Novartis' ($NVS) new $150 million manufacturing plant outside St. Petersburg, Russia, will be built in two years, says Joseph Jimenez, CEO of the Swiss pharmaceuticals company. It is part of a $500 million push in the country, seen as one of the most promising markets in the world.
Novartis already has extensive operations in Russia, but in his interview with Dow Jones before the St. Petersburg International Economic Forum, Jimenez gave an impromptu primer on why companies like his must consider building more manufacturing plants in emerging markets.
Novartis' decision followed warnings by then-Prime Minister Vladimir Putin that drugmakers needed to build plants and transfer technology there or face restrictions on their imports. Putin was recently re-elected president. Jimenez tells Dow Jones that "the government has been very clear that over time [foreign companies] ... will face hurdles" in the form of tariffs if they don't instead manufacture there. Russia, like so many other countries that have not had a large pharmaceutical infrastructure, is looking at ways to reduce its dependence on imported drugs. Indonesia, for example, has made it difficult for drugmakers to expand exports there, encouraging it to manufacture instead.
According to information sent to FiercePharmaManufacturing, the new Novartis plant is expected to eventually produce both new drugs and generics. It will have a capacity of about 1.5 billion units per year and could be expanded if needed. Additionally, the company is making a wide range in investments in R&D collaborations and public health alliances with Russian partners. Those efforts will include more clinical trials there and out-licensing, in-licensing partnerships with Russian companies and academia and CRO partnerships.
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