On the one hand, in Q1 2017, Russian pharmaceutical retail sector strengthened the positive trends of the past year. The demand for medicinal products is recovering, albeit slowly, both as a result of higher consumption in terms of physical volume and the shift of consumers to more expensive drugs. On the other hand, current positive trends are so far, alas, just a pleasant fact which, while making the retail pharmacies feel better in general, cannot serve, for a number of objective reasons, as a foundation for either quantitative or qualitative development of the industry.
Today, the key growth drivers underlying the development of pharmaceutical retail in the recent past are either completely ineffective, or very close to the threshold of losing their practical usefulness. For example, in locations with sufficient consumer traffic, it is almost impossible to find any premises with acceptable surface area and rental terms. While the general investment programs, such as the housing renovation project in Moscow, are creating here some opportunities, these are purely local stories despite all their scale. Similar prospects are currently being open by the demise of formerly large pharmacy chains in some regions, such as St. Petersburg. The opportunities for price competition are also about to run out. Today, virtually every self-respecting pharmacy chain has its own discounter outlets and, in the present environment, it wouldn’t be worth the trouble to cross the line that leads to price war.