On the one hand, the first six months of 2018 for the Russian pharmaceutical retail was marked by a slight recovery in demand, which, despite failing to bring the segment out of the red zone, promised some growth by the end of the year, unless the macroeconomic situation changes.

On the other hand, the pharmaceutical retail was confused about another initiative of the Ministry of Industry and Trade, which directly concerns the possibilities for future development of the industry. The confusing part is that the development strategy of the pharmaceutical industry included the aspects of pharmaceutical retail sales. The reasons are probably marketing bonuses, which currently form the main revenue item of most pharmacy chains. There would not be anything wrong with it if the cost of services of pharmacy chains was not rising and the quality of those services was not falling.

Sure, producers can see this problem, and while some of them are trying to find the solution independently, some are encouraging system transformations, in particular by lobbying their interests in the ministry.

Another important tendency in the development of the Russian pharmaceutical market is the institution of franchising. While the most prominent company here is Rigla, other market players are also taking interest in franchising. In particular, the owners of eApteka announced the launch of franchise last year, and in April 2018, Erkafarm and Farmia (Voronezh) announced the launch of a joint franchise project.

However, if the benefits of this cooperation are obvious for the sellers, they are far from obvious for potential buyers. The franchise projects on the Russian pharmaceutical market are similar in something more than just transfer of the technology of doing business and possibility to use a well-known brand. The most popular additions to the classic scheme are distribution and marketing services. Most importantly, this market has long had leaders with clock-working business models.

Tab 1. Top pharmacy chains in the pharmaceutical retail market in Russia (Q1 – Q2 2018)