DSM Group it also follows that by the end of 2023 the largest number of pharmacies is located in large cities. So, among cities with a population of more than 1 million people, Krasnodar is in the lead, where there are 87 pharmacies per 100 thousand population. The second place is occupied by Voronezh, where 73 pharmacies per 100 thousand population. Next comes Rostov-on-Don - 66 pharmacies per 100 thousand population. According to this indicator, Moscow is in last place among million-plus cities: in the capital, there are 35 pharmacies per 100 thousand population.^[2]

Migrant work ban

The Government of the Russian Federation approved a decree on the permissible share of foreign workers in some areas of activity in 2024. The new document extended the ban for migrants to work as pharmacists in pharmacies. This is stated in government decree No. 1511 of September 16, 2023.

According to the decree, migrants cannot work in pharmacies, street shopping tents and markets. It is forbidden to take foreigners to these jobs in principle: their maximum permissible share is indicated as zero percent.

Extended ban for migrants to work as pharmacists in pharmacies

The draft presentation was first presented Ministry of Labour and Social Protection in July 2023. Prior to that, a similar ban was approved in October 2022. For the first time, a decree banning the hiring of foreigners to work in pharmacies appeared in December 2013. The document was signed by the then current Prime Minister. Russia Dmitry Medvedev For ten years, the ban was extended.

A total of 16 items were attached to the draft presentation. In addition to working in pharmacies, in 2024, the hiring of foreigners will be limited in such specialties as growing vegetables, forestry and logging, wood processing and the production of wood and cork products (except furniture), wholesale trade in timber and lumber, trade in alcohol and tobacco, construction, real estate management, as well as truck and passenger transport.

Yaroslav Nilov, Chairman of the State Duma Committee on Labor, Social Policy and Veterans Affairs, said that the maximum permissible indicators should be reduced in other types of activities. According to Nilov, the number of unemployed in Russia has already reached 2 million people.

Therefore, in my opinion, it is necessary to engage in the employment of our citizens, and not to support imported labor, - Nilov commented on the presentation.

2022

Opening a record number of pharmacies - 4 thousand.

In 2022, about 4 thousand new pharmacies were opened in Russia, and their total number reached 70.4 thousand. Such data are presented in the DSM Group study.

According to analysts, such a high market growth rate was not observed over the entire monitoring period: before that, the maximum number of new pharmacies was recorded in 2018, when about 3 thousand points appeared.

Rating of pharmacy chains in 2022

If we talk about the main results for market participants (pharmacies and pharmacy chains), then the expected reduction in points of sale again did not occur. The pharmacy segment remains attractive for business, and as a result, a record number of pharmacies have been opened in recent years, the report says.

According to the DSM Group report, sales of pharmacy chains in the Russian Federation in 2022 reached 1.68 trillion rubles, which is 15% more than a year ago. The researchers note that the dynamics in the market in 2022 had various factors for growth. So, in January-February - this is the COVID-19 coronavirus pandemic, in March - "rush demand" mainly for expensive imported drugs for systemic use, in April-May - the consequences of high inflation in March, in November-December - an increased incidence of influenza and ARVI. At the same time, the demand for "non-seasonal" drugs has recovered to the pandemic level, and sales grew by an average of 10%.

The leader of the Russian pharmacy market in 2022 is the Rigla chain "" with a share of 8%. In terms of sales, the network April"" is in second place (112 billion rubles). In third place is the IRIS network (85 billion rubles), and the combined network ErkaPharm"" and Health melody"" (80 billion), as well as "" 36,6(67 billion) complete the five leaders. Among marketing associations, leadership was retained ASNA by "," which includes 17 thousand participants with a turnover of 15.8% of the entire pharmacy market.^[3]

Roskomnadzor blocked 20.5 thousand sites of illegal pharmacies

The Federal Service for Supervision of Communications, Information Technology and Mass Media (Roskomnadzor) in 2022 blocked about 20.5 thousand sites that were engaged in the illegal trade in drugs. For 2020-2022 The regulator for the appeal of Roszdravnadzor stopped the activities of about 45 thousand such resources, which he announced in February 2023.

According to representatives of Roszdravnadzor, whose data are provided by Izvestia, in 73% of cases in 2022 sites with offers to sell drugs unregistered in Russia were blocked. In another 13% of cases, sites selling prescription drugs, including psychoactive drugs that can cause drug dependence, were blocked.

Another acute problem is the spread of "pharmacy" drug addiction in Russia in connection with the sale of drugs with psychoactive effects, noted in Roszdravnadzor.

Buying drugs on unverified sites can threaten not only the wallet, but also health. Most often, people are looking for drugs on the Internet when they do not want to go to the doctor because of fear of a diagnosis, believes Elena Burdelova, psychiatrist of the Doctis telemedicine service.

For various reasons, a person may not want to see a psychiatrist. For example, he is afraid for himself to "legalize" his unpleasant mental state, or that he will be diagnosed in which driving is not allowed. But he knows that his friend was prescribed such and such a drug and he helps, "she told the publication.

According to the director of the SRO Association of Independent Pharmacies, head of the Alliance of Pharmaceutical Associations Victoria Presnyakova, by 2022 many private advertisements for the sale of drugs appeared on the Internet, although a few years ago these were isolated cases. Medicines, including prescription ones, are sold on social networks and ad sites. The expert explained their demand for high demand for some drugs.^[4]

2021: Reduction of the number of new pharmacies in the Russian Federation to 541 - DSM Group

In Russia, in 2020, a record low number of pharmacies opened - 541. Their total number reached 64,495, according to DSM Group analysts.

As they write Sheets"" with reference to this study, in 2018-2019. 2981 and 1532 pharmacies were opened in Russia.

It is noted that after a sharp jump in sales in March 2020 (46% year-on-year) amid the outbreak of the coronavirus pandemic, COVID-19 as well as a depreciation ruble , the same sharp drop followed, says DSM Group CEO Sergei Shulyak. According to him, in April sales grew by only 4.6%, and in May this figure fell completely by 2.1%, which is explained, among other things, by the self-isolation regime that began throughout the country.

Shulyak noted that the profitability of even existing pharmacies has decreased, so it was unprofitable to open new points. In June, sales grew by 2% year-on-year, with roughly the same trend observed through the end of the year. And in December alone, the figure increased by 19%, which is associated with traditional seasonal demand.

Record few pharmacies opened in Russia in 2020

Although 124 pharmacies were opened in the 36.6 pharmacy chain, they confirmed that during the pandemic it was problematic to get acquainted with the place for trade due to the restrictions imposed. The Rigla chain opened 336 pharmacies, which became possible thanks to the vacated rental space. Regional networks, when opening points, experienced problems with filing documents due to the fact that government agencies were closed during the period of the self-isolation regime. Also, some pharmacies were closed due to low profitability, and points were opened in more passable places.

The Voronezh pharmacy chain Pharmia (also present in the Kursk, Lipetsk, Pskov, Rostov, Leningrad and Bryansk regions) opened three points in 2020, excluding franchising, the company told the newspaper.^[5]

2020: Average profit growth for pharmacies and pharmacy chains by 131%

On August 13, 2021, information appeared that the revenue of pharmacies and pharmacy chains at the end of 2020 changed slightly, but profitability indicators increased significantly.

In particular, median revenue increased from 22.2 to 24.4 million rubles (10%). Average revenue jumped from 121.8 to 126.8 million (up 4%). Median profit - from 324 to 584 thousand rubles (by 80%), average profit - from 887.2 thousand to 2.05 million rubles (by 131%).

The largest profit growth was shown by Melissa-Pharm (Voronezh) - from 58 thousand to 870 million rubles, in second place is Radnik from Vladivostok ( from 388 thousand to 14.7 million rubles), in third place is Farmland (Ufa ) - profit grew from 8 to 169.9 million rubles.^[6]

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