The work of the pharmaceutical company AVVA RUS in the conditions of the crisis

In addition, our interview covers: prospects of the drug monitoring system and the crisis as an opportunity to reassess oneself and one's business.

- Olga Sergeevna, you have likely repeatedly read or heard in the media that the pharmaceutical business is one of the sectors that saw profit growth during the pandemic. Is this true?

- Many may think so. When I hear such conclusions, I am deeply saddened by this superficial view of the pharmaceutical industry. Believe me, we suffered losses just like any other sector, because the cost of raw materials directly impacts our production costs. As you know, high-demand medicines are included in the list of vital and essential drugs (VED), and their prices are regulated by the state. Currency fluctuations, supply disruptions due to transportation restrictions, and foreign suppliers' efforts to retain raw materials domestically during this challenging time—all of this led not only to significant price increases but also to difficulties in sourcing necessary components for drug production. Additionally, during the second quarter, a decision was made to suspend most activities under the company’s investment program for 2020, which affected long-term business development planning.

Demand for our existing product line increased because our portfolio includes drugs widely used to treat respiratory infections. During the pandemic, production operated at an intensified pace, manufacturing both broad-spectrum antibiotics and penicillin-based antibiotics. I am very glad that we were able to supply sufficient quantities of our products to medical institutions that needed them more than ever.

- How did the plant employees respond to this extraordinary challenge?

- For the plant employees, this meant working in an intensified mode, but everyone unanimously saw an important mission in their work: producing vital medicines. Of course, we were not on the front lines like doctors, but we also risked our health and that of our families by commuting to work every day while most people were in self-isolation. To support our workers, we provided everyone with vitamins, masks, gloves, and sanitizers to protect themselves outside the plant in public spaces. Importantly, wages for April and May were paid with a higher coefficient.

The company’s top priorities included implementing a set of measures related to the changing epidemiological situation, such as preserving jobs amid adjustments to production plans due to supply chain disruptions. We retained our valuable employees by offering them stability. Moreover, we managed to fill all vacancies thanks to the increased number of job seekers in the labor market. I am grateful to all plant employees for their dedication, patience, work on weekends, night shifts, and overtime, and for maintaining a positive atmosphere at the plant.

Thank you to every employee for their contribution to our common cause.

- Olga Sergeevna, less than a month remains until the law on mandatory drug labeling comes into effect. Is the company prepared? How do you assess this legislation?

- 'AVVA RUS' is fully prepared for the transition to the mandatory drug labeling system. We recognize our responsibility to consumers for uninterrupted drug supply. Certainly, this imposes a burden on businesses in terms of additional investments, space constraints due to new equipment, and other challenges. Nevertheless, we have completed all necessary preparations. There were difficulties because Russian regulatory requirements are not fully harmonized with international standards, and we have our own specificities. The labeling project in Russia is the most complex and comprehensive compared to similar projects in the EU, U.S., China, and India. The implementation timeline is also the strictest, even considering its postponement. The most challenging aspect today is the lifecycle of finished products in circulation, i.e., logistics and distribution to pharmacy chains and points of disposal. All this requires control, standardization, and compatibility when interacting with partners. Very few drug packages have passed through the entire supply chain, and even during this relatively limited testing, numerous difficulties in handling labeled products were identified.

Mass training sessions are now underway, and the Center for Research in Perspective Technologies (CRPT) is assessing whether all supply chain links are ready for the new system. The state pursues a clear goal: tracking, controlling, and monitoring medicines throughout the entire supply chain from manufacturer to consumer. In December 2019, we faced an issue where the CRPT was unable to respond for seven days regarding erroneously sent labeling codes, which halted our production line for a week. However, further postponement of the law is not feasible, as delays do not guarantee readiness of all participants by the next deadline. Unfortunately, we still encounter such issues today.

For us, this was a challenging project, but we achieved parameters such as no reduction in packaging line speed due to the innovations and a minimal defect rate in labeling application, allowing us to maintain our production plans. The equipment is installed, and the staff is trained.

- Should we expect drug price increases due to the mandatory labeling system or other factors?

- I assume that for products whose prices are not state-regulated, the costs incurred by manufacturers for retrofitting production lines and modernization will be reflected. Of course, raw material costs and currency exchange rates will also impact prices. But believe me, prices will not rise due to the pandemic or increased demand for certain medicines. The introduction of labeling eliminates the gray market, enabling legal manufacturers to capture the vacated market share and thus achieve new growth points, which may create real conditions for maintaining or even reducing drug prices.

- Tell us about the company’s overall development.

- We are growing. This is visually evident: non-core areas have nearly doubled, allowing us to expand capacity within existing production sites. We introduce up to 10 new products annually and are only accelerating. 'AVVA RUS' produces drugs that only a few manufacturers worldwide offer. We register drugs whose costs are significantly lower than imported analogues, enabling us to supply the Russian market with affordable products.

Our partner network is constantly expanding. We actively develop cooperation with countries in the near and far abroad. If our products are in demand, we are always open to collaboration.

- Today, some entrepreneurs blame circumstances and await government aid, while others see the crisis as a time of opportunities. What are your thoughts?

- Businesses must be prepared for any scenario with three development models: optimistic, pessimistic, and crisis. If we step outside with an umbrella on a cloudy day, we are unafraid of rain. In business, everything is predictable. We must be able to forecast.

Undoubtedly, the crisis affected small and medium-sized businesses, but not to the extent often portrayed. In my opinion, currency volatility impacts businesses more significantly. The risks here are much greater, yet this topic is rarely discussed.

The crisis is a time of opportunities, not only for businesses but also for individuals. Some will reassess their business and realize they need to pursue something entirely different. I anticipate more manufacturers emerging, not just sellers, which is a positive development.

Now is the time to understand where we can be most needed. Those who preserved their business, even at the expense of profitability, are already winners. Your team remains with you—people believe in you and are ready to move forward and develop the company. Everyone has reevaluated their core values.

New opportunities are not just about income but also about new growth points and prospects. In this situation, everyone has realized what truly matters in life: healthy children and parents, job security, and confidence in the future. That is already a lot, isn’t it?

Seek true values in simplicity.