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By Marie Daghlian

Prime Minister Vladimir Putin wants Russia’s drugs and devices to be made in Russia. To achieve that goal, he has promised $3.9 billion (122.9 billion rubles) in federal funding before 2020 to modernize the country’s pharmaceutical and medical industry.

In a Moscow Times report, he said:

These serious resources are to act as a sort of seed capital for the modernization of the industry, for quality breakthrough in innovation.

The funding will implement a development plan for the pharmaceutical industry unveiled earlier in the year, which calls for domestic industry’s share of total drug sales to increase to 50 percent by 2020, from about 20 percent today.

Putin also wants local production of drugs deemed vital to the country to increase to 90 percent. These essential drugs currently make up about 47 percent of the total pharmaceuticals market, according to The Moscow Times report.

Along with plans to shore up Russia’s domestic manufacturing and innovation capabilities, Putin cautioned global pharmaceutical companies and medical equipment makers that they will face increasing restrictions in Russia if they do not set up local production facilities and transfer technology.

During a visit to the private KhimRar research center in a suburb of Moscow, Putin warned that Russia’s dependence on foreign drugs and equipment would leave the country vulnerable to sudden price hikes and shortages.

The Russian government exerts control over the sector through import duties, subsidized purchases of drugs for people with low-incomes, and funding purchases of medical equipment for hospitals.

Russia’s market for pharmaceuticals is expected to grow more than twice as fast as the global industry. Several leading global drug companies have plans to invest in Russian manufacturing as a way to go around a tougher government stance on imported medicines.

Just a week ago, GlaxoSmithKline (NYSE:GSK) signed a deal with Moscow-based Binnopharm that will allow the Russian firm to make and market three of GSK’s vaccines in the domestic market. Other companies that recently announced plans to set up shop in Russia include Nycomed, Novo Nordisk (NYSE:NVS), AstraZeneca (NYSE:AZN), and Novartis (NYSE:NVO). Together those plans could set in motion more than $1 billion investment into Russian manufacturing.

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Source: Putin Strengthens Russian Drug Industry