“We chose Veropharm because the company has modern production facilities and experience in promoting branded drugs,” LGLS CEO Yang Hung Jun said yesterday. Under a licensing agreement with LGLS, Veropharm will produce the innovative antibiotic Factive (active ingredient gemifloxacin). This drug against bronchitis and pneumonia will be available in packages of five and seven tablets. The retail price will be $15 and $22, respectively.

According to Veropharm CEO Anton Parkansky, Factive will appear on the Russian market only in early 2006. “Before that, the drug must undergo clinical trials in Russia,” Parkansky explained the delay. The parties are not disclosing details of the licensing agreement. The head of Veropharm only noted that the planned sales volume of Factive is $4 million per year.

However, some market participants doubted Veropharm’s capabilities. “They are unlikely to sell so much,” says Oleg Zeitlin, a member of the board of directors of the dealer company ROSTA. “The best-selling drug for treating respiratory diseases is sumamed, and it will be difficult for Veropharm to reorient consumers to Factive.” “Sumamed and its analogues account for a significant part of the market,” agrees an analyst from one of the marketing companies.

The Koreans will not participate in the promotion of Factive on the Russian market. “All over the world, we only control the production process of our drugs,” explained Yang Hung Jun’s strategy of his company. “We take on the promotion of the brand ourselves,” said Parkansky. The head of Veropharm declined to name the amount of investment. However, Zeitlin explained that “usually the costs of marketing promotion of a new pharmaceutical drug make up 30-35% of the sales volume.”

Veropharm's competitors took the news positively. Andrey Mladentsev, head of Nizhpharm (Nizhny Novgorod), said that his company also plans to sign a licensing agreement with one of the international operators. "This is a fundamentally new business model for our industry, and its implementation is promising," Nizhpharm's press service reports Mladentsev as saying. Vladimir Nesteruk, CEO of Otechestvennye Lekarstva, agrees with him. "They [Veropharm] are still pioneers, but the fact that Western manufacturers have started paying attention to Russian ones is simply great," Nesteruk believes. According to him, Otechestvennye Lekarstva is also holding similar negotiations with Western manufacturers, but "it is too early to talk about this."

Korean medicines from Veropharm