One month into the Russian military invasion of Ukraine, the international community has presented a predominantly united front in condemning its aggression by imposing crippling sanctions against various industries within the Russian economy. Some industries, particularly pharmaceuticals and medical devices, have continued operations in Russia at higher rates than many consumer-oriented industries such as retail and hospitality, citing humanitarian needs to provide essential medical supplies.
Some medical device companies such as 3M and Conformis have announced a complete suspension of all distribution and sales operations; most others, including leading companies Medtronic and Johnson & Johnson, have instead opted to denounce the invasion and focus on their philanthropic activities. While implementing sanctions on all medical device exports to Russia is highly unlikely, the Russian medical device sector has already been heavily impacted by other indirect means. For example, the Russian market is acutely susceptible to global supply chain disruptions due to its high reliance on imported medical equipment, which was estimated to exceed 73% as of 2018, according to the US Department of Commerce. In addition, the plummeting buying power of the Russian rouble, combined with reduced healthcare budgets, will undoubtedly lower device procurement rates, resulting in the inability of the country to keep up with domestic surgical demand.
Given that medical devices that do not fulfil an essential need are more impacted than those that do, GlobalData has estimated that the Russian aesthetic device market has been particularly hard-hit. This market includes aesthetic implants, aesthetic injectables, body contouring devices and laser resurfacing devices. Selling these product types has been more challenging given the economic sanctions in place, as applications for export licenses for these devices are now less likely to be approved. In particular, laser resurfacing devices exported from the US are expected to be completely rejected due to the dual-use capability of laser technology in these devices for Russian military operations. In addition, one of the leading companies in the aesthetic devices space, AbbVie, recently announced a temporary suspension of all its aesthetic product sales in Russia. This significant decision will particularly affect the injectables market, which AbbVie dominates with its highly popular Botox and Juvederm product lines.
Taken together, GlobalData estimates the Russian aesthetic device market to have contracted by 59% between last year and this year. Since it is unlikely for Russia to quickly achieve political stability, regain international trust, reform its healthcare system and rekindle business-friendly environments to recover from this costly conflict, let alone by the end of this year, GlobalData forecasts the market to take several years, if not a decade or more, before it returns to pre-invasion levels. As the nature of this conflict rapidly evolves, the Russian aesthetic device market ‒ and medical device market more broadly ‒ have never been more battered and bleaker in their growth since the Russian annexation of the Crimean Peninsula in 2014.