Global Drug Makers to Manufacture in Russia

Posted on by

Feb. 9 – More global drug makers will soon announce plans to establish a local presence in Russia in response to government measures to boost its domestic sector and cut dependence on imports, industry group Association of International Pharmaceutical Manufacturers (AIPM) said on Tuesday.

AIPM, whose members account for 80 percent of all global drug sales, had earlier promised US$1 billion in investments in Russian manufacturing, packaging and research and development.

“We have confirmed our statements by realization of concrete projects. I assure you that other companies are close to announcing their plans to support local production,” Vladimir Shipkov, head of AIPM, said at a news briefing.

Novartis, with 6.6 percent of the Russian market share, said in December it would invest US$500 million in Russian manufacturing over the next five years, following other global firms such as Nycomed (market share 4.1 percent), which is working on a US$93 million API-making facility, Novo Nordisk, which plans a US$100 million insulin plant there, and Sanofi-Aventis (5.6 percent).

Novartis will expand its research and development activities in Russia and collaborate with the government on public health initiatives. The company didn’t give a dollar figure for R&D investment, but said it will work with both academia and private businesses and pledged to double its spending on clinical trials there. Both in and out-licensing could be part of the picture, the company said.

Israel’s Teva Pharmaceutical Industries (2.9 percent of market share) announced last summer its plan to invest up to US$100 million in a drug production plant in Russia as it aims to more than triple Russian sales by 2015.

GlaxoSmithKline will also pour cash into the emerging Russian market. It struck a deal last year to invest in Russia’s Binnopharm to produce cervical cancer, rotavirus and pneumococcal vaccines for the domestic market.

The Russian government signaled in 2009 it would give more benefits to local producers as it moves to improve healthcare and modernize the pharmaceutical sector, prompting many international drug makers to explore the idea of establishing local manufacturing there.

Domestic pharmaceutical manufacturers in Russia largely focus on low-cost drugs, while the foreign players dominate the expensive drugs segment.

This is evident from the fact that locally produced drugs in the country account for about 22 percent of the market value while about 70 percent of the market volume.

The state-owned segment accounts for about 30 percent of the Russian pharmaceutical market value.

According to Quest Solution forecast, the country market is expected to grow at a CAGR of about 14 percent for next three years.

The size of Russian pharmaceutical market was estimated at about US$22 billion as of Dec 2009. The country has a per capita pharmaceutical spending of about US$130.

Leave a Reply

Your email address will not be published. Required fields are marked *

Dezan Shira & Associates

Meet the firm behind our content. Dezan Shira & Associates have been servicing foreign investors in China, India and the ASEAN region since 1992. Click here to visit their professional services website and discover how they can help your business succeed in Asia.

Never Miss an Update

Subscribe to gain even better insights into doing business in Russia. Subscribing also lets you to take full advantage of all our website features including customizable searches, favorite, wish list and gift functions and access to otherwise restricted content.

Scroll to top