News
New Roadmap for Western Pharma Firms Planning Inward Investment in Russia
Posted 07.09.2010
Recommendations for foreign pharmaceutical companies planning to invest or expand their operations in Russia were released today by the Moscow government relations team at global communications agency, Grayling.
These recommendations are presented in a Thinkpiece entitled “Implementation of the Pharma 2020 Strategy: Challenges from the Russian Producer Perspective and What It Means for Foreign Investors”. It is based on an analysis of 20 extended, in-depth interviews with key policy-makers, opinion leaders and influencers in the pharma industry in Russia supported by substantial desk research.
Stephen Lock, Global Co-Head of Public Affairs & Managing Director, Eurasia, said: “we are seeing many western pharma firms ‘rush to Russify’ in terms of localised packaging, manufacturing and R&D (although, in concrete terms, still a lot less of the latter). Ultimately, in our Thinkpiece, we wanted to explore the prospects of foreign pharma in light of the Russian government’s Pharma 2020 Strategy”.
Vladimir Melnikov, President of Grayling Russia, Head of Eurasia Strategic Consultancy at Grayling and co-author of the Thinkpiece says: “we don’t only give answers to foreign investors, but also we ask those questions that they should know how to answer if they want to be successful in the market, such as whether their company has considered how it is domiciled within the Russian Federation (as this affects which region/s receive its tax payments). Selected Governors now have powerful political leverage so, if a company invests in their region, this could help in securing Federal government endorsement of a company’s plans. Transferring payment of taxes to one of the Russian regions, where a governor would be more engaged in their activities, is just one issue foreign investors need to consider in-depth before they even think about announcing investment plans.”
Grayling’s research compares the differing visions of domestic manufacturers versus key international pharmaceutical producers across topics such as strategy and outlook and provides an interesting perspective on aspects such as the financing of innovative drugs; conditions for foreign players; future of small and medium pharma businesses in Russia and the role of the newly established Customs Union amongst others.
The main challenge for Russian pharma, especially on the innovative drug front, is the lack of guarantees for the sale of the end product either within the Russian reimbursed drugs’ market, or access to reliable, well-funded export markets in Russia’s ‘near-abroad’.
The overriding message arising from the research is that Russian producers and governmental experts assess prospects for foreign investment in Russia quite realistically and acknowledge the main hurdles for foreign investment with which western pharma firms struggle.
Additionally, advanced domestic producers understand that without meaningful cooperation with sizable foreign investment, implementation of the Pharma 2020 Strategy will bring little tangible results. For foreign investors it means that a dialogue with Russian producers is not only now possible but also mutually desirable.
To read the report please click here.
