While geopolitical instability in Eastern Europe would appear to make Russia a risky bet, the size of the market and incoming targets on drug production mean the likes of Abbott Laboratories ($ABT) are still investing. For companies unwilling or unable to strike deals like Abbott's $495 million buyout of Veropharm, a new option is tipped to emerge: CMOs.
|R-Pharm CEO Vasily Ignatiev|
Speaking at the Global Pharmaceutical Contract Manufacturing summit in London, Vasily Ignatiev, CEO of Russia's R-Pharm, predicted contract manufacturers will start to invest in Russia as the 2020 deadline for local drug production looms, Outsourcing-Pharma reports. Under a strategy adopted in 2009, Russia is aiming to have 50% of all drugs sold in the country--and 90% of those on its essential medicines list--produced within its borders.
The requirement encourages global drugmakers to buy, build or rent capacity in Russia. Companies choosing the latter option currently have a limited pool of GMP-compliant service providers from which to choose, but Ignatiev predicts competition will heat up as global CMOs set up sites in Russia. While Ignatiev is unaware of any major players with concrete plans to enter the country, he expects companies to commission "two or three pure international CMOs sites" within the next few years.
Some of the big manufacturing service providers, such as Lonza, run sales and support offices out of Russia, but production capacity operated by big name CMOs is rare. Ignatiev said the cost of running a plant in Russia has deterred CMOs so far, with companies finding emerging markets like China and India cheaper. But if the 2020 targets increase client demand for drugs produced in Russia, for Russia, the economics of adding capacity in the country could start to make sense.
- read Outsourcing-Pharma's article
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