How has the market in Russia been affected by the recent unrest – as far as local medical device companies and overseas companies selling into  Russia are concerned?  

Our perception is that the market was mainly affected by the budget cuts in the healthcare sphere caused by economic stagnation, rather by the recent political unrest. As the governmental health care system accounts for 80% of the market, such a decrease in governmental healthcare spending has a negative impact on sales. Given that around 85% of the medical devices on the Russian market are of foreign origin, such a decline in spending on healthcare public procurement has led to a decrease in sales of foreign medical devices. We suppose that Russian manufacturers are in a slightly better position because of their portfolio consisting mostly of low-cost or mid-cost devices - demand for these is relatively constant.

Can you give an update as to the size of the market ($6bn was the 2011 figure), the pace of growth, and which market segments are showing fastest growth at present?  

The publicly available surveys on the size of the market for medical devices are always pretty confusing – the figures may vary dramatically depending on the expert. According to the various surveys we are aware of, the size of the market today amounts to RUR 154 billion, which is USD 4.5 billion, against RUR 135 billion, which at that time converted to USD 4.3 billion, in 2011 (please note that the exchange rate has changed significantly compared to that of 2011). Other surveys show different figures but the common consent is that the market experienced considerable growth until 2012 and, since then, has fallen into decline. The common prognosis is that the market will continue to shrink during this year, them stabilize and grow.

We believe that such a dip in sales has been caused, among other things, (i) by the adoption of the Federal Contractual System, the new system for public procurement in Russia, which governmental customers do not yet know precisely how to operate, and (ii) the decrease mentioned above in governmental spending on the healthcare system. However, given the plans for improving the regulatory landscape and for localization, and assuming that international relations will normalize, we are anticipating that the size of the market will grow in the near future.    

In regulatory terms Russia has undergone massive change – and it is not yet finished. How are the changes being seen by the industry, are they able to work with Roszdravnadzor?

Over recent years, the industry has been suffering from the lack of proper regulations. For instance, nowadays, the federal regulations devote only 3 articles to regulating medical devices, which of course is not sufficient for them to be regulated effectively. Some regulations of the Customs Union also apply to certain aspects of the circulation of medical devices, but the vast majority of rules are set out in numerous governmental decrees and orders of particular ministries. Thus, the industry has to operate in a complicated and ambiguous legal environment.

The new legislation is a step forward, but requires more guidance for the industry as well as more transparency. The rules for registering medical devices were rewritten in 2013 and regulators claimed that the new text was a considerable improvement. However, the lack of official guidance and explanations creates a lot of problems. Thus, many applications were rejected in 2013 and it very hard to predict the results of the registration process.  

However, Roszdravnadzor has started to issue letters explaining the particular aspect of circulation and there are numerous references to the EU rules.

What is the procedure to get a non-class I product onto the market, and who do companies work with to do this? What role does Pepeliaev play in this?

As things now stand, all classes of medical devices, save for custom made ones, need to undergo registration procedures to obtain market authorization. Simply put, the procedure is comprised of the following stages:

Stage 1: Obtaining approval to import samples and the importation itself (may take around 2 months);

Before the application process is commenced, permission for importation should be obtained. To this end, the company has to enter into contracts with the facilities which will conduct the pre-clinical studies and then submit copies of these contracts to Roszdravnadzor along with the request for permission to import samples.

Stage 2: Conducting technical, toxicology and metrology studies, defining the availability of interchangeable devices and the type of risks of the device (around 3-4 weeks);

Stage 3: Filing an application (including reviewing the file and eliminating faults – 30 days);

The application for a medical device to be registered can be made by a manufacturer or developer of a medical device, as well as by the authorized representative of the manufacturer.

Stage 4: Examining the application (assessing the feasibility of clinical trials, including obtaining approval from the Ministry of Health's Ethics Committee – up to 3-4 months);

Stage 5: Conducting clinical trials;

Clinical trials of medical devices also require approval from the Ethics Committee. Such trials can only be conducted in medical facilities that meet the criteria set out by the Ministry of Health. Please note that there are Russian national standards relating to the rules for conducting clinical trials, and these standards are similar to the international ISO standard, setting out certain rules and ethical aspects for clinical trials. For example, an informed consent of the subjects of clinical trials must be obtained.

Stage 6: Examining the results of the studies for the purpose of state registration (around 2-3 weeks).

If the device is successfully registered, a registration certificate is issued, evidencing the fact that the device is allowed to circulate in Russia. From now on all registration certificates will be issued for an indefinite term.

To obtain market authorization the industry uses the support of service providers which specialize in registering of medical devices with Roszdravnadzor, but some companies use their own in-house registration and regulatory departments. The registration process also entails interacting with the clinical investigation sites that meet governmental requirements, certification bodies, test facilities, etc.

Our firm is mainly focused on providing full legal support when new products are launched on the market. We advise on the full range of matters connected with the circulation of the medical devices – from registration to advice on the post-market surveillance procedure. Of course, being a law firm, we engage registration specialists where necessary, as this requires special field of expertise distinct from legal.

What changes are still yet to occur in the regulatory overhaul?  

Despite being constantly improved, the current legislation is still fragmented and some parts are unclear. The industry needs a main body of laws for medical devices and has been waiting since 1998 for a dedicated federal law that will contain comprehensive regulations regarding the whole life cycle of the device. There is also a need for a single set of dedicated technical regulations, since it is hard without this to navigate effectively through numerous technical requirements scattered throughout different documents of different levels.

At the same time, given that the Eurasian Economic Union Treaty has been concluded, which stipulates that a single market and unified regulatory system will be established for medical devices, we suppose that the legislation will continue to improve on the level of the Union, in parallel with the national harmonization process.  We believe that the approach to further improvement in Russia will be strongly dependent on the provisions of the Rules for medical devices to circulate freely within the Union. These are still in draft form and there is an evolving discussion between the representatives of the member states as to their details and best approaches.

How is the clinical trials system for device working – well?

The system really needs lots of improvement, despite having significantly improved during recent years. The Ministry of Health has recently adopted requirements applying to medical organizations where clinical trials (investigations) of medical devices are taking place. This is so that control over the trials is enhanced, but there is still a lack of guidance on the issue.

What do you see as the key drivers for the Russian medical devices markets  - now and in the coming 5 or so years?

At present, it looks like the main conditions for growth will be improvements in financial support for public healthcare, and transparent, straightforward regulations. In the coming 5 years the main drivers would probably be: the prospect of regulatory systems in Russia, Belarus and Kazakhstan being unified, so that there will be a single market for the 3 countries; the increasing use of PPP mechanisms in healthcare, which may potentially improve situation with financing; a growth in the number of private hospitals; and localization incentives for foreign companies.​

Ashley Yeo