Evalar: pharmaceutical business with a female face

Larisa Prokopyeva, the founder and permanent head of Evalar, on the eve of her own anniversary and the 30th anniversary of the company, talks about the formation of the pharmaceutical production and its development, about the use of digital technologies in sales channels and new market expansions.

- Larisa, you were at the very origin of the company. What was your motivation? How did the Evalar brand come about?

- Evalar did not appear immediately in today's well-known format. This was preceded by a considerable period of searching. In the late 1980s, when state orders disappeared, I was a senior researcher and a group leader at the Scientific and Production Association Altai (NPO Altai), a defence enterprise in Biysk. Almost the entire defence industry was then left without funding, but the government made orders to develop conversions, and we began to restructure into the civil sector. That’s how the first Soviet chewing gum ended up among our developments.

After some time, the management of NPO Altai decided to split into separate joint-stock companies working in different areas of conversion programs. By that time, I had already gained applied work experience and I organized a joint venture with the Polish company Pollena, headed by Ewa Dambrowska. That’s when the name Evalar appeared - we simply combined our names: Eva and Larisa. As a result, in the early 90s, we started producing cosmetics. Unfortunately, this project was not destined to exist for long: with the removal of obstacles for imports, it became obvious that the global giants of the beauty industry would occupy this niche of the Russian market.

But our company already had experience working in new economic conditions, and we decided to use our natural competitive advantage: Altai is a place known for its unique ecology, as well as great traditions in the use of medicinal herbs. Therefore, we decided to move towards pharmaceuticals, adapting the existing machines for the production of medicinal herbs briquettes, which were supplied to pharmacies and to the wholesale market. This was an example of a near-perfect conversion.

- What are the most significant stages of the company's development?

- I think our first success was the launch of the first industrial Altai Mumiyo of almost pharmaceutical quality on the market, flooded with artisanal samples. This product is the same age as the company. It traces its history fr om 1991, and today it occupies almost 80% of the market under the "Golden Mumiyo" brand with a patented purification technology. Then there was MCC Ankir B, a microcrystalline cellulose-based weight correction product, people were lining up for it because the drug was an affordable alternative to the product of a well-known American company. These initiatives actually brought Evalar fr om the level of a regional company to the position of a player on a national scale.

A major event and a real breakthrough both in production terms and in quality development was the transition in the early 2000s from rented space to its own production site. At the same time, we introduced our top brands to the market: Bilberry Forte, Ginkgo Biloba, Marsh Cinquefoil Tincture, Fitolax, and a little later - the famous Turbotrim. It was from this moment that the global growth of Evalar began.

In 2005, a representative office was opened in Moscow, which, along with the introduction of new strong brands and another production expansion, provided additional opportunities for gaining leadership positions in the market. We expanded our partnership channels, started advertising on television and already in 2006 officially became the No. 1 company in terms of sales of dietary supplements in Russia. We still hold this status.

In many ways, 2019 was a turning point for us, which confirmed a new vector of the company's development in recent years - an increase in the share of medicines in the total volume of products. The second production complex was launched, wh ere the production of its own medicines was localized - currently, there are already 27 trade names.

After the launch of the plant, we increased the production of medicines by 64%, and its share in the turnover structure exceeded 20%. At the same time, in 2020, it was the medicines portfolio that became one of the main growth drivers for the company - in 9 months of 2020, sales of our medicines, according to the research bureau PROXIMA RESEARCH, grew by 60%.

Of course, there were plenty of difficult moments: the crisis of non-payments, bankruptcy of pharmaceutical wholesalers, and dramatic turns in the regulation of alcohol-containing dietary supplements ... Each period of the company's development offered new challenges, and we found decent responses to them.

- How has the market changed over time, how has the company changed? Did Evalar follow the market or did it influence its development?

- We stood at the origins of the Russian market of dietary supplements and I can confidently say that the market has changed dramatically: from completely empty, wh ere absolutely everything was "swept away", to the current highly competitive state. But the dietary market in Russia is still very young, so we always strive to bring global trends to the Russian consumer. Many products that have received world recognition in the international market appear for the first time in Russia under the Evalar trademark.

The peculiarity of the dietary supplements market is its high sensitivity to innovations: in order to lead in this segment, it is necessary to present new products all the time, and that we have done and continue doing. For example, when in 2007-2008 there was a demand for weight loss product in the form of drainage drinks, we released Turbotrim drainage. This product caused a real furore - such weight loss drinks were never produced in Russia before. We strive to comply with the leading global trends both in terms of the use of new components in product composition and in terms of introducing effective forms of use. Vivid examples are curcumin in an easily digestible micellar form, Elder Berry Immunity in effervescent tablets, stable non-injectable Acetyl Glutathione capsules, vitamins for adults in the form of gummy berries, and much more. In my opinion, we mostly influenced the formation of the Russian dietary supplements market.

- How has your client changed over the years? Who is your client today?

- The consumer of our products has changed a lot - the audience buying dietary supplements has gotten significantly younger, and this has become especially noticeable in the last two years. So, according to the international research company Ipsos Group, until 2018 the group of buyers aged 45-54 dominated, in 2019 the consumption of dietary supplements was equally distributed across all age groups. And already in 2020, a younger group of consumers aged 25-34 began to prevail within a wider range from 20 to 44 years.

These are young people who are interested in a healthy lifestyle, find useful information on the Internet and are ready to regularly spend adequate money on their health. Such audience, as a rule, is not ready to go to a pharmacy but makes complex purchases through marketplaces.

- How has your work with consumers changed over the decades?

- If until recently more than 90% of dietary supplements were sold through pharmacies, in recent years new sales channels have been developing at a faster pace. First of all, these are online services, interest in which was further stimulated by quarantine and self-isolation. Internet sites actively make themselves known - from Apteka.ru to Wildberries, OZON, Goods and Yandex.Market. We are consistently expanding our presence here - today the share of sales in the digital segment has reached 10% of the total turnover.

Our goal is to ensure the availability of Evalar products at every possible point of consumer presence. Therefore, we have always worked towards diversification and our own sales channels. So, in 1998, postal delivery was opened directly from the factory - it still works and is in great demand. Ten years ago, we opened our own pharmacy chain Evalar in the cities with the highest consumption of dietary supplements, because we have many loyal customers-innovators who come to our chain for new products. New items first appear in our chain. Today the client likes to buy online - we have offered our own marketplace Fitomarket.

These are sales and communication with the consumer without intermediaries. But own sales channels are also a tool for developing marketing ideas related to the development of the assortment, as well as an effective tool for diversifying sales. For example, if in the pharmacy market we have the leading product Fitolax, a completely different assortment is purchased in non-pharmacy marketplaces, mainly novelties: vitamins, omega, collagen, minerals, etc.

- What is the current place of the company in the market? How did the events of 2020 affect the company's activities?

- Today Evalar is the leader of the Russian market of dietary supplements and also ranks 6th among Russian companies in terms of turnover in pharmacy retail (according to the marketing agency DSM-Group). But this leadership must be constantly reaffirmed, and this year it was especially not easy to do.

We needed maximum flexibility and responsiveness in response to a rapidly changing situation. For example, during the first wave, we launched the production of antiseptics. In order to do that the lines for the production of cosmetic products were converted in less than a week. Not so long ago, Evalar launched its own production of sterile masks, expanded its production capacity to produce medicines related to the immunity category.

Drugs that support and stimulate the immune system have become the driving force of the entire dietary supplements market in the last six months. The growth of this category across the entire market in 9 months was 59% (DSM), while our category of drugs for immunity increased by 395% (DSM). All dosages of vitamins C and D, as well as dietary supplements with zinc in the composition, are in special demand - in April-May, growth rates reached 816%. In addition, the sedentary lifestyle during the quarantine period led to peaks in demand for dietary supplements for weight correction by 73% in April and May, although the total final indicator of this category for 9 months, compared to the same period in 2019, changed insignificantly (+ 4%; DSM).

Changes in the demand structure due to the impact of the pandemic, access to digital platforms with a much younger audience and other factors have significantly influenced the assortment policy of the company. During this year, the company has already released more than 30 new products in the dietary supplements category. We have significantly updated and expanded our portfolio of vitamins of various forms of production, expanded the line of products for normalizing the functions of the gastrointestinal tract, continued to develop our premium line of "age management" products ANTI-AGE.

- What is the difference between Russian dietary supplements and Western alternatives, is there a difference in quality?

I believe the main difference is only in marketing. The Western pharmaceutical industry, which is quite mature today, uses marketing techniques in Russia that have already been tested in their own markets.

As far as quality and technology are concerned, there is absolutely no difference. Quality standards have no boundaries and are not divided into Russian and Western ones. The GMP standard, according to which we work, is global and uniform for all factories in the world. We work on the same, and in some cases, more modern equipment, we purchase raw materials from the same international suppliers. As a result, our product is completely identical to foreign counterparts, but the consumer gets it cheaper, sometimes several times cheaper.

- What principles did you build into the foundation of the company? What is the company's mission today?

- High quality and affordability are two principles that have remained unchanged for many years. It is important that the opportunity to take care of your health and the health of your family is available to as many people as possible. The quality of life should not be the prerogative of a narrow segment that can afford to buy expensive products. We have been and remain a people's company, well-known and chosen by several generations.