V. Khristenko on the Russian pharmaceutical industry, medicine and biotechnology

Viktor Khristenko: "It is necessary to launch an innovation cycle now so that by 2020 the necessary number of implemented developments will appear"Minister of Industry and Trade of the Russian Federation Viktor Khristenko took part in a meeting of the Commission on Modernization and Technological Development of the Russian Economy under the President of the Russian Federation.

August 31, 2009
Published on the website of the Ministry of Industry and Trade of the Russian Federation.

Dear Dmitry Anatolyevich! Dear colleagues!

Biotechnologies have long been a point of growth for the advanced economies of the world. The world market of pharmaceutical and medical products in 2008 exceeded 1 trillion US dollars. At the same time, the TOP 15 pharmaceutical companies account for about 50% of the market, and the TOP 30 medical equipment manufacturers account for 80% of the market. The Russian pharmaceutical market, having a relatively small volume compared to developed countries (11th place in the world), occupies one of the leading places in terms of its annual growth rate – more than 12% per year. In terms of the total volume of the pharmaceutical market, we are already ahead of India ($ 9 billion) and comparable to China ($ 22 billion).  The financial and economic crisis and current global trends are putting a new imprint on the development of the industry in the world, which in turn opens up new opportunities for the development of the domestic industry. At the moment, the following economic trends are dominating:

1. The compression of the largest pharmaceutical markets (USA, EU, etc.) leads to an increase in the processes of mergers and acquisitions;
2. Migration of production and research facilities to China and India;
3. The evolution of companies' products towards generics and bioengineers.

When formulating a strategy for the development of the industry, it is necessary to rely on the forecast indicators of the development of health systems, science and the structure of morbidity. Structural and economic trends in the development of world markets are "superimposed" by changes in the "demand" for medical products. At the same time, the two main trends are the rapid "aging" of developed countries and the ever–increasing standard of living in "developing" countries.  Today, there are about 450 million people over 65 years of age in the world (about 7% of the world's population). By the twentieth year, this figure will double, and by the fiftieth it will grow more than three times.  As a result, pressure on healthcare systems will increase in developed countries and the structure of causes of death will change.

The evolution of the morbidity structure leads to a change in priorities in the development of new medical products. Recent advances in biotechnology will allow us to radically change approaches in medicine in the near future. There will be a shift in emphasis from mass treatment issues to the development of preventive drugs and personalized medicine. At the same time, given the current economic situation in our country, these trends are unlikely to become dominant in the coming decades.

The structure of the Russian market differs significantly from the markets of developed countries by the predominance of "branded" generics, and mainly of foreign production. At the same time, the main part of the product portfolios of domestic manufacturers are low-margin generic drugs. This limits the spending of Russian companies on research and development to 1-2% of revenue. The world leaders have about 20%. At the moment, imports occupy 80% in the Russian pharmaceutical market, with the share of public procurement – 35%. In the medical equipment market, the share of imports is 70%, and public procurement is 90%. Thus, the main determining factors in the Russian market are (a) imports, (b) demand from the state.

The Ministry of Industry and Trade, having begun preparations for the implementation of the Strategy of the pharmaceutical industry, conducted an analysis of public procurement of medicines in 2008. In our country, there is a significant potential for localization of generic drugs and drugs that will expire patent protection in the coming years. In this regard, it is necessary to pay special attention to the process of public procurement of medicines. First of all, we are talking about preventing the inclusion in the tender documentation of conditions and requirements that discriminate against domestic producers. At the same time, modern requirements for the quality and safety of the supplied products should be fixed at the state level. As for drugs not yet produced in Russia, the creation of a special target program will allow them to be developed and put into production.

Taking into account the current market structure and the identified problems, the Pharma 2020 Strategy was developed, which provides for several stages of implementation. At the first stage, it is necessary to make structural adjustments to the regulatory framework, focus the state order and accelerate the processes of localization of production and development of medicines.  In the future, at the second stage, the localization of the production of generics should reach the 50% level, in turn, the goal of the third stage is the import substitution of 50% of innovative drugs. It is important to note that it is necessary to launch the innovation cycle now so that by 2020 the necessary number of implemented developments will appear.

The work on the formation of a system of strategic documents and regulatory legal acts in the medical and pharmaceutical industries, taking into account the current trends in the development of these sectors, is in the final stage. These developments cover the horizon up to 2025, provide for a gradual transition to innovative rails and coordination between the demand from healthcare and the capabilities of Russian industry.

The medical products market has two features: (a) the extremely significant role of the state in terms of product consumption; and (b) the highest degree of state "regulation" of this market. In addition, the current situation on the Russian market of medical products is largely determined by historical factors. This is, first of all, the rigid system of regulation of the domestic market that we inherited – much more demanding, from the point of view of procedures, to the domestic manufacturer than to the importer. This was a logical consequence of an attempt to cover the market supply that fell out after the collapse of the USSR due to supplies from developed countries, and the accompanying liberalization of market access from outside. In addition, due to the scheme of production cooperation that has been functioning for years – the production of substances in the RSFSR, ready–made dosage forms - in the COMECON countries, in the early 90s we were left without modern factories.

The strategic development field described above forms the areas of activity for the Working Group "Medical Equipment and Pharmaceuticals". This:

1. development and production of new types of medical equipment and medical devices for treatment and diagnostics;

2. development and production of medicines to provide healthcare in the field of prevention, diagnosis and treatment of socially significant and rare diseases;

3. development of innovative nanotechnologies, biotechnologies, cellular and nuclear technologies in medicine.

Within the framework of the group's work, a list of strategic tasks has been formulated. They directly follow from the developed and approved program documents in the field of pharmaceuticals and medical equipment. It is proposed to approve these tasks today. On the one hand, each of the projects passing through the Working Group and the Commission can contribute to the solution of several tasks. On the other hand, in order to implement each of the management tasks, it is necessary to recruit a sufficient number of projects - a certain "critical" mass, in order to "break through" existing barriers and stimulate a breakthrough by accompanying their implementation.

A priori, a large number of projects in the healthcare system, as well as their diverse scale, dictate the fundamental openness and sensitivity of the Working Group to the emergence of new projects and initiatives. For this purpose, a register of projects has been created within the framework of the Working Group, which will be updated after a comprehensive discussion and approval of the relevant proposals.

The first systemic product of the Working Group's activities was a List of medicines of priority importance for the Russian healthcare system. Of the more than 3,000 drugs circulating on the Russian market, 650 are included in the list of vital and essential medicines. 248 of them are not produced on the territory of our country.

Based on mortality statistics, the Ministry of Health and Social Development has compiled a list of the 15 most important drugs needed by the healthcare system. And we believe that, from the point of view of national security and budget savings, their production should be located in Russia.

The projects submitted for consideration at today's meeting of the Commission already close 6 of the 15 designated positions and, after their successful completion, will allow the state to save up to 6.5 billion rubles annually.

The first project is the creation of the Generium research center. The center consists of production and scientific parts. As part of the production part of the project, the existing production facilities for three already registered drugs will be expanded, as well as the production of five more drugs in the late stages of development will be started. The company has already invested 600 million rubles in the project, and plans to invest another 2 billion rubles. own funds.  The volume of production of the developed drugs will meet all the needs of the country, and the total budget savings across the entire range after reaching full capacity can amount to 4.8 billion rubles per year.

Within the framework of the project, a production facility for 140 high-tech jobs will be created, as well as a research center, which will employ up to 150 specialists, including those invited from abroad and repatriates. The scientific center will allow solving any problems in the field of biotechnology, cell technology, chemistry and pharmacology. After the construction is completed, it is planned to develop and bring to market up to 8-10 new genetically engineered medicines annually.

The next slide shows the network schedule of the project. Generium does not require additional budget financing, it is a pure "business project".

The second project is called "Plasmapheresis". The aim of the project is to create a domestic high–tech production of medical equipment for cascade filtration of blood plasma and related technologies for the treatment of a wide range of diseases by purifying blood from pathogenic (harmful) substances.

To date, blood filtration methods have been implemented on the basis of extremely expensive technologies. This made their use inaccessible to the majority of the population, even in the most developed countries of the world. The implementation of the presented project will solve this problem by expanding the availability of this service.

As a result of the project, the production of high-tech medical equipment will be created in Russia.

According to the network schedule:

• In 2009-2010, design work will be carried out, product certification will be launched in early 2010, and construction of the Beta RPC will begin in mid–2010.
• The equipment will be put into operation as production is created and expanded (2010-2013).
• Production is expected to start in 2012. By the end of 2012, the capacity utilization should reach 60% of the planned.
• By the end of 2013, the project should reach full capacity.

The third project is the Himrar Center. The main goal of the project is import substitution. Annual savings can amount to 1.5 billion rubles from the state budget. These indicators should be achieved due to the lower cost of manufactured drugs compared to the original ones.

The average age of the center's staff is 37 years, while the main staff is young graduates of leading Russian universities (MSU, MIPT, MITHT), who managed to "consolidate" in applied domestic science. Many laboratories are run by our compatriots who have returned from abroad and gained experience in Western industrial science.

The fourth project is presented by Biocad companies. As a result of its implementation, a full cycle of production of medicines based on monoclonal antibodies will be created in Russia. Preparations based on monoclonal antibodies are the most modern and expensive class of medicines. To date, there is no technology for the production of such drugs in Russia. The drugs in question are highly effective for the treatment of the most common oncological diseases. The annual volume of public procurement for this group is more than 4.5 billion rubles.

The effect of import substitution achieved as a result of the project implementation will allow saving at least 1.5 billion rubles annually from the state budget, since the analogues being developed will be cheaper than the original drugs. In addition, the created scientific and production complex will be able to develop and introduce into production other medicines obtained by methods of biotechnology and genetic engineering, including innovative ones, in the shortest possible time.

The Biocad company has already created the research infrastructure necessary for work in the field of genetic engineering and cell biology. It is planned to create a pilot production and the entire complex of works on the development and study of the claimed drugs.

The fifth project was announced by FSUE Medradiopreparat of the FMBA of Russia. It is designed to provide diagnostic and therapeutic procedures performed in cancer centers in Russia with radiopharmaceutical products.

The project features – specific working conditions, geographical spread of medical centers across Russia, short shelf life of drugs. As a consequence – the need to build complex logistics schemes.

The implementation of such a program requires coordination of interaction between the institutions of the FMBA of Russia and the Rosatom State Corporation.

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