Russian police search Novartis, Teva in distribution probe

Perhaps the last police force you'd want knocking at your office door--Russian. But Novartis and Teva Pharmaceutical Industries found themselves in just that position yesterday, as Russian police officers searched their premises as part of a probe into distributors selling crucial drugs to the government, a Moscow newspaper reported.

Neither Novartis nor Teva is a target of that probe, so the situation probably sounds more grave in headline form than it is. And both companies were willing to confirm the searches. As Bloomberg reports, Teva spokeswoman Shir Altay said the company was asked to testify in a case against distributors that aren't company entities. Teva itself isn't facing charges. Police visited the company's Russian offices in search of evidence in that case.

Sources tell Reuters that the police are looking into pricing policies of a former distributor for several drugmakers. "The police came to Teva's office to examine the possibility that Teva employees who worked with the distributor would testify," the source said.

Meanwhile, police also searched Novartis' offices in Moscow, spokesman Eric Althoff said. The company was "one of several searched," Altoff told the news service, declining further comment on the ongoing investigation. Reuters says four drugmakers, including these two, were targeted by police for evidence-gathering. The other two are Russian drugmakers Valenta and Akrikhin, Reuters sources said.

The police visits come as Novartis and Teva are investing hundreds of millions of dollars in the Russian market. Drawn by predictions of fast growth in that country, Novartis has earmarked $500 million for Russian investment over the next 5 years, including a new plant in St. Petersburg. Teva is planning a $100 million plant in the country; as Reuters notes, the company plans to triple its sales there by 2015.

- read the Bloomberg story
- check out the news from Reuters