GENERICS’ EXPORTS TO RUSSIA AS ONE OF THE DRIVERS OF OUTPUT GROWTH OF THE MANUFACTURE OF PHARMACEUTICALS, MEDICINAL CHEMICAL AND BOTANICAL PRODUCTS INDUSTRY IN ARMENIA

Аннотация

Purpose: to identify the role of exports of Pharmaceutical products, and generic drugs, in general, and in Russia, in explaining the growth of real output of the manufacture of pharmaceuticals, medicinal chemical and botanical products industry and to highlight the priorities the Government of Armenia needs to pursue to ensure the Industry growth. Design/methodological approach: by converting nominal monthly values of the output of manufacture of pharmaceuticals, medicinal chemical and botanical products industry, exports of generic drugs and pharmaceutical products into real ones, and through seasonally adjusting the data and performing stationary tests, the statistically significant impact of thereof on the real output was estimated using ordinary least squares with variables in logs and their first difference for the sample period 2011:3-2017:12. Per unit values (net weight in kilograms) of exported sub-groups of pharmaceutical products and generic drugs by destination (current US dollars) were calculated as well. Findings: Estimation results state that if the real value of the exports of the pharmaceutical products increases by 10% in period t it would cause statistically significant changes in the real output of the manufacture of pharmaceuticals, medicinal chemical and botanical products industry by 2.24% in period t, on average, meanwhile, the same change in the real value of the exports of generic drugs could cause a 2.22% increase in the real output of the Industry in period t. Per unit value (net weight in kilograms) of generic drugs (current US dollars) exported to other nations (except Russia) was mainly declining over time (except in 2013), while in the case of Russia, the amounts received from exporting domestically produced generic drugs started growing accompanied with the increase in the per unit value from 2011 to 2017 (except 2015), meaning that Armenian exports of generic drugs to Russia were of higher value, in general. Conclusion: The future increase of the exports reported in generic drugs to Russia, and in particular of higher value drugs, would enable the industry to report higher output growth rates, along with increase reported in exports of other sub-groups of the exports of Pharmaceutical products. The priorities of the Government of Armenia would be to assist the local drug producers in producing and introducing new generic drugs of higher value that haven’t been previously manufactured both in Armenia and Russia that could compete with Russian pharmaceutical companies in the case of manufacturing them in Russia; and in penetrating new markets, while focusing on the Russian market as the main export destination to promote generic drugs to. Practical Implication: the findings could be used by the Ministry of Economic Development and Investments of Armenia, and Business Armenia in drafting future action plans, elaborating strategies with respect to developing the manufacture of pharmaceuticals, medicinal chemical and botanical products industry, etc.