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Kai Ryssdal: Doing business overseas almost always comes with challenges. Those challenges almost always vary, depending on where you are.
In Russia, it goes a little something like this: Moscow definitely wants foreign companies to come in and invest, but it wants them to do that without accumulating too much economic influence.
Last week, our health care correspondent Gregory Warner told us how Russia’s trying to convince big pharmaceutical companies to build factories there. Today, the other side of that story — how Moscow wants to replace the drugs those foreign companies make with domestically produced versions.
Gregory Warner: Last year, Vladimir Putin made a surprise appearance at a Russian pharmacy, TV news cameras in tow. Russia’s prime minister had come to check on the price of Arbidol, a Russian-made flu medication and the best-selling drug in the country. Putin wanted to make sure it was affordable, or maybe remind his countrymen just how affordable it is. With the cameras rolling, Putin learned that Arbidol is even cheaper than comparable drugs. A box is 150 rubles, about $5.
The curious thing about that encounter is that just a few years ago, the Arbidol brand seemed destined for the trash heap. A Soviet relic outclassed by foreign imports. Experts at Russia’s own Academy of Medical Sciences deemed it an “obsolete drug with unproven effectiveness.” So how did Arbidol get such a successful second life?
Pavel Melnikov: Arbidol? It is called like Russian blockbuster.
This is Pavel Melnikov, a former government official who now works for a private PR firm in Moscow. He says that the rise of Arbidol begins with Russia’s richest man: Roman Abramovich. In 2006, he acquired the company that owned Arbidol and immediately spent millions of rubles on ads.
Melnikov: Commercials on television you see Arbidol, Arbidol, Arbidol. You are just like a rabbit coming to the drugstore: “Give me an Arbidol.”
By 2008, sales of Arbidol had doubled. Then the drug got a boost that money can’t buy: The outbreak of swine flu in April of 2009. Government health officials — some of them close associates of Arbidol’s new owner — got on television to recommend Arbidol to every man, woman and child.
Health program on state TV
‘And today our Russian answer’ — she’s saying — ‘to this foreign epidemic gripping the continents,’ and the answer to this worldwide scourge: ‘Arbidol.’
And in a move worthy of a World War II film, Russia’s Ministry of Emergency Situations dispatched a chartered flight to Ukraine stocked with 6.5 tons of Arbidol.
That year Arbidol sales doubled, again, to $188 million. A success not only for Arbidol, but also for Russia’s own troubled drug industry.
Ewald Kreid: It’s exciting times, in Russian health care, Russian pharma.
Ewald Kreid is an expert on Russia’s health care industry. He says the government spends 80 percent of its drug budget on imported drugs. It’s pledged to spend 50 percent by the end of the decade. To meet that goal, Russian drug makers have been pumping out domestic versions of those imported drugs.
Kreid: Biosimilars are getting very fast approvals.
Warner: How fast?
Kreid: Within a couple of months, you get the required regulatory approvals.
Approvals, even before the drugs have been clinically tested as safe and effective.
Kreid: There is indeed a challenge of the government to decide between patient safety and speed of localization.
And just because Russia approves domestic drugs does not mean that Russians will buy them. Russians prefer their drugs, like their cars, imported. Foreign drug companies know this. They’ve profited from that preference for years.
Kreid: Well-known brands have a very long life cycle in Russia, because consumers trust it, they know it.
And because they don’t trust what comes out of their own factories. They might buy a domestic drug for flu, but not for a serious disease.
Liana Ivanova is a mother of two.
Liana Ivanova (via translator): This is, as they say, a fatherland drug, it’s an old one.
Her medicine chest has plenty of Russian-made drugs.
Ivanova: If you have a stomach ache or diarrhea.
But the sophisticated drugs:
Ivanova: Take a look at this, who makes it?
Like her daughter’s asthma meds, those:
Ivanova and translator: Todje Nederland. Netherlands.
Are imported. Ivanova tells me she’s not going to switch to a domestic drug for her children just because the Kremlin wants her to buy Russian.
Ivanova: Let’s put it this way. We trust our doctors. Whatever the doctor recommends, and if it’s a domestic product we’ll take that one.
How those recommendations get made brings the story back to the Russian blockbuster. The official promotion of Arbidol — Putin’s visit to the pharmacy, Russian health officials getting on TV talking about the drug — all this sends a message to doctors. Something that PR exec Pavel Melnikov told me.
Melnikov: Of course there is an informal order that you should prefer products produced by Russian producers.
And in Russia, what sounds like a suggestion is often heard as a directive. When health officials highlight the fact that Arbidol is made here…
State television: Rassitski preparat dla lichenya.
They’re not just using Russia to sell a drug. They’re using the drug to sell a better image of Russia: To revamp the Russian brand, and convince Russian doctors and patients that what’s good for their health care industry — is also good for their health.
In Moscow, I’m Gregory Warner for Marketplace.
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