As part of the St. Petersburg Economic Forum (SPIEF) on Thursday Russian Economic Minister Elvira Nabiullina and St. Petersburg Governor Valentina Matvienko joined Novartis executives to lay the first brick of the company’s new manufacturing plant at a groundbreaking ceremony in the St. Petersburg special economic zone, Novo-Orlovskoe.
Novartis, which is expanding its investments in research and development as well as public health collaborations with the Russian government, said the deal deepens its commitment to becoming the leading healthcare partner in the Russian pharmaceutical industry in its support of government healthcare reform efforts. Company representatives noted that Novartis’ relationship with Russia allows it to expand its commercial presence for long-term growth in what they called “a key emerging market.”
Minister Nabiullina asserted that the deal highlighted the potential of Russia’s pharmaceutical market, saying, “Today the volume of Russia’s pharmaceutical market is about $22 billion and many estimates say consumption in this industry will grow.”
Novartis announced its $500 million commitment to Russia last December and signed Memorandum of Understanding (MoU) with Saint-Petersburg administration to localize manufacturing in the city.
It is expected to take a year to a year and a half before the facility is fully operational. Of the total $500 investment planned for a 5-year period, $150 million will be allotted for plant construction, and the rest of the funds will go towards R&D collaborations and public health initiatives. The plant is intended to manufacture both generic and brand name medicines. Novartis Chief Executive Director Joseph Jimenez said the company expects to produce 1.5 billion items a year, but will decide exactly which medicines will be produced at the plant later this summer.
Novartis is not the only company looking to expand the Russian pharmaceutical industry; there are currently nine other pharmaceutical plants in the design or construction stages in St. Petersburg alone. The first of these plants is expected to open within the next two years, and total investment in these projects will cost approximately $910 million.
This impressive growth is largely a result of regional efforts to develop St. Petersburg as a pharmaceutical cluster. Governor Matvienko explained that the government intends “to set up a full-fledged pharmaceutical cluster in two to three years” as part of the government-run “Pharma 20-20” program.
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