Novartis Invests Heavily in the Growing Russian Healthcare Market

| About: Novartis AG (NVS)

By Marie Daghlian

Novartis (NYSE:NVS) is investing $500 million in Russian pharmaceutical infrastructure, R&D partnerships, and public health development over the next five years as it aims to strengthen its position there. Its investment comes at a time when Russian Prime Minister Vladimir Putin has warned multinational drug companies that they will face severe restrictions if they fail to develop local production.

Novartis’ commitment to Russia came with the signing of a Memorandum of Understanding with the city of St. Petersburg. Novartis aims to become Russia’s leading healthcare partner in supporting government healthcare reform.

“Novartis is making a strategic investment in Russia for long term growth,” says Joseph Jimenez, CEO of Novartis. “The ongoing partnership with Russia enables us to expand our commercial presence in a key emerging market.”

The St. Petersburg facility will be a state-of-the-art pharmaceutical manufacturing plant and will enable transfer of cutting-edge technologies and skills to the Russian Federation. The new facility is expected to manufacture both high-quality branded generics, as well as pharmaceuticals that will be marketed in Russia and other parts of the world. Construction is scheduled to start in 2011.

Novartis will also expand its investments in R&D and public health collaborations in alliance with the Russian government. Collaborations may include such efforts as out-licensing of Novartis compounds to Russian companies with proven scientific capabilities, in-licensing, scouting for promising drug candidates from Russian scientists and universities, and modeling and simulation activities for clinical trials. Novartis also has committed to double its investments in drug development in clinical trials in Russia and expects to enroll approximately 4,000 individuals by the year 2013.

Russia is a fast growing market, with high unmet medical needs, and a government that is increasing its healthcare investment and focus on both local and non-local healthcare market collaborators. Novartis is working with the government in implementing its strategy to develop the local pharmaceutical industry and enhance its healthcare system.