Vladimir Kreiman, General Director of Pharmstandard-Leksredstva, gave an interview to Pharmvestnik, where he spoke about the prospect of rapid import substitution and plans to increase production volumes, including the OTCPharm product line. OTCPharm products represent a significant share among the 500 million product units manufactured by the factory each year. For more details, read the article on the Pharmvestnik website.
— In mid-March, there were reports that some essential medications had disappeared from retail in Moscow, and that there were huge queues in the pharmacies. How was the situation in Kursk?
— I am yet to see any evidence of this 'severe situation' that many people are talking about. Look for yourself. Have you noticed the factory parking space? There's about 3,000 m2 of parking space with no vacant place in sight. The factory is up and running, and the logistics are also operational. Medicines are produced and staff are paid for their work. As for pharmacies, I don't think that people without serious or chronic illnesses need to worry and purchase medications in bulk. Of course, you can take Arbidol as a preventive, but there is no point in keeping several packs of painkillers at your home – they will expire and you'll have to just throw them away There may be an extremely high demand for medicines in Moscow, but not in Kursk.
— Is this a 'Kursk anomaly' or is it caused by the fact that there is a Pharmstandard-Leksredstva factory in the city?
— Probably the latter Phs-Leksredstva JSC is among Russia's top five pharmaceutical manufacturers, actively contributing to the government's import substitution programme. Our factory may not be a cornerstone of the town, but we are a promising employer and one of the largest taxpayers in the Kursk Region. Today, the factory produces around 450 SKUs, with another 50 soon to be added, pending development completion. In 2021, we produced 500 million product units and we do not plan to scale down the production this year. I don't know what will happen to sugar production, but we will continue producing pharmaceuticals and even expand our output.
— In 2003, the factory was incorporated into Pharmstandard Group. Could you tell us some key milestones in the company's development since then?
— By the time the factory became part of Pharmstandard Group, it was already producing pharmaceutical substances, ready-to-use medicines, as well as syrups and suspensions for children, compliant with international standards. Since 2003, we have regularly launched new production lines, expanding our capacity to produce solid dosage forms, sprays, aerosols, and hard gelatin capsules. We received GMP, GLP (after the factory laboratory became operational), and GDP (for storage facilities) certificates and we regularly apply for their renewal. Our finished products warehouse, which opened 11 years ago, can hold 11,500 pallet spaces.
— You have been running this facility since 2019. What can you tell us about the current capacity of the factory? What kind of products does it make?
— By the decision of the Board of Directors, I've been elected the General Director of the factory, starting 1 September 2019. By this point, I had been managing such a large pharmaceutical company as Pharmstandard-UfaVITA for 20 years. I am now in charge of both facilities.
Today, Pharmstandard-Leksredstva OJSC has all the infrastructure necessary to guarantee continuous manufacturing of pharmaceuticals and medical devices.
We have six operational workshops with 26 production lines and around 28,600 m2 of floor space.
We also have an in-house print shop for labels and barcodes.
Moreover, we have storage facilities for auxiliary raw materials, active substances, and packaging materials. The storage complies with the GMP requirements.
We produce various pharmaceuticals: solid dosage forms (coated and uncoated tablets), hard gelatin capsules, sprays, aerosols, and liquid dosage forms such as syrups, including those for children. We focus on antiviral, antipyretic, and analgesic pharmaceuticals, as well as dietary supplements (including hematogens). Our pulmonology product line includes a powder for asthma treatment. We also manufacture consumables for medical devices – test strips for glucose meters.
— Which OTCPharm pharmaceuticals are manufactured at the Kursk factory?
— OTCPharm is the main client of our factory. The company's medicines account for the largest share of production volume. We produce 10 million packs of Arbidol alone per month. That is 120 million packs per year.
In addition to Arbidol, we also produce a lot of the antiviral medicine Amixin, Pentalgin and Next painkillers, as well as Maxicold antipyretics.
— How does the quality assurance system work at your factory?
— We received our first GMP compliance certificates in 2003, and have been regularly renewing them since. We carry out quality assurance checks as per the approved standards and regulations, using the methods developed by us or by the manufacturer. We have all the necessary cutting-edge equipment: liquid and gas chromatographs, spectrophotometers, and much more. The quality assurance department employs 192 people. We are constantly training them, taking them on off-site courses and webinars conducted by independent quality assurance specialists.
— People still believe – in a casual, layperson way – that Russian-made products are inferior to foreign ones in quality. What would you say to the sceptics?
— Everyone is entitled to their opinion and everyone has the right to doubt. I think the problem is that we don't communicate effectively enough. Many people aren't even dissuaded by the price difference. They would buy, for example, a foreign product containing paracetamol, instead of Russian-made paracetamol, which is several times cheaper.
I believe we should more often mention that Russian manufacturers are strictly controlled and monitored – by the Ministry of Health and the Ministry of Industry and Trade. We are subject to regular inspection and we are obligated to get certificates of compliance and get mandatory licencing. This control applies to manufacturers of both originator and generic Russian medicines. Pharmstandard-Leksredstva produces both.
Generic drugs that we produce are a complete copy of the originator, with the same international nonproprietary name, same composition and dosage form. When we put any generic into production, we check that it is identical to the original product.
Many foreign pharmaceutical companies, which came to Russia at different times so as to participate in tenders, have produced their products at our facilities. This localised production was under their strict control and with their participation. As a result, the manufacturing process is no different from that of the same pharmaceuticals in the U.S. or Europe.
The fact that consumers have been using our products for years and that there has been little information about undesirable effects also speaks to the efficacy and quality of the medicines produced in Russia, particularly at our factory in Kursk. Each incident is thoroughly investigated and it often turns out that the unwanted side effects are caused by the way the medicine was taken, stored, etc.
— Do you struggle with staff shortage in Pharmstandard-Leksredstva? How do you build up a talent pool and ensure the influx of young professionals?
— Today, the factory employs around 2,000 people, most of them locals from Kursk. All employees are suitably qualified and motivated. Pharmstandard-Leksredstva OJSC has a 'Certificate of Trust' issued by the Kursk Region State Labour Inspectorate. It confirms the company's inclusion in the register of employers who promote the respect for employees' rights. We pay the wages on time and ensure good working conditions. We have a great team. Staff turnover is minimal, at around 3% per year.
We actively cooperate with local higher and secondary education institutions and invite students for internships with the overall goal of recruiting productive and motivated talent. In short, staffing is not a problem.
— How does the focus on import substitution impact the company's strategy as well as internal and external processes? What obstacles do you face along the way?
— The country's pharmaceutical industry does depend on imported substances and equipment. Domestic pharmaceutical manufacturers want to produce high-quality products at speed. Unfortunately, the Russian machine industry hardly provides any equipment to enable the required quality and process speed. There is a long list of equipment that is required by the modern pharmaceutical industry but not manufactured in Russia. For example, it includes tablet presses, capsule filling machines, high-speed packaging lines, mixing machines, dryers and granulators. In this regard, Chinese and Indian producers almost entirely cover the needs of Russian enterprises. I'd like to note that in recent years several domestic pharmaceutical equipment manufacturers have penetrated the market with cutting edge solutions that meet all the requirements of the modern pharmaceutical industry. We buy the equipment from them, put it to active exploitation, and we are satisfied with the quality.
As far as the localisation of pharmaceutical substances is concerned, the strategy is also to move 'eastwards' – buying substances from China and India and accelerating domestic production.
We made some progress in this regard. In Russia, an increasing number of pharmaceutical substance manufacturers have emerged in recent years as part of the import substitution effort. So far, their main focus was on substances for expensive medicines under the federal programmes covering, for example, oncology and rare diseases.
When it comes to packaging, there is a single viable strategy: switching to Russian cardboard and glass producers to a maximum extent. It is possible, but it is important to maintain the quality during the transition.
To summarise: import substitution was a buzzword for several years, but the process itself was not as active as we would like it to be. Now it's time to commit to the cause.
Our factory, being one of the largest production facilities in Russia, mainly faces difficulties of a technical nature; switching to domestic products is not the end of the world. We work day and night, in several shifts. And there's more to be done, that's for sure.
The rapid and complete substitution of imports, covering as many product groups as possible, is also critical because of the significant exchange rate disruption, resulting in higher prices for imported raw materials. We strive to minimise the costs arising for the end customers due to higher prices.
— Over the past three years, the industry faced major challenges related to labelling and pandemics. What transformation have they triggered in the company?
— We participated in a labelling pilot. We joined the project in 2016 – still during the experimental phase. Today, we have an in-house print shop where we print the barcodes for labelling the packages around the clock. The labelling process is integrated into the packaging line and blistering machine.
A large project team put a lot of hard work and effort into the labelling initiative, which allowed us to implement the process without much difficulty. The company's productivity has not been affected.
There were initial communication difficulties in transferring information to the CRPT, but now all ends are met, and the system is working well. We only have one or two returns due to unreadable barcodes per several million packs. Labelling enables tracing the product all the way to the consumer, be it in the pharmacy or the hospital. I think this is an excellent result.
As for the pandemic, it did not startle us. In 2020, we ramped up the production of Arbidol tenfold to 10 million packs per month. We also continued recruiting and added 200 people to our staff: we added new production shifts, trained and retrained our employees, and sped up the production lines.
In addition to Arbidol, paracetamol, activated charcoal, and antibiotics were in high demand, so we cranked the corresponding production volumes.
— What are your plans for the factory's development in the short and long term?
— We align our plans with the current social agenda. First and foremost, we focus on import substitution. We produced 500 million packs in 2021, which constitutes a 100% capacity utilisation. We commenced a project for a large production building with 4,000 m2 of floor space and a projected capacity of around 200 million packs per year.
Another key focus under the Pharma 2030 programme is a radical modernisation of the entire factory involving a threefold increase in production volumes. In view of the recent events, we see replacing the products that will not be available in the pharmacies and hospitals as our duty. It concerns, of course, not our factory only but the whole Russian pharmaceutical industry.
Big pharma takes up a major share of the pharmacy shelf space, and today we have an opportunity to win this space for ourselves.
We are also planning to launch the production of soft gelatine capsules and gummy pills, which are popular in the dietary supplement segment. These include multivitamins for children and various complexes with Omega-3, 6, 9.
Despite the uncertainty and some difficulties with equipment supply (we experience delivery delays for previously ordered Italian and German equipment), we are not putting on hold any of our scheduled investment projects for this and next year. I don't see any issues, apart from deadline shifts, yet.
We are working on several projects today. For instance, in the Khrabrovo Industrial Park (Kaliningrad region), we designed the OTCPharm Pro production site, currently under construction. There, OTCPharm plans to manufacture around 22 products, including the flagships Arbidol, Pentalgin and Next.
We expect the substance market to stabilise in the coming months. We are planning to set up paracetamol, aspirin and citramon production in Kursk, as these medicines are in high demand when people do not have money for expensive alternatives.
Partner material: OTCPharm
OTCPharm JSC is a Russian pharmaceutical company founded in 2013 as a result of the Pharmstandard Group's over-the-counter business spin-off. The company portfolio comprise 32 brands. These include a large group of medicines for respiratory and viral diseases: Arbidol, Amixin and Maxicold. The vitamin and dietary supplement group includes Asvitol, Complivit, Lactazar, Magnelis B6, Selmevit, Cyclovita. The company also produces the painkillers Ascophen-P, Pentalgin and Next, the anti-anxiety medicine Aphobazol and the nootropic Noopept.
OTCPharm's products are produced at Pharmstandard Group's largest industrial pharmaceutical sites. The main contract site is Phs-Leksredstva JSC in Kursk.
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