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Frances Hume
Sales in Russia: Healthcare needs are growing
Just when you think there's no hope for American manufacturers out there on the global horizon, a group like the Coalition for U.S.-Russia Trade points to openings in Russia for US healthcare and pharmaceuticals industries.
It looks now like at least some parts of the Russian economy are beginning to recover. The most recent market forecast for Russia from the Bank of Finland Institute for Economies in Transition points to a quick recovery in consumption.
How long can Americans afford to ignore market opportunities in Russia? We're a resourceful lot -- surely we can find a way to profit from one of the most significant emerging markets in the world.
Ongoing healthcare needs of its 140 million residents make the country a "major emerging market for (American) life sciences products," as the Coalition's report states.
The way folks do business in Russia is nothing like the way we do business in America, or even in other Western countries for that matter. In the early years our ignorance worked against us.
So if it's such a bad place, why do nearly 800 large American industries already in Russia choose to stay? Why didn't they pull out when the world economy tanked? Because when all is said and done, and they get down to that bottom line on their annual reports, they are still operating profitably.
There's strong demand for retail prescription drugs that Russian consumers pay for out-of-pocket, and Russia's ongoing desire to join the WTO should help US pharmaceutical manufacturers maintain a strong position in the Russian market. This will help U.S. companies such as Abbot Laboratories, Eli Lilly and Company, Pfizer Inc., Johnson & Johnson and Amgen that are already busy in Russia's emerging pharmaceutical market.
At this point, Russian tariffs on imported medicines are 15%, but after Russia joins the WTO that rate will drop to around 5.5%, and the tariffs on substances used in medicine production will be cut to about 2.5%. (1)
Maybe the answer to trade tariffs is to think about building a manufacturing plant inside Russia.
Isn't it about time other American companies started looking for opportunities? I believe so. To paraphrase the words of President John F. Kennedy, "If not us, who? If not now, when?"
Frances Hume is an entrepreneur and marketing specialist who promotes trade between the U.S., Finland and Russia. Before entrepreneurial interests pulled her toward building international businesses, she created content for global trade magazines, cable television companies, e-commerce sites and newsprint publications. Learn more.
(1) SOURCE: ITC Dataweb, US Total Exports to Russia, (SITC-54), 2004-2008 and Jan-Sep 2009, YTD by FAS value, as published by Coalition for US-Russia Trade.
