FEATURE & INTERVIEW
How does a dialysis company based in Germany manage to achieve success in Russia – a market so vast that it encompasses eleven time zones and in which conditions vary significantly from region to region? For Fresenius Medical Care, the answer is obvious: It takes a pioneering spirit, long-term commitment, intercultural expertise and the conviction that there is hardly any investment more worthwhile than the transfer of knowledge.
When Dr. Aleksey Myagkov was studying medicine in Moscow in the 1980s, a certain “SGD-8” attained fame in Soviet dialysis. You could even say it was infamous. Dr. Myagkov’s smile is slightly bitter as he utters the name again today, three decades later. “This abbreviation was not a code name or a secret agent along the lines of 007,” he explains, “but a dialysis machine built in the Soviet Union.” Dr. Myagkov describes the machine as “frustratingly robust”. It never worked well, but it always worked. It simply never broke down. Yet the authorities lacked the money to buy new, better dialysis machines. “The old equipment still works,” the administration would say.
Aleksey Myagkov tells us this anecdote with a slight shake of the head. He has experienced Perestroika, an attempted coup d’etat, the collapse of the Soviet Union as a superpower, wars and wild inflation. He himself also contributed to a few – albeit far less widely known – chapters of Russian history: In 1988, as head of the dialysis unit of Moscow’s Municipal Hospital № 7, he initiated the first USSR state order to be placed with Fresenius Medical Care. It was agreed that the Company would deliver several dozen machines. Finally, the tough old SGD-8 was being replaced, something that would have been inconceivable only a couple of years earlier. But all that is history. Today, he is the managing director of the Russian subsidiary of Fresenius Medical Care in Moscow. He is sitting in a conference room in the Company’s offices. His hair might be slightly grayer than it was then, but his blue eyes still have a youthful shine to them. Before him, on the conference table, lie a smartphone and a trendy iPad, witnesses to how times have changed since the SGD-8.
Fresenius Medical Care was one of the first foreign companies to found a joint venture in Russia in the days of the Soviet Union, in 1990, in cooperation with a hospital in Moscow. “We were real pioneers back then,” Myagkov says with a certain pride in his voice. Fresenius Medical Care has since acquired all shares in the subsidiary, which is now market leader in Russia in the field of dialysis products. The pioneering spirit has not flagged since that time. “In recent years, Russia’s society and economy have again changed fundamentally,” Myagkov says. “Even five years ago, it would have been completely unthinkable for a private company to open a dialysis clinic in Russia.” For more on this subject, see the interview with Dominik Wehner. Today, Fresenius Medical Care operates ten dialysis clinics treating more than 2,000 patients. In addition, the Company opened a production site in Russia in 2008. In the city of Izhevsk, the capital of the Udmurt Republic, approximately 1,100 kilometers east of Moscow, peritoneal dialysis solutions are manufactured for the Russian market.
“The Russian market” is a term that almost seems too modest in view of the dimensions involved. From west to east, Russia spans eleven time zones and some 9,000 kilometers. The country is heading for the future at breakneck speed – yet at the same time large areas of it have not even caught up with the present day. In Moscow, old men and women step onto rickety trolley buses crawling slowly through the Moscow traffic jams, while black limousines with flashing lights race past them on the central lane.
The Russian subsidiary of Fresenius Medical Care is slightly outside the center, and away from the traffic jams. Above the building entrance, the Company’s name is inscribed in Latin and Cyrillic letters. Dr. Aleksey Myagkov has been working here for 20 years. The Company has continued to grow and invest, even in periods of economic crisis and political instability. No personnel has been dismissed. Instead, the Company has penetrated new markets and expanded. “We have been able to continuously boost our market share in the past. This long-term investment in the location was also good for our reputation in Russian society,” Myagkov says today. “It created trust.”
Fresenius Medical Care has gradually expanded its business in Russia over the last three decades from a mere equipment distributor to a clinic operator and manufacturer. In Ulyanovsk, 700 kilometers east of Moscow, the first clinic for around 330 patients was built in 2008. In the same year, the Russian production site in Izhevsk started operations. The estimated quantity at the time of 600,000 bags of manufactured solution for peritoneal dialysis was raised to 900,000 in 2010. In future, the plan is to increase this capacity to more than three million units annually.
Of course, these success stories brought with them a number of challenges at first. “One problem is the public health budget, which is often limited,” Myagkov says. The situation is much as it was during the days of the notorious SGD-8, and does not differ from that in many other countries around the world. “Doctors and politicians want our products and clinics because they are known for their good quality,” Myagkov says. “But the question is always what resources are available to clinic management for purchasing products, or to regional administrations for reimbursing dialysis services in our clinics.” That’s a question which is all the more difficult to answer because Russia’s regional administrations and social systems still vary substantially in terms of their development and infrastructure. For example, there are still no consistent national reimbursement regulations for dialysis. In some provinces, the funds come from the national health insurance system, and in others from the federal government coffers. “That’s why we always adapt our business model to the local conditions,” Myagkov explains.