Russia mulls taking $300M in state vaccine contracts local

Many global vaccines players count on emerging markets for sales growth, but some of them may not be able to count on Russia for much longer. Multinationals may lose some of their access to the market thanks to pressure from state corporation Rosteh, with 11 billion rubles ($300 million) in state contracts at stake.

Russian Minister of Health Veronika Skvortsova

Rosteh, which has strong connections to the Russian government, is pushing to become the country's single supplier of vaccines for state needs, The Pharma Letter reports. The company, established in 2007 to promote the development, production and export of high-tech industrial products for the civil and defense sectors, says vaccine supply for the state is a national security issue that should be handled by a local producer.

The proposal is already gaining ground, garnering support from some members of government and the country's minister of health, Veronika Skvortsova. Foreign vaccinemakers, however, are not so enthused with the negative effect Rosteh's plan will have on competition, a rep from the Association of International Pharmaceutical Manufacturers in Russia told the publication.

Russia has never been an easy landscape for drugmakers to operate in. The government has been pushing to localize manufacturing, forcing companies to build up if they want to supply the market. The country also requires local clinical data in order to satisfy regulatory requirements. In an added complication, Russia is counted among countries expected to introduce price controls like those that have seriously dented some companies' top lines in India.

But those challenges haven't scared vaccinemakers away. GlaxoSmithKline's ($GSK) Russian arm includes a venture to produce vaccines against influenza and hep A and B, and the company says it plans to expand production there in accordance with the country's national vaccination calendar. Merck ($MRK) counts Russia as one of 10 prioritized markets for pharma and vaccine revenue on which it plans to increase its focus, it said in its annual report. And Abbott ($ABT) tried last April to buy out Russian company Petrovax Pharm, though Russia turned the deal down, citing national security as a reason to keep local control of vaccine production.

Russia is not the only company moving toward producing more of its own vaccines. Mexico and South Africa recently said at the World Health Assembly that they believe expanding local manufacturing will drive down costs and make their supply more reliable, SciDev.Net reports.

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