Translated material
A Billion Promises
Pharmaceutical giants plan to accelerate the localization of production in Russia
At the forum in St. Petersburg, representatives of the largest foreign pharmaceutical companies confirmed their intention to build a number of new production facilities in our country. Experts believe that total investments in the Russian pharmaceutical market in the next few years could exceed $1 billion. However, foreigners have not yet specified when exactly they will begin implementing investment projects. Perhaps this is a trade secret, since foreign businessmen presented all the specifics (deadlines and estimates) to representatives of the Russian government in a strictly confidential environment. In addition to several officials, executives from AstraZeneca, Bayer Schering Pharma, Boehringer Ingelheim Pharma GmbH, GlaxoSmithKline, Novartis Group, Nycomed, Pfizer, Roche, Sanofi-Aventis, and Stada took part in the negotiations.The expected investments will not be able to radically change the situation of the domestic pharmaceutical industry, but will help solve short-term problems - for example, filling pharmacy shelves with quasi-domestic medicines within two to three years. The discussion about the strategic need to fill the Russian pharmaceutical market with local products by at least 50% (currently in price terms they are about 20%) has been going on for a long time. And so far there has not been any particular excitement regarding the construction of factories on Russian soil from foreign manufacturers. But the more realistic the promises of the Russian authorities become to tighten conditions for importers, including the introduction of protective customs duties, the more seriously Western manufacturers begin to think about the possibility of establishing their business in Russia. And those who already have production sites in our country pulled out new investment projects “from their sleeves” at the economic forum.
Thus, the Swiss company Nycomed announced its intention to invest 75 million euros by 2014 in the construction of a plant for the production of sterile liquid and solid dosage forms. On Friday, in the presence of the company's top management and officials, the foundation stone was laid for the building of a new workshop in the Yaroslavl industrial park "Novoselki". As reported, the enterprise will specialize in the production of Cardiomagnyl, Actovegin, Calcium D3-Nycomed and Warfarin. At the first stage, about 150 jobs will be created at the plant.
Another Swiss company - Novartis - in St. Petersburg confirmed its intention to build several production facilities (including insulin) in the North-West region. “Perhaps this will be in two or three years,” Daniel Vasella, executive director of Novartis, said earlier.
A month ago, the Danish Novo Nordisk announced its readiness to invest 80-100 million dollars in the construction of a plant in Russia. The Russian manufacturer OJSC Nizhpharm, owned by the German Stada Arzneimittel AG, is ready to expand production by investing 206 million rubles. into a project that will significantly expand the range of products. Currently, the company produces more than 80 types of drugs that are alternatives to similar imported drugs. The French company Sanofi-Aventis has already followed the path of Stada: in May of this year it received permission to acquire a controlling stake (55%) of Bioton Vostok CJSC (Oryol region) from the Polish insulin manufacturer Bioton SA, thus forming a new, already domestic company - "Sanofi-Aventis Vostok". It is known that from the beginning of June, the enterprise began re-equipment for the production of so-called analog and human insulins of the latest generation, including Lantus, Apidra, Insuman Basal, Insuman Rapid, and syringe pens for patients with diabetes. The start of production is scheduled for the fourth quarter of 2010, reaching full capacity by the end of 2011. The amount of investment in upgrading production is not disclosed.
Other foreign companies also own quite successful “assembly” enterprises in Russia. And they are all now sharply increasing production. Slovenian KRKA announces plans to triple the production capacity of its Moscow region plant, built in 2003, within three years. The Hungarian company Gedeon Richter, which owns a production and packaging enterprise near Moscow, in the spring increased its stake in Protek Group of Companies (which, after the IPO, is focusing on retail and its own production) from 4 to 5%.
Such global pharmaceutical giants as the British vaccine manufacturer GlaxoSmithKline and the American Pfizer express themselves much more streamlinedly. Last spring, the management of Pfizer's emerging pharmaceutical markets division issued a special statement saying that cooperation and investment in Russia would begin soon. But the same document mentions the need to make “greater use” of priority countries such as China, Mexico, Türkiye, Brazil and India.
The management of the GlaxoSmithKline concern states that negotiations with the Russian authorities are very active and that a strategic partnership agreement will be concluded in the near future. The amount in question has not yet been announced. But let us remember that GlaxoSmithKline has already “proven” itself in the eyes of the leadership of the domestic healthcare system. In 1997, the joint venture Smith Klein Beacham - Biomed LLC was organized, significantly expanded in 2001. This plant produces hepatitis vaccines.
But despite all the variety of proposals, the assistance offered to Russian pharma is still very modest, says David Melik-Guseinov, director of marketing research at Pharmexpert. “All organized production is the last stages from mixing some substances to packaging,” the expert said in an interview with a Vremya Novostei correspondent. - These are far from the most costly and far from the most profitable stages. The main rate of profit in pharmaceutical production is still formed far beyond the borders of Russia. Where scientific research goes."
According to Mr. Melik-Huseinov, it is futile for Russia to try to follow the same path as overpopulated China and India with huge domestic demand. Western companies must be forced to open scientific laboratories here, invest in development and tap into academic potential. “The policy, the slogan of which is “Localize at any cost,” will lead to the fact that in a few years we will receive a lot of low-liquidity and outdated assets,” a representative of Pharmexpert is sure.