[Federal Register Volume 78, Number 104 (Thursday, May 30, 2013)]
[Notices]
[Pages 32369-32372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12792]


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DEPARTMENT OF COMMERCE

International Trade Administration


Healthcare Trade Mission to Russia, October 21-25, 2013

AGENCY: International Trade Administration, Department of Commerce.

ACTION: Notice.

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Mission Description

    The U.S. and Foreign Commercial Service (CS), an agency of the U.S. 
Department of Commerce's International Trade Administration, is 
organizing a Healthcare Trade Mission to Moscow and St. Petersburg, 
Russia from October 21-25, 2013 which will be led by a Senior Commerce 
official.
    Russia, with 140 million consumers and almost unlimited medical 
needs, presents lucrative opportunities for U.S. companies. In addition 
Russia's recent membership into the WTO will benefit U.S. exports to 
Russia. Significant equipment, technologies, and investments are needed 
in the healthcare sector, specifically in the medical equipment, dental 
equipment

[[Page 32370]]

and biotechnology areas. This healthcare mission will directly 
contribute to the National Export Initiative (NEI) by assisting U.S. 
businesses in entering new markets and increasing U.S. exports to 
Russia. As a result, the mission will focus on U.S. firms and trade 
associations in the following sectors: medical equipment, dental 
equipment and biotechnology.
    The mission will help participants gain market insights, make 
industry contacts, solidify business strategies, and advance specific 
projects with the goal of increasing U.S. exports to Russia. The 
mission will include one-on-one business appointments with pre-screened 
potential partners, market briefings, and networking events. 
Participating companies will enhance their ability to assess the 
Russian market by joining this official U.S. delegation.

Commercial Setting

    Russia is one of the world's fastest growing economies and its 
healthcare system is evolving rapidly with a promising outlook for U.S. 
healthcare exports, particularly with medical equipment, dental 
equipment and biotechnology. It is estimated that only 20% of Russia's 
population has access to quality healthcare in a system that is 
{primarily government run{time}  and under-funded.
    As a result, approximately 20% of overall health care spending is 
covered out-of-pocket by patients. Voluntary healthcare insurance 
programs account for approximately one-third of total private 
healthcare expenditures. According to future reform plans, mandatory 
insurance funds will serve as the main source of healthcare funding and 
will provide transparency and monetary control within the system.
    The National Health Project was developed in 2005 and was designed 
to significantly improve Russian healthcare. From 2011-2013, $15.4 
billion was allocated from both the federal budget and the Mandatory 
Healthcare Insurance Fund. The Program of Healthcare Modernization 
2011-2012, aimed at renovating and upgrading healthcare facilities, was 
financed at $11 billion. In addition, Russian healthcare providers need 
modern technologies for diagnostics and treatment. Russian patients are 
becoming more aware of modern medical technologies around the world and 
expect the same types of treatment in Russia.
    In addition to these programs, the Ministry of Health has recently 
developed a draft government program called ``Development of Healthcare 
in the Russian Federation.'' This document is currently under review 
for approval. It contains the principles of preventive medicine, 
quality of provided healthcare services, education of medical 
personnel, and overall changes in the healthcare infrastructure.
    The Ministry of Industry and Trade is also currently developing a 
strategy for the development of the medical industry until 2020. With 
continued growth in this sector, World Trade Organization (WTO) 
accession, and government plans to modernize and invest in Russian 
healthcare to 2020, American companies should be poised to make 
significant contributions to this market.

Medical Equipment

    The medical equipment sector is one of the fastest growing sectors 
of the economy. There is a relatively stable macroeconomic situation in 
Russia with much unsatisfied deferred demand for medical equipment 
across the country. In addition, the Russian government pays close 
attention to this field and is making efforts for greater transparency 
and efficiency, resulting in increased government financing for the 
purchase of medical equipment. For example, the Program of High-Tech 
Medical Assistance 2011-2013 was financed at $4 billion.

Medical Equipment

    The medical equipment sector is one of the fastest growing sectors 
of the economy. There is a relatively stable macroeconomic situation in 
Russia with much unsatisfied deferred demand for medical equipment 
across the country. In addition, the Russian government pays close 
attention to this field and is making efforts for greater transparency 
and efficiency, resulting in increased government financing for the 
purchase of medical equipment. For example, the Program of High-Tech 
Medical Assistance 2011-2013 was financed at $4 billion.
    Since commercialization of medical equipment manufactured in Russia 
remains low, the market for medical equipment is heavily dependent on 
imports. The average annual increase in the import market for medical 
equipment from 2006 to 2011 was approximately 23%. Medical equipment 
imports in 2006 were $14.2 billion with steady growth to $41 billion in 
2011.
    In 2011, the market for specific subsector of diagnostics and 
imaging equipment was estimated at $4.9 billion. During the next nine 
years the experts expect the yearly market growth at 13.5%. This 
includes diagnostics and imaging equipment, cardiovascular equipment, 
ophthalmology, orthopedics, laboratory diagnostics and urology.
    Membership in the WTO will also benefit foreign exports to Russia. 
After full implementation of the WTO accession and Permanent Normal 
Trade Relations, tariffs for medical equipment are estimated to range 
from 0% to 7%. Currently, tariffs range as high as 15% to 20%.

Dental Equipment

    The Russian dental market is also an area that is expanding and 
showing good growth potential. In 2011, total world imports into Russia 
for dental equipment were approximately $500 million and the total 
market for dental services was approximately $6 billion.
    The number of clinics, practicing dentists, technicians and patient 
visits are all on the rise. There are over 9,500 dental units operating 
in Moscow, with 3,000 state clinics and over 6,500 private clinics. 
There are 670 municipal dental clinics and 2900 dental departments 
within those clinics.
    The highest level of {dental industry privatization{time}  is in 
the Moscow region. The number of practicing dentists in Russia is 
68,000, of which 35,000 are members of the Russian Dental Association. 
The number of patient visits is approximately 150 million a year. 
However, the ratio of dentists to patients in Russia is still only 45/
100,000 people, which is below levels in the U.S and most European 
countries. In the U.S., the ratio of patients to dentists is 60/
100,000.
    The dental market is one of the most highly controlled and 
organized markets in Russia. The largest associations are the Russian 
Dental Association which has 69 regional divisions and the Dental 
Industry (DI ROSI) which has 45 member companies. These associations 
play an important role in the introduction of new technologies and 
practices, actively participate in trade events and publish in 
professional journals. As a result, they have a large impact on the 
industry. The two major dental universities are Moscow State Medical 
and Dental University and the Sechenov Medical Academy in Moscow.
    Domestic production of dental equipment is insufficient in Russia 
and produces very few new products. Local manufacturers such as Averon, 
VladMiVa, Raduga Rossii, Geosoft, Stomadent Omega, and Tselit produce a 
wide range of dental equipment. Since Russia's domestic dental 
production level meets only 20% of total demand, imports play a 
significant role in the market. The majority of dental equipment is 
supplied from the U.S,

[[Page 32371]]

Germany, France, Switzerland, Japan, and other countries.
    Many large U.S. and international companies have offices in Russia, 
including Densply, 3M, Nobel Biocare, Mileston, Midmarek, 3i, Sirona, 
Kavo, Colgate, Kodak-Eastman, Philips-Sonicare, Discuss Dental (now 
owned by Philips), Oral B, and Wrigley Adeck.
    There are about 500 distributors of dental equipment in Russia. The 
major distributors are located in Moscow and work in other regions 
through smaller local distributors or through regional representatives. 
Import customs clearances are executed more easily in larger cities 
like Moscow and St. Petersburg. There are strict product registration 
and certification procedures necessary for the release of dental 
equipment into the market. The registration and certification process 
can be complicated, time-consuming, and expensive. It may require a 
regular market presence by the manufacturer or an authorized 
representative with competent Russian language skills and knowledge of 
the local market to be able to complete the process.

Biotechnology

    In the last several years, Russia has been developing an innovative 
modern economy by focusing on information technologies and 
nanotechnologies. The biotechnologies area has large potential and is 
underdeveloped, but is evolving because of the need to extend life 
expectancies within the country. Large companies like Celgene, Amgen, 
and Genzyme are established in the market and are already working in 
the biotechnology field. Despite the fact that major companies from 
Europe and the U.S. have already entered the market, there is still 
room for small innovative companies in the biotechnology area. Good 
examples include two small biotechnology companies, Bind and Selecta, 
who have recently opened offices in Russia to start R & D which is a 
priority of the Russian government.
    The Government Commission on High Technologies and Innovations 
signed a decision in April, 2011 to create a State Coordination Program 
for the Development of Biotechnology in the Russian Federation until 
2020. The Ministry of Economic Development is responsible for this 
program which focuses on several areas including biopharmaceuticals and 
biomedicine.
    Biopharmaceuticals (essential medicines, including biogenerics, 
hormones, cytokines, therapeutic monoclonal antibodies, peptides, 
phytomedicines, new generation vaccines, antibiotics and 
bacteriophages).
    Biomedicine (molecular diagnostics, personalized medicine, 
engineered cell and tissue for therapeutic purposes, biocompatible 
materials).
    The Russian market of biopharmaceuticals in 2010 was estimated at 
$2.2 billion, of which $1.3 billion was dedicated to cytokines, 
genetically engineered hormones (including insulin), coagulants and 
therapeutic enzymes, monoclonal antibodies ($350 million), and vaccines 
($350 million). The sales of the two former antibodies and vaccines are 
expected to rise to $480 million and $370 million respectively by the 
year 2015.
    The Russian biomedicine market is focused on the development and 
manufacturing of biotechnological products for the diagnosis and 
treatment of human diseases and for the prevention of harmful effects 
of the environment on humans. The world market of biotechnology (used 
for molecular genetics diagnostic technologies) was $13.5 billion in 
2010, and is expected to be $33.3 billion by 2015. The access to 
credible biomedicine data for the Russian market is low because the 
segment has not been fully developed, but it is expected to mature in 
the near future.
    Biotechnology is a large part of the overall pharmaceutical sector. 
According to industry experts, Russia is currently one of the ten 
largest pharmaceutical markets in the world. In 2011, the 
pharmaceutical market volume amounted to $26 billion in end user 
prices, which is 12% higher than in 2010.
    An important recent trend was the planning and formation of 
``pharmaceutical clusters''. This was due in part to the completion of 
the ``Strategy of Development of the Pharmaceutical Industry--2020'', 
developed by the Ministry of Industry and Trade which outlines some 
government priorities.
    The Russian pharmaceutical market is import driven with 76% of 
drugs taken in Russia produced abroad. The only domestic manufacturer 
in the top 20 leading players in the Russian pharmaceutical market is 
Pharmstandart.

Mission Goals

    The goal of the Healthcare Trade Mission to Russia is to promote 
the export of U.S. goods and services by: (1) introducing U.S. 
companies to industry representatives and potential clients and 
partners; and (2) introducing U.S. companies to industry experts to 
learn about policy initiatives that will impact the Russian healthcare 
industry in general as well as the major segments: medical equipment, 
dental equipment and biotechnology.

Mission Scenario

    In Moscow, trade mission members will participate in an Embassy 
briefing from industry experts and take part in one-on-one business 
appointments with private-sector organizations and/or government 
agencies as appropriate. In addition, they will enjoy a networking 
event with industry leaders and partners. In St. Petersburg, all of the 
delegates will have customized one-on-one business appointments and 
attend another networking reception.
    Matchmaking efforts will involve partners such as the Association 
of International Pharmaceutical Manufacturers (AIPM), Innovative 
Pharma, Association of International Manufacturers of Medical Devices 
(IMEDA), and the American Chamber of Commerce in Russia. U.S. 
participants will be counseled before, during, and after the mission by 
CS Russia staff actively involved in the healthcare trade mission.

                           Proposed Timetable
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Sunday, October 20, Day 1..............  Arrival into Moscow.
                                         Informal greeting at hotel and
                                          no host dinner.
Monday, October 21, Day 2..............  Moscow.
                                         Briefing by the U.S. Embassy
                                          and industry experts.
                                         Site Visits in afternoon.
Tuesday, October 22, Day 3.............  Moscow.
                                         One-on-one business
                                          appointments.
                                         Networking reception.
Wednesday, October 23, Day 4...........  Depart for St. Petersburg.
                                         Travel day and free evening in
                                          St. Petersburg.

[[Page 32372]]

 
Thursday, October 24, Day 5............  St. Petersburg.
                                         One-on-one business
                                          appointments.
                                         Networking reception.
Friday, October 25, Day 6..............  St. Petersburg.
                                         Additional meetings and follow-
                                          up appointments.
                                         Departure for the U.S. (Friday
                                          evening or Saturday, June 8).
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Participation Requirements

    All parties interested in participating in the Healthcare Trade 
Mission to Russia must complete and submit an application package for 
consideration by the Department of Commerce. All applicants will be 
evaluated on their ability to meet certain conditions and best satisfy 
the selection criteria as outlined below. A minimum of 15 U.S. 
companies and/or trade associations and maximum of 20 companies and/or 
trade associations will be selected to participate in the mission from 
the applicant pool. U.S. companies or trade associations already doing 
business with Russia, as well as U.S. companies or trade associations 
seeking to enter these countries for the first time may apply.

Fees and Expenses

    After a company or trade association has been selected to 
participate in the mission, a payment to the Department of Commerce in 
the form of a participation fee is required. The participation fee will 
be $4,050 for large firms and $3,830 for a small or medium-sized 
enterprise (SME) or small organization, which will cover one 
representative.*\1\ The fee for an additional representative (SME or 
large company) is $750.00
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    \1\ An SME is defined as a firm with 500 or fewer employees or 
that otherwise qualifies as a small business under SBA regulations 
(see http://www.sba.gov/services/contractingopportunities/sizestandardstopics/index.html). Parent companies, affiliates, and 
subsidiaries will be considered when determining business size. The 
dual pricing reflects the Commercial Service's user fee schedule 
that became effective May 1, 2008 (see http://www.export.gov/newsletter/march2008/initiatives.html for additional information).
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Exceptions

    Expenses for travel, lodging, meals, and incidentals will be the 
responsibility of each mission participant. Delegation members will be 
able to take advantage of U.S. Embassy rates for hotel rooms as of 
Sunday, October 20 through to Wednesday, October 23 in Moscow and 
Wednesday through Friday, October 25 in St. Petersburg. Please note 
that the trade mission begins in Moscow and ends in St. Petersburg. 
Early arrival nights in Moscow, return transportation to Moscow from 
St. Petersburg, or the extension of stay in St. Petersburg will be the 
responsibility of the participants.

Conditions for Participation

    An applicant must submit a completed and signed mission application 
and supplemental application materials, including adequate information 
on the company's products and/or services, primary market objectives, 
and goals for participation. If the Department of Commerce receives an 
incomplete application, the Department may reject the application, 
request additional information, or take the lack of information into 
account when evaluating the applications.
    Each applicant must also certify that the products and services it 
seeks to export through the mission are either produced in the United 
States, or, if not, marketed under the name of a U.S. firm and have at 
least 51 percent U.S. content of the value of the finished product or 
service.

Criteria for Participation

    Selection will be based on the following criteria:
    1. Suitability of the company's products or services to the market. 
Please note that due to Government procurement restrictions the Russian 
healthcare market is not receptive to used or refurbished products. For 
the purpose of this mission therefore, participants may not promote 
used or refurbished goods in the context of this mission.
    2. Applicant's potential for business in Russia and in the region, 
including likelihood of exports resulting from the mission.
    3. Consistency of the applicant's goals and objectives with the 
stated scope of the mission.
    Diversity of company or trade association size, sector or 
subsector, and location may also be considered during the review 
process.
    Referrals from political organizations and any documents containing 
references to partisan political activities (including political 
contributions) will be removed from an applicant's submission and not 
considered during the selection process.

Timeframe for Recruitment and Applications

    Mission recruitment will be conducted in an open and public manner, 
including publication in the Federal Register (http://www.gpoaccess.gov/fr), posting on ITA's trade mission calendar (http://export.gov/trademissions), and other Internet Web sites, press releases 
to general and trade media, direct mail, notices by industry trade 
associations and other multiplier groups, and publicity at industry 
meetings, symposia, conferences, and trade shows. Recruitment will 
begin immediately and conclude no later than COB July 29, 2013. The 
U.S. Department of Commerce will review applications and make selection 
decisions on a rolling basis until the maximum of fifteen participants 
is reached. We will inform all applicants of selection decisions as 
soon as possible after the applications are reviewed. Applications 
received after the July 29th deadline will be considered only if space 
and scheduling constraints permit.

Contacts

Anne Novak, U.S. Commercial Service, Washington, DC, Tel: (202) 482-
8178, [email protected].
Jessica Arnold, U.S. Commercial Service, Washington, DC, Tel: (202) 
482-2026, [email protected].
Timothy Cannon, U.S. Commercial Service, U.S. Embassy, Moscow, Tel: +7 
495 728 55 32, [email protected].

    Dated: Elnora Moye,
Trade Program Assistant.
[FR Doc. 2013-12792 Filed 5-29-13; 8:45 am]
BILLING CODE 3510-FP-P