I admit I cannot resist this — the level of implausibility of Mr. Hassan’s recent statements — on the Russian market — simply demands a good Fisking (demands to be clearly outlined). So, here goes:
If, as I established in my last post, it would take 48 to 43 billion Roubles of new Russian sales to fill Schering’s 2008 EPS “gap” — then, according to this summary research report, Schering-Plough will need to take home, to America, one Rouble out of every seven spent in Russia this year on pharmaceuticals, or about 15 percent of the overall Russian spending in the category. As many have cogently observed, Pfizer is big into Russia, especially lately — so that kind of share seems a stretch, at best.
Can Schering garner 15 percent of all Russian pharma Rouble expenditures, in 2008?
I think not.
In any event, here is a relevant snippet from the above report, on Russian pharma market sizes — I’ve allowed for 15 percent growth over 2007 levels, in the middle of the more optimistic scenarios outlined in the report:
. . . .According to BMI’s latest estimate, Russia’s pharmaceutical market reached a total value of US$11.7bn in final consumer prices 2007, representing 20% year-on-year (y-o-y) growth in dollar terms and bringing total per capita annual spending on medicines to US$82.3, twice 2004 levels. This is broadly in line with the growth rate recorded by local research groups DSM (20.2%) and RMBC for 9M07 (21%). More modest local currency growth rates of 11.2% reflect the distorting effect of the weakness of the US dollar. Looking forward, BMI’s five-year forecast, extended to 2012, sees annual average dollar growth of 10.9%, a lower but potentially more sustainable growth rate, in particular if the rouble continues to appreciate against the dollar through the forecast period. . . .