The pioneer of the Russian market of dietary supplements Evalar was born in the bowels of the Soviet defense institute. The co-founder of the company, Larisa Prokopyeva, worked as a senior researcher at NPO Altai in Biysk, developing cold gas generators.
In the late 1980s a "conversion" began in the USSR - defense enterprises were ordered to move into the production of civilian products. Prokopyeva came up with an idea to produce chewing gum, using the NPO's already existing developments for the production of solid rocket fuel, which consists of a viscous base and a powdery oxidizer.
“We worked with such mixtures on rubbers, on different vinyl acetates. Chewing gum is the same, but instead of an oxidizing agent, it contains sugar. Technologically, chewing gum was the closest thing to what we were doing. The only question remained was how to get it approved in different departments and how to present it to the country,” recalls Mrs. Prokopyeva, the author of two dozen patents, including for this development.
According to Prokopyeva, at that time practically no one was producing chewing gum in the country, so the Altai product was in demand among the population. This continued until the collapse of the Soviet Union in the early 1990s. Then Russia opened its borders, a massive flow of imported goods streamed into the country, and interest in Altai products disappeared.
The production of chewing gum was just one of many areas of work for NPO Altai, which was left without defense orders. When privatization started in the country, employees of the enterprise, united in areas close to them, began to register joint-stock companies - about 70 in total. One of them was Evalar, headed by Larisa Prokopyeva.
Origin of the name.
In addition to experimenting with chewing gum, Larisa Prokopyeva tried to produce and sell cosmetics. The idea was suggested by Eva Dombrovska, the director of the Polish company of perfumery and cosmetics Pollena, who collaborated with Altai in 1980s. Actually, the name Evalar was formed by combining the names of the two founders of the company - Eva Dombrovska and Larisa Prokopyeva. Using Pollena technologies, Evalar produced lipsticks and perfumes on Altai's production lines, but these products could not compete with imported goods. In 1991, Dombrovska sold her share to Prokopyeva and returned to Poland.
Evalar began to produce dietary supplements, as several factors have fortunately coincided: Prokopieva already had experience in the food industry, the defense enterprise maintained the production capacity and laboratories, and the Altai Mountains served as a source of medicinal plants.
“Since we are residents of the Altai Territory, we used to make different tinctures in laboratories - rhodiola, calendula, etc. It was close to us, and we saw that the products were in demand. At that time there was a health trend amongst people, it was foolish not to take advantage of it. We bought raw materials fr om state farms that remained fr om Soviet times, and sometimes I myself, together with my employees, went to collect herbs. First of all, we were collecting badan leaves, and also chamomile and spanish needle. Then the raw materials were processed into briquettes and sold through pharmacies” says Prokopyeva.
The production of dietary supplements was organized in rented premises of Altai. But at the beginning of the 2000s, Evalar felt cramped within the walls of the scientific center, and the company started building its own plant.
According to DSM Group, Evalar has been the leader in pharmacy sales of dietary supplements in Russia for many years. In 2019, it occupied 17.1% of this market, the total volume of which is estimated by DSM at 63.4 billion rubles.
In an interview with Vedomosti& Larisa Prokopyeva talked about the dietary supplements market in the 1990s, how the production of supplements differs fr om the production of drugs and how the coronavirus affected consumer needs.
"Herbalife influenced the dietary supplements market in Russia"
- What was the market of dietary supplements like in Russia in the 1990s?
- It was completely empty, except for the network marketing companies. Whatever we brought to the market, everything attracted interest [among consumers]. For example, there were queues for our food supplement made of microcrystalline cellulose (used in dietary supplements for weight loss. - Vedomosti &). This additive was created in the Soviet years by scientists of the Academy of Sciences of Kyrgyzstan, then the Biysk Chemical Combine began to produce it. But the product turned out to be largely untapped because it was produced in powder form. In the 1990s we began to buy it, process it into tablets and sell it to the consumer in this form. The product became popular: weight loss supplements of this kind have never been produced in Russia before, and imported counterparts were expensive. We held out on this wave of demand for a year. Then other Russian companies began to copy our supplement. Now, by the way, competitors are working much faster - in six months they already present their analogues. Therefore, it is very important to be the first to enter the market.
After the experience when microcrystalline cellulose was copied, I realized that it was necessary to patent products, and Evalar began to actively engage in this.
Another aspect of that time was that advertising had a much stronger effect on people than it does now. We ran our first advertisement in the federal newspaper Trud (since even then we were selling products throughout the country). That really increased our sales - we barely coped with orders.
Larisa Prokopyeva, General Director of the Evalar holding company
In 1974 she graduated fr om Polzunov Altai State Technical University. Worked at the Altai Research Institute of Chemical Technologies, which in 1977 was transformed into the Scientific and Production Association Altai.
In 1984 she received her PhD in Engineering.
In 1991, together with Eva Dombrovska, she founded Evalar and became its CEO. In 2020, the city council of Biysk awarded Prokopyeva the title of "Honorary Citizen of the City of Biysk".
Larisa Prokopyeva has two children. Daughter Natalia is the chairman of the board of directors of Evalar. Son Alexander is a State Duma deputy fr om the United Russia party.
- Typical scene from the 1990s: the doorbell rings - Herbalife salesman is on the doorstep. How did you market your supplements? Did you have to go to apartments?
- No, because we immediately focused on promotion through pharmacies. In general, Herbalife influenced the development of the dietary supplements market in Russia. It is thanks to Herbalife that consumers have developed an interest in food additives.
- Since pharmacies were your main distribution channel, it was logical to create your own pharmacy chain. But you started opening pharmacies in Biysk in the 1990s, and then for a long time did not develop retail. What was the reason for this?
- I started to open pharmacies when there were problems in the country with cash and paying salaries. Back then there was barter, everyone was exchanging something. Salaries were given out either with vodka, or with crystal vases – whatever they could come up with. People then stood along the roads with this "salary" and tried to sell or exchange it for something useful - food, clothes, etc.
Here is how Evalar worked at that time: we gave our goods to distributors, and they paid for them with medicine. That is why I created a pharmacy chain: the sale of medicine received from distributors through pharmacies made it possible to receive cash and pay salaries to employees. We have always paid salaries only with money and on time.
When we opened pharmacies, we realized that having our own retail network is also good from a marketing point of view: there is always feedback from the consumer, you always know what interests them, what is popular on the market. But it is impossible to sell all products only through our own channels, so we also focus on partner pharmacies and development of franchising.
The company was founded in 1991. The main focus was the development and production of dietary supplements and medicines.
Evalar portfolio includes more than 300 names of drugs and dietary supplements of various forms of production. The company has its own plantations of herbs (about 1000 hectares of sown area) - this raw material is used in the production of supplements.
The company built the first production complex for the production of supplements in 2002, and the second, for the production of medicines, in 2019.
The company's turnover in 2019, according to its own data, amounted to 10 billion rubles.
- In 2009 you opened the first pharmacy in Moscow. Why did you decide to go beyond the borders of your native Altai Territory?
- In Moscow at that time there was a low representation of our products - not a single pharmacy took our full range. We needed points wh ere the consumer could buy everything he needs from our assortment. In addition, we have unusual pharmacies - we consult customers. In order for a consumer to buy a product, he needs to be told about it. To do this it is best to have your own pharmacy.
"Business does better wh ere it is more difficult"
- A year ago, Evalar opened a plant for the production of medicines. At the same time, the company had a license for pharmaceutical production back in the 1990s. Why then did you make a choice in favor of dietary supplements and why later decided to produce medicines?
- Dietary supplements are easier to register and faster to market than pharmaceuticals. For example, we have a drug based on cinquefoil that is registered as a drug. To bring it to market, we had to conduct clinical trials for five years. And it takes only 2-3 years to bring a food supplement to the market, sometimes faster.
On the other hand, producing only dietary supplements, the manufacturer bears certain risks: lawmakers periodically try to prohibit advertising of dietary supplements or restrict their sale. The production of drugs allows for business diversification. In addition, the life span of drugs is longer than that of dietary supplements. There is a certain craze for supplements: today one thing is in trend, tomorrow another.
In fact, we have been producing medicines for a long time, it is just before we did it in smaller volumes than now. When we realized that there was not enough capacity, and there was a need to build complex production schedules, that’s when we decided to build a new plant. Now we have 27 preparations in our portfolio - natural and synthetic drugs.
- What is more difficult to produce - medicines or dietary supplements?
- Technological processes are absolutely the same. But there is a lot of documentation in medicine production, it is imperative to comply with GMP standards (good manufacturing practice - norms of good manufacturing practice. - Vedomosti&). Although business does better wh ere it is more difficult: not everyone is ready to deal with the difficult.
Calls to lim it advertising of dietary supplements have been heard repeatedly. In 2009, the deputy from A Just Russia party Anton Belyakov introduced a bill to the State Duma, which stated that it was prohibited to advertise supplements in all media except specialized and printed publications. Belyakov's colleagues did not support this bill, but he tried to initiate its adoption in subsequent years: first - in the status of a deputy, then - a senator.
At the same time, in 2009, Belyakov introduced another bill to the State Duma, providing for a ban on the sale of dietary supplements outside of pharmacies. The bill was also not supported.
- What medicines are you currently working on and what niches do you consider promising?
- First of all, we focus on the production of OTC drugs, because we know well how to promote them - the experience of selling supplements helps a lot in this. Prescription drugs are a different market with their own marketing rules: you need to hire medical representatives who will promote the drugs among doctors.
We are trying to develop generics of popular drugs that still have few analogues on the market. For example, we are not interested in producing a drug with the active substance drotaverine (it is used to relieve pain and spasms - Vedomosti&) - several dozen pharmaceutical companies already sell it in Russia. But [antifungal] naftifine, a few years ago was produced by only two companies - OTCPharm and Vertex. Therefore, it made sense to enter the market with it. But then other Russian manufacturers also started producing it.
- Do you develop original supplements and preparations?
- Yes, but our innovations relate mainly to the form of production, dosage and composition. For example, abroad black elderberry (used in supplements to maintain immunity. - Vedomosti&) is sold in the form of syrup, but we made it in the form of an effervescent tablet. Another example: we were the first to register vitamin D3 in the highest dosage - 2000 IU (international units - Vedomosti &), in Russia no one else has such a dosage.
Same works with medicines. We are now registering a drug for insomnia with the active ingredient melatonin. Several manufacturers have such a medicine, but we have added another component to its composition, which enhances the properties of melatonin to normalize sleep.
- What share of your revenue comes from dietary supplements, what - from medicines?
- Supplements - 80%, medicines - 20%. Right now, sales of drugs in our country are growing faster than dietary supplements: by 50% in the first nine months of 2020 compared to the same period last year. The growth in supplements is only 6% over the same period.
- How do you see the optimal ratio of sales of dietary supplements and medicines?
- Hard to tell. I am satisfied with the current ratio. It’s a bad idea to produce only supplements because they have a short life span. Trends often change: today one thing is in fashion, tomorrow another. We must capture trends, bring from abroad and be the first to release supplements. Therefore, we constantly have to deal with new developments. Medicines have a longer life span - they can be sold for decades.
- You say: “Bring trends from abroad”. So, when you visit other countries, do you go to pharmacies to see what supplements are popular now?
- Definitely. I look and think: “Soon this trend will come to us. We need to start producing it very soon. " Several years ago, turmeric (herb from the ginger family – Vedomosti&) became popular in the United States - all local manufacturers began to produce dietary supplements based on it to strengthen the immune system. We also caught this trend and first released a turmeric supplement in Russia. In general, I can say that many global trends first come to the shelves of Russian pharmacies under the Evalar brand, but with one important feature - an improved formula, the developers work on this.
Originators and generics
Original, or innovative drugs are new drugs that have been under development for many years and require large investments. Scientists-developers analyze thousands of molecules, from which one is selected, on the basis of which a new medicine can be obtained. The drug goes through the stages of preclinical (on animals) and clinical (on humans) trials, then, based on the data obtained, the regulator (in Russia it is the Ministry of Health) makes a decision on registration. Only registered medicines can be sold. The first years after the market launch an innovative drug is under the patent protection, after that other manufacturers can release analogues of this drug – generics.
- Many Russian pharmaceutical companies buy substances in China. In the spring, due to the pandemic, the borders between the countries were closed. Wh ere do you buy substances and has your production suffered?
- We also buy substances in China, and also in Europe and India. We produce only 30% of medicines from our raw materials - natural herbal preparations.
There were, of course, minor supply disruptions. This was due to the fact that logistics began to take more time and became more expensive. If earlier we transported substances by sea, now - small batches by air. We did that in order to not create a deficit. Substances for the production of drugs, sales of which, according to our forecasts, should have increased, were purchased six months in advance. But these drugs (we are talking primarily about antiviral drugs) sold out very quickly, so we bought the next batch for a year in advance.
- Will you now look for new suppliers of substances, for example, in Russia?
- In the end, the price decides everything. We are thinking about producing more raw materials on our own, but we do not have any specific plans in this regard yet.
In December 2019, a new type of coronavirus infection, COVID-19, was discovered in China. In early 2020, the virus spread to other countries. To contain the increase in the incidence, many countries have introduced quarantines, and Russia has introduced a self-isolation regime, which implies a ban on leaving home unless absolutely necessary. Since the end of March, regions have begun to impose a widespread ban on the work of some enterprises, including restaurants, fitness centers, beauty salons. These restrictions were lifted only three months later.
"Dietary supplements consumers are getting younger"
- What products sales have grown during the pandemic?
- Due to the epidemic, the demand for vitamins and minerals has increased - especially among young people. In general, we see a trend towards rejuvenation of the dietary supplements’ consumer audience. It is partly due to the fact that diseases are getting younger, such as cardiovascular diseases. Therefore, people begin to consume omega acids at the age of 30.
Another reason is that it is now fashionable to lead a healthy lifestyle. And young people follow this trend, take various vitamins and minerals.
Other trends include an increase in sales of anti-aging products for those over 40, and the demand for antiviral drugs.
Pharmacy sales of dietary supplements in Russia grew in the first nine months of 2020 compared to the same period last year - up to RUB 53.9 billion, according to DSM Group data.
- Because of the trend for healthy lifestyle, fitness clubs and various studios are popular. Do you consider them to be your competitors?
- Of course not. On the contrary, we work with fitness clubs. We have a sports line that we supply just to fitness clubs, including our own, which we opened in Biysk in 2016.
- Why did you need to open your own fitness club? After all, this is a non-core business for you.
- We made it for ourselves, because there were no high-quality fitness clubs in our city. I go there myself. The club still hasn't paid off. Perhaps, this can be a big business only in big cities (the population of Biysk is 200,000 people - Vedomosti &). There are difficulties due to the pandemic: at first the club was closed [due to the self-isolation regime], and when we opened it, the clients visited less frequently- they are afraid of contracting the coronavirus.
- Still, what ages consume supplements more than others?
- Our main audience is 40+. But, as I said, young people are increasingly becoming our consumers.
- How many bottles of dietary supplements should a modern person have?
- It all depends on how much this person cares about his health and how many problems he has that he can solve with supplements. For example, 80% of the population of our country experiences a lack of vitamin D - all these people should take it. In general, everything is very individual: someone needs 10 bottles, and someone will need only one.