Modernization of the Russian pharmaceutical industry: abroad will help us!
Investment boom
International companies are taking over the development of Russian pharmaceuticals and medicine
Maria Golubkova, Rossiyskaya Gazeta, special issue "Pharmaceuticals", 04.07.2011
The pharmaceutical industry of Russia is entering a phase of active development. In cooperation with the world's leading manufacturers, domestic companies, research and educational institutions intend to promote the industry in several directions at once - from joint productions to the creation of R&D centers and educational programs.
In fact, the XV St. Petersburg International Economic Forum can be considered a new start of the Russian pharmaceutical industry. Russian President Dmitry Medvedev, in his report on the assessment of the current state of the Russian economy, noted pharmaceuticals as priority areas of development.
"Projects in priority areas worth hundreds of millions of dollars have been launched in recent months alone," he stressed. – Almost all major pharmaceutical and energy companies have come to Russia as strategic investors.
The transactions and agreements of intent concluded within the framework of the SPIEF became a practical reinforcement of the stated thesis. Two years ago, Dmitry Medvedev said that the domestic pharmaceutical industry as a whole is not ready for serious competition with foreign manufacturers and cannot yet produce highly effective modern medicines. Now three new companies have been added to the pharmaceutical cluster of St. Petersburg, which is now being actively formed, in addition to the already existing nine - the number of residents is constantly increasing. The total volume of domestic and foreign investments in the pharmaceutical industry of St. Petersburg has already exceeded 25 billion rubles.
According to the Executive Director of the Association of International Pharmaceutical Manufacturers (AIPM) Vladimir Shipkov, cooperation with world industry leaders will help to use the experience already gained and "not reinvent the wheel", it will also give a delayed economic effect in the form of technology transfer, attracting highly qualified specialists to work in Russia, creating world–class jobs, and ultimately - a general increase in the level of Russian pharmaceuticals, and consequently, Russian healthcare in general.
– Often domestic medicines are much cheaper than imported ones, but they hardly always meet modern requirements of efficiency, quality and safety, – explains Vladimir Shipkov. – International companies will help make our products more competitive from a global point of view.
In fact, the first event of the SPIEF was the ceremony of laying the foundation stone of the new Novartis plant. The initial agreements on the formation of the St. Petersburg pharmaceutical cluster were reached a year ago also within the framework of the economic forum, and now they are beginning to take real shape.
According to Joseph Jimenez, Chief Executive Officer of Novartis International AG, the pharmaceutical plant will be built in a special economic zone at the Novoorlovskaya site (Primorsky District of St. Petersburg). After the planned completion of construction in 2014 and obtaining all necessary permits, the plant will produce approximately 1.5 billion units per year and will become a platform for the introduction of advanced pharmaceutical technologies in Russia. The company will produce both affordable high-quality generics and patented innovative drugs. When reaching full production capacity, the plant will provide about 350 jobs for highly qualified Russian specialists.
The new plant is part of the Novartis investment program in Russia with a total volume of $ 500 million, designed for a five–year period. The program, which was announced in December 2010 as part of the signing of a Memorandum of Understanding with the administration of St. Petersburg, includes comprehensive cooperation aimed at solving three tasks: organizing local production, cooperation in the research field and improving the healthcare system in Russia.
The American company Pfizer in partnership with the Russian "Biocad", which is already a resident of the pharmaceutical cluster, St. Petersburg and the St. Petersburg State Chemical and Pharmaceutical Academy intends to launch in the city on the Neva a program of advanced training and professional development for students and specialists of the pharmaceutical industry "MORE THAN EDUCATION" - part of the overall strategy "MORE, THAN." Cooperation between St. Petersburg and Pfizer provides for the organization of special trainings, educational seminars, internships in laboratories and at the production sites of Pfizer and Biocad.
As explained by Ahmet Goksun, regional president of the Fast-growing Markets, Europe and India division of Pfizer, "for the successful work of the pharmaceutical industry, specialists of the highest professional level are needed who are well-versed in the modern business environment. The "MORE THAN EDUCATION" program is designed to help ensure the continuous development of talented specialists, and it is no coincidence that it starts in St. Petersburg, a city known as a center for high-quality education and the development of innovative biopharmaceutical science and industry. Being one of a series of projects implemented by our company in Russia, the "MORE THAN EDUCATION" program is part of Pfizer's investment strategy, called "MORE THAN". Its concept is to create benefits and favorable changes for Russians by implementing progressive partnership projects aimed at modernizing the pharmaceutical industry, developing medical innovations and healthcare. This activity goes beyond solving only business problems, it is aimed at improving the health and quality of life of millions of people."
The Swedish-British pharmaceutical company AstraZeneca, which also signed an agreement of intent with St. Petersburg, is even more serious. Over the next five years, it intends to invest $ 1.2 billion in Russia. This amount includes investments in R&D (Research and development, that is, research and development) and production, investments in employee training and development and marketing opportunities, as well as in increasing the number of research institutions engaged in clinical research in the country. The main direction of cooperation with St. Petersburg will be R&D in the field of biomedicine. By the end of 2011, AstraZeneca plans to create a center for bioinformatics and prognostic medicine in St. Petersburg. And, according to the agreement signed with St. Petersburg, the parties will create a joint expert group on the basis of the new R&D center of the company. It is planned to involve the leading research and educational centers of the city in the implementation of the project.
– At the first stage, about 30 people will work in our new R&D center, - David Brennan, Executive Director and Chairman of the Board of AstraZeneca, told RG. – We intend to expand in the future. The interest of the new center will focus on the development of bioinformatics, data analysis methods and software and system support for more accurate prediction of the safety and effectiveness of innovative medicines.
MSD Pharmaceuticals became the next partner of St. Petersburg in the pharmaceutical industry during the forum. The Joint memorandum of intent is aimed at "developing, supporting and improving cooperation in the field of pharmaceuticals both in relation to basic research and in relation to clinical trials." At the beginning of this year, the American company Merck (MSD – trade name) granted St. Petersburg State University the right to use the curriculum for the development of pharmacological medicines for the training of students and employees. Now, within the framework of the memorandum, it is planned to expand the number of institutions with access to this program, introduce two accredited programs of permanent medical education, as well as develop a program for providing grants and awards to specialists in the field of pharmacy.
Janssen Pharmaceuticals NV and Johnson & Johnson, which plan to cooperate with the Skolkovo Foundation, also intend to implement educational programs in Russia. The main areas of cooperation will be venture investment in Russian start-up companies engaged in research in the field of pharmaceuticals, and the organization of a Center for High Technology and Continuing Medical Education.
The main objective of this project is to stimulate innovative processes in the field of research and development and prepare Russian companies to work effectively in highly competitive conditions on the world market
Janssen Pharmaceuticals NV intends to cooperate with the Skolkovo Foundation "in order to transfer experience and knowledge, as well as technological know-how at every stage of the process of transforming Russian scientific ideas and developments into products and solutions with the potential for international commercialization."
We hope that this will help accelerate reforms in the Russian healthcare sector and make innovative medical developments more accessible to Russian patients," said Naira Adamyan, Head of the Janssen Pharmaceuticals NV representative office in Russia.
Johnson & Johnson plans to use its experience in organizing the Kazan Educational Center for High Medical Technologies, opened in 2008, when creating the Center for High Technologies and Continuing Medical Education at the Skolkovo Innovation Center.
– The provision of high-tech medical care to the population of Russia is possible only if there are highly qualified medical specialists. We believe that the creation of educational centers in the future will allow the state to better address the issues of modernization of the healthcare system in Russia," said Johnson & Johnson CEO Arman Voskerchyan.
Note: The Janssen Group of Companies is a pharmaceutical division of Johnson & Johnson Corporation. Janssen is looking for solutions to such serious medical problems as oncology (multiple myeloma and prostate cancer), psychiatry (schizophrenia, Alzheimer's disease), infectious diseases (HIV/AIDS, hepatitis C and tuberculosis), immunology (psoriasis), cardiovascular diseases and metabolic disorders (diabetes).
Meanwhile, Russia does not intend to focus only on pharmaceutical products in the fight against such serious threats. As part of the same SPIEF, a memorandum of intent was signed on the construction of the first proton radiation therapy center in Russia in St. Petersburg. There are only about 20 similar medical institutions in the world, and therefore in the Northern capital, patients will be able to receive unique high-tech care not only from Russia, but also from the countries of Northern Europe. Currently, the design of the medical center has already begun, negotiations are underway on the purchase of equipment. The project will be implemented on the principles of public-private partnership, the volume of investments will amount to $ 150 million. In addition, according to the Governor of St. Petersburg Valentina Matvienko, the city is negotiating the creation of a new cluster of nuclear medicine.
Serious attention to Russian pharmaceuticals and healthcare as a branch of the economy was confirmed by the participants of the session "Russian healthcare on the threshold of an investment boom", which was also held within the framework of the SPIEF. In 2010, the state and citizens collectively spent more than 2.3 trillion rubles on healthcare. State investments in the modernization of the industry planned for the next two years (460 billion rubles from the federal budget and almost 200 billion rubles from the regional budget) are a significant factor stimulating investment activity. Meanwhile, at present, the healthcare sector in Russia – in a broad sense – is practically not capitalized, although Western experience shows that there are mechanisms for this: from the creation of concessions and management companies to the construction of medical institutions "in the open field".
One of the obstacles to the implementation of such projects may be the imperfection of the regulatory framework in Russia, but these issues need to be addressed in parallel with the implementation of practical tasks. At the same time, the way to increase the volume of those services that are currently lacking – effective medicines, the number of doctors and medical institutions – is necessary, but insufficient.
– Investments in structural and institutional changes are needed, says Lev Yakobson, first Vice–rector of the National Research University – Higher School of Economics. - It is hopeless to strive to catch up with the United States or Europe in terms of health care costs, for this they must grow 3.5-4 times faster than GDP, and only in 2020 we will get what they have now. Therefore, the answer should be asymmetric: it is necessary to develop not only medicine, but also to cultivate a healthy lifestyle, physical education, and solve environmental issues.
The problem of Russian healthcare, in his opinion, is also that it is focused on the "old and small". The active and able–bodied part of the country's population practically does not turn to doctors, and the high mortality rate among this category of citizens is primarily not a medical, but a social problem. Together, all these factors lead to the fact that Russians prefer to be treated independently, without turning to specialists. Two-thirds of all citizens' health care expenses are "pill" expenses, that is, the purchase of medicines. While the share of such expenditures in the state is less than one third – about 26 percent of the total amount of funds.
According to the Governor of the Yaroslavl region Sergey Vakhrukov, in such conditions, the state's efforts to form pharmaceutical clusters are clearly insufficient.
– We have learned how to allocate sites for the construction of factories, but we do not know how to attract international experience in practical medicine, – he believes – the new financing system "money is for the patient" remains a declaration. It is necessary to propose a clear system of interaction with business and determine what companies need from us (the authorities. – "RG") to get the effect.
According to sociological research, Russians are still confident that they have the right to the best medical care and treatment in the world, although the myth of the unsurpassability of our healthcare has long been dispelled. Modernization of domestic medicine and pharmacology, the principles of which were formed at the highest state level, will require efforts in a variety of areas, full interaction of government and business, both in financial and ethical matters.
CommentsHakan Bjorklund, Chief Executive Officer, Nycomed:
– Some consider Russia to be a developing country, but advanced science and highly qualified personnel are atypical for developing countries. In my opinion, Russia today is a big country with a fast–growing economy and ongoing fundamental changes.
The Russian pharmaceutical sector is currently in a transition period, in which the predominance of drug imports is inevitable, while the national pharmaceutical industry is developing on the basis of high international standards.
It will take several more years before the production facilities that are currently being created in Russia by international pharmaceutical companies are ready, but already now such a regulatory environment is important, which would not only facilitate direct investment in production and scientific research, but also allow for the rapid registration and market launch of medicines that will be produced in Russia.
As for Nikomed, our company is not only successfully building a large pharmaceutical plant in Yaroslavl, but also decided to create an Innovation Center in Russia for research and scientific development.
Joseph Jimenez, Chief Executive Officer, Novartis International AG:
– Investments in the Russian healthcare system have good prospects not only because the market has recently shown stable and steady growth, but also because one of the main state priorities today is to improve the quality and accessibility of medical services for the population. In addition, many regions of Russia, for example, St. Petersburg, Yaroslavl, Kaluga and others, create favorable conditions for the inflow of foreign capital, which, of course, inspires confidence in international business when deciding on the transfer of technologies and the organization of production in Russia.
David Brennan, Chief Executive Officer, AstraZeneca:
– Russia for AstraZeneca is a dynamically growing market, increasing investments in which we will be able to provide Russian patients with high–quality innovative medicines. We are pleased to contribute to the innovative development of the pharmaceutical industry in Russia, using our production and infrastructure capabilities, as well as expanding our partnership in the field of science and education.
Ivan Blanarik, CEO, Boehringer Ingelheim:
– Speaking about the development of Russian healthcare, I want to say that this is a complex process that includes a wide range of activities: these are educational programs, R&D, clinical research, and localization of production.
The main focus of attention is now focused on localization – this is not surprising, since localization is the "tip of the iceberg" that is best visible and that can be "touched". I think that in the coming years, most foreign companies will establish local production in Russia or enter into partnership agreements with Russian manufacturers. This will happen even though investments in the creation of such enterprises may not pay off in the short term, and the legislative framework for such projects still requires improvements.
Russia is an interesting market with great potential, and such investments will be of a strategic nature. To make sure of this, it is enough to briefly study investment research and recommendations. But even without them, the facts speak for themselves – the need for high-quality drugs and effective methods of treatment is growing every year.
Here, by the way, I want to agree with Lev Yakobson's opinion – medicines alone are clearly not enough to solve the problem of improving the health of citizens. The root of the problem lies, rather, in social traditions, which, at the moment, are by no means "healthy" in nature. In order to preserve people's health, a large and long-term program is needed to change attitudes to this issue. It is necessary to form the intention and determination to engage in your health, to lead a healthy lifestyle. Compared to localization issues, this is a much longer and more extensive story, in which specialists from many fields should be involved. It is gratifying to observe that some progress has already been made recently.
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