Pharmaceuticals : Eyeing New Market, Novartis will invest $500 million in Russia

Novartis has signed an agreement to build a pharmaceutical manufacturing facility in St. Petersburg, Russia. The plant is part of a $500 million Novartis investment in infrastructure, health care initiatives, and R&D in Russia over the next five years.

The Swiss company says construction will begin this year on a facility to which it will transfer technology for both generic and innovative pharmaceuticals. “This collaboration shows our commitment to contributing to the ambitious health care goals of the Russian government,” Novartis CEO Joseph Jimenez says.

In addition to building the plant, Novartis says it will invest in research collaborations that may include out-licensing Novartis compounds to qualifying Russian companies and in-licensing compounds from Russian scientists and universities. Novartis has also committed to doubling its investment in drug development and clinical trials in Russia.

The announcement follows a pledge late last year by Russian Prime Minister Vladimir Putin of some $4 billion in federal funding for pharmaceutical industry development over the next 10 years. The government has set a goal for local industry to produce 90% of Russia’s “essential medicines”—about half of the country’s total pharmaceutical sales—by 2020.

According to Michael Kleinrock, director of market insights at IMS Health, Russia is a “high potential” emerging market for multinational drug companies as it follows the lead of China and India in developing its domestic drug industry. “They understand there is a linkage between the science and the benefit for health care,” Kleinrock says.