Russian government spurs pharma growth

Earlier this week, Prime Minister Putin announced that the Russian government will invest nearly $4 billion to modernize the pharmaceutical industry in Russia. Of note:

Putin said he wanted 90 percent of Russia’s vital medicines and 50 percent of its medical equipment to be domestically produced by 2020.

Other reports suggest that ~80% of Russia’s current medicines are imported. 80%! It is this dependence on foreign imports, coupled with a desire to grow the industry internally, which has spurred the call by the government to intervene. If successful, this rapid swing in imports from 80% down to 10% would be an amazing achievement.

It is too early to know what this means for US/EU companies looking to expand into Russia. It is likely that pharma and biotechnology companies who want to do business in Russia will likely have to manufacture product within Russia. Thus, acquisitions of local Russian companies and facilities will be a critical route for market entry. In fact, acquisitions of local Russian companies have already been taking place for several years in an attempt to capture a portion of the substantial market for generic products in Russia. These trends bode well for companies in the CEE, for example, who are already familiar with the Russian pharmaceutical market. Whether US/EU companies, especially branded companies, can participate in this growth remains an open question.