UPDATED: Novartis faces technical issues on $150M plant in Russia

Construction of a $150 million plant that Novartis ($NVS) is building near St. Petersburg in Russia looks to have been delayed because of "technical reasons," just short of completion.

Citing a company announcement, Pharmaletter reported construction would be delayed for at least a year, but said the interruption may have to do more with the technicalities of politics than of engineering. Citing sources close to the Russian Ministry of Industry and Trade, the publication said the plant's construction was halted because of the sanctions imposed by the EU earlier this year in response to Russian involvement in Ukraine.

Asked for comment, a Novartis spokeswoman in the U.S. called the report inaccurate. "Novartis is not suspending construction of our manufacturing plant in St. Petersburg, Russia. While there have been technical changes to the project layout, we are on track to open the site in 2015." She said those changes would create a "slight delay."

Russian President Vladimir Putin

"We are committed to meeting this goal and to improving healthcare in Russia. This ongoing partnership with Russia enables us to expand our commercial presence in a key emerging market. The scientific development and public health efforts have been prioritized to focus on the most beneficial programs for the Russian people."

Novartis has said the plant would manufacture both branded drugs and generics and could produce about 1.5 billion units per year, a capacity that could be expanded if demand called for it. The facility was one piece of a $500 million commitment that CEO Joseph Jimenez has made in the emerging market. The Swiss drugmaker is making a wide range of investments, including R&D collaborations and public health alliances with Russian partners.

But Novartis needs local production to meet the the requirements set out by President Vladimir Putin, who has told western drugmakers that he expects them to build plants and transfer technology if they want to tap into Russia's growing pharma market. Novartis started work in 2011 on the facility, which is being built in a special economic zone, and it was slated to be completed this year.

- here's the Pharmaletter story (sub. req.)