Eli Lilly is barely visible – Newspaper Kommersant No. 52 (7497) of 03/28/2023

Eli Lilly became the second American pharmaceutical manufacturer after Bristol-Myers Squibb (BMS) to leave Russia for good. The company can transfer its business in the country to the management of the Swiss Swixx Biopharma – this was done almost a year ago by BMS. Although the share of Eli Lilly in the Russian market does not even reach 1%, but before the geopolitical crisis, the manufacturer was able to increase revenue by almost one and a half times – up to 14 billion rubles. According to Kommersant’s sources, the transfer of business to management will allow the company to retain at least this market share, where it will be possible to return after a possible normalization of the situation.

Eli Lilly decided to withdraw from the Russian market and transfer its local business to its partner in Central and Eastern Europe, Swiss-registered distributor Swixx Biopharma. This was told to Kommersant by two former employees of the Eli Lilly division in the Russian Federation. According to them, preparations for this process began at the end of February with a change in top management at the company’s representative office. Then, according to the Unified State Register of Legal Entities, the CEO of Lilly Pharma LLC, the Russian structure of Eli Lilly, Irina Zaporozhets was replaced in this position by Ekaterina Ibragimova. Part of the staff of Lilly Pharma, together with the top manager, will move into a new structure that Swixx Biopharma intends to create for the distribution of Eli Lilly drugs in Russia, Kommersant’s interlocutors add.

In the Russian offices of Eli Lilly and Swixx Biopharma, they were unable to promptly respond to Kommersant’s request. On Monday evening, Eli Lilly’s possible departure from the Russian Federation was also reported by the Right to Health industry Telegram channel, citing its sources in the pharmaceutical market.

A year ago, due to the Russian-Ukrainian military conflict, Eli Lilly announced the suspension of the export of drugs to the Russian Federation and investment in clinical trials, although Western sanctions did not affect this segment. Then the company stopped supplying only Salis for erectile dysfunction, since the remedy is not included in the list of vital drugs and has 11 analogues in the Russian Federation (see Kommersant dated March 22, 2022). At the same time, a number of drugs, including insulin Humalog, the antidiabetic drug Trulicity, and cancer drugs Zenlistik, Cyramza, Alimta and Gemzar, the manufacturer promised to continue supplying. It is likely that Swixx Biopharma will distribute these drugs after Eli Lilly has taken control of the Russian business, Kommersant’s interlocutors do not exclude. In this case, Swixx Biopharma can count on a percentage of sales and deductions from marketing activity, says Sergey Shulyak, CEO of DSM Group.

According to IQVIA, in 2022 Eli Lilly’s share in the Russian market was 0.52%, or RUB 11.6 billion. The company had the best indicator in 2021, according to the results of which, according to SPARK-Interfax, Lilly Pharma’s revenue reached almost 14 billion rubles, which is almost one and a half times more year-on-year, net profit amounted to 525 million rubles . with a loss of 163 million rubles. in 2020.

According to one of Kommersant’s sources, the transfer of Eli Lilly Swixx Biopharma is an attempt to keep most of the revenue in the commercial segment, which accounts for a significant share of the pharmaceutical company’s sales in the Russian Federation. It is also an opportunity to return to the market when foreign policy conditions change, he adds.

As part of government procurement, Eli Lilly supplies Lisipro insulin. But in 2022, the volume of the company’s state contracts for this drug amounted to 614.8 million rubles, which is 31% less year-on-year and 43% compared to 2020, says Lyudmila Balandina, Head of Strategic Development at Headway Company. While the second main supplier of this type of insulin, the Russian Geropharm, the volume of state orders in 2022 reached 1.01 billion rubles, which is 3.8% more year-on-year and 11% more than in 2020 .

Some types of insulin from Eli Lilly can be replaced by Russian analogues, Nikolai Bespalov, development director at RNC Pharma, believes. But he doesn’t rule out the risk of temporary supply disruptions as Eli Lilly transfers its Swixx Biopharma business.

Eli Lilly has become the second Western pharmaceutical company to leave Russia by transferring its business to Swixx Biopharma. Almost a year ago, the American BMS did this (see Kommersant dated May 19, 2022). Mr. Shulyak connects this decision with pressure on foreign pharmaceutical manufacturers, which today are limited in their ability to invest in marketing and promotion of their drugs in the Russian Federation. At the same time, the expert explains, drug distributors do not have such difficulties.

Khalil Aminov, Alina Savitskaya