Case: Eli Lilly launches insulin production in Russia

In order not to lose an access to government procurement of insulin, the Company decides to start production in Russia in collaboration with R-Farm company.

One of the largest American pharmaceutical companies, Eli Lilly, with global revenues of around 23 billion US dollars, imports insulin into Russia.

The pharmaceutical company faces steep competition in Russia, especially after the preferences for domestically produced equipment were introduced. According to the state regulation, foreign manufacturers have to give 15% discounts at tenders.  

The access to government procurement is likely to be banned for imported pharmaceuticals, if there are domestically produced analogues sorry but what are analogs?. About 90% of all sales of insulin in Russia is through government procurement. 

The largest international competitors Novo Nordisk and Sanofi already have plants in Russia. Local manufacturers Farmstandart and Medsintez also only dilute blends and pack products (this helps not to pay additional 15% while participating in government procurement tenders). Another fact of increased competition can be the setup of full-cycle insulin production plant by Geropharm-Bio, which will operate at full capacity soon.

In order not to be forced out of the market, Eli Lilly has made the decision to localize insulin production in Russia, using the facilities of high-tech pharmaceutical manufacturer R-Farm. In this way, Eli Lilly can set a competitive price and count on government support and preferences. 

Another advantage is logistics. Eli Lilly will avoid supply lag from the import of finished goods and will be able to quickly react to demand changes. R-Farm has also benefited from the opportunity to expand capacity and from the access to western technologies.