Pharma 2020: Deputy Minister's optimism

Implementation diagnostics
Published on the <url> websiteDenis Manturov, Deputy Minister of Industry and Trade of the Russian Federation, spoke about how the federal target program for the development of the pharmaceutical industry until 2020 (Federal Target Program "Pharma-2020") will develop the domestic pharmaceutical market and increase the life expectancy of citizens.

Interviewed by Sergey Artemov, BUSINESS GUIDE

– The main goal of the pharmaceutical industry development strategy until 2020?

– First of all, it is aimed at the development of modern medicines – from research to mass production. Usually this cycle lasts 12 years. We are currently developing appropriate mechanisms for venture financing, similar to foreign experience, which would help to make new promising products.

– What are these mechanisms?

– We will definitely tell you, but later. I just don't want to make blank shots while the approvals are going on. The main goal of Pharma 2020 is the transition of our industry to a new, innovative way of development. Therefore, the emphasis is on supporting the development of medicines with high risks and long deadlines. Of course, the program has sections dedicated to import substitution and personnel training.

– The ambitious project started from a low start: today, according to experts, up to 80% of the Russian drug market belongs to foreign players. And only 20% are Russian.

– In packages or money?

– In money.

– If we talk about packaging, the advantage is with Russian manufacturers. Zelenka and bandages are inexpensive, but they form the volume. And as for expensive drugs, unfortunately, foreign manufacturers still have the advantage. That is why we set the task at the initial stage, until 2020, to first go through the generics stage, replenish the volumes, and then switch to an innovative development path.

– Our country is turning into a country of ready-made dosage forms. Why is no one investing in the production of substances?

– Substance is a very expensive product today. And chemical substances are also an environmentally dirty product. Previously, the Soviet Union supplied substances throughout the socialist camp, but then the USSR collapsed, economic ties were disrupted. While we have been putting the economy in order for 15 years, building new relations, China and India have occupied our niche in the market of substances in Eastern Europe and some former Soviet republics. It must be admitted that Chinese and Indian chemical substances are cheaper, so it is unprofitable to produce them in Russia. It is more profitable to buy them abroad. And not always in Asia. For example, Pharmstandard orders substances for the production of arbidol in Italy. If you don't need a lot of intelligence for chemical generics of Chinese and Indian production, then biotechnology is a completely different level. Therefore, we consider the production of high-tech substances a priority. For example, the Commission for the modernization of the economy supported a new project on monoclonal antibodies with the participation of Generium.

– According to the Federal Target Program, about $1 billion is allocated for the creation and development of Russian medicines. But, for example, Pfizer spends so much on the development of only one new drug.

– It's a fiction. They don't spend that much money on development. In fact, they buy an almost ready-made drug on the side, without developing anything on their own. And at the same time, they can really pay $ 500-600 million and spend additional funds only on the promotion of this drug. Then I'll agree with you. Western companies have a wide range of investments – this includes venture financing, seed funds, there is a purchase of ready-made, in fact, developments at different stages: they can buy at the first phase of preclinical trials for several million. For example, the Russian company "HimRar" bought from the Swiss "Roche" the development of a drug for the treatment of AIDS for $ 5 million. At the same time, the investor will receive royalties from each package sold. There are many options for such cooperation. Today, when merging, some large corporations cannot "digest" some developments themselves and outsource them to specialized companies. Others, like Merck, change their strategy and focus only on certain diseases, respectively, they sell all other developments. Therefore, I would like to emphasize that $1 billion under the federal target program is allocated not only for the development of new drugs, but also for the processing of "weak" drugs. This is a change in delivery forms, combinatorics, a new indication, therapeutic action, etc. These new technologies can also be considered as part of the financing of the Federal Target Program, which, I hope, will bring additional income to Russian companies.

– And why $1 billion, and not $10 billion, for example?

– We proceeded from the realism of the plan. It is difficult to invest more effectively in such a short period of time. Secondly, we are limited in resources. We have about $2 billion to finance the industry until 2020.

–– Critics of the program are confused by very tight deadlines.

– What's so complicated there? Now we have 25% of the drug market, and by 2020 we will have 50% of medicines. Absolutely realistic plans.

– Our research base has been destroyed. The wear of equipment of some specialized research institutes is 80-90%.

– Only individual leading research institutes will remain, the rest will be merged or closed. Therefore, we are betting on universities that have a decent application base. They do it all over the world. And we have educational institutions separately, and research institutes separately. Why do many of our universities lose in the ranking to Western competitors? Because they have an implementation base. We intend to actively fill this gap and will finance the creation of "centers of excellence" on the basis of our educational institutions.

– Will there be enough highly qualified and motivated personnel for such centers?

– Do you know what we are doing now? We are buying up our talents who have gone to work abroad. And many are happy to go. A legislative framework is being prepared to create a preferential regime for the return of our leading specialists to their homeland. The process is gaining momentum. If you pay attention to new biotech companies in Russia, then there are people in key positions there who have extensive experience working in Western corporations. For example, most of the department heads at HIMRAR or Generium worked abroad and returned home. These are companies of a completely different level.

– For the third year, the media has been actively discussing the topic of pharmaceutical clusters. What does Russia need them for?

– Clusters are needed in order to professionally develop Russian pharmaceuticals. They will be created by combining leading specialized educational and research institutes. In our opinion, the best sites for creating clusters today are located in Moscow, St. Petersburg, Novosibirsk, Samara region, Tatarstan; with a few reservations - in Yekaterinburg, Yaroslavl and the Moscow region. The color of our science and modern laboratories are concentrated here. Production capacities are secondary today: it is cheaper to build a new modern plant than to redo the old one.

– In the West, large companies that finance scientific developments usually act as a "magnet" for the cluster. Are there any such people in Russia?

- of course. Today, all domestic pharma is financed by private entities. There are practically no state-owned companies left. Of the major manufacturers, only the Semashko Plant and Microgen can be distinguished. This year, about 900 million rubles are planned for R&D from the state budget. So we consider the creation of pharmaceutical clusters to be a very promising direction.

– What will the emphasis be on?

– Primarily on localization. We will do our best to help in the creation of production facilities with their gradual localization and transformation into a national product. At the same time, Russian manufacturers will have preferences when purchasing medicines and medical equipment. I would like to note that we welcome the attraction of foreign capital. If foreign investors want to build new facilities in our country, we will not interfere with them. However, we reserve the rights to certain conditions for foreign investors. Criteria are being developed for who should be considered a foreign investor in pharmaceuticals.

– Companies wishing to build new plants in the same special economic zone of St. Petersburg do not hide the fact that they hope for the help of the state. What can they expect?

– Mostly only for infrastructure. If we are talking about a special economic zone, then all the infrastructure there is provided by the SEZ administration. In addition, private companies can participate in R&D financing competitions. Another measure of state support concerns exporters: Russian manufacturers of medicines and medical equipment can count on subsidizing interest rates on loans. Such a program has been operating throughout the industry for more than five years. During this time, exporting enterprises received about 28 billion rubles, which gave an impetus to the development of exports by 1.5 trillion rubles. Last year, the first pharmaceutical companies joined it. Unfortunately, the volumes are still small: our pharmaceutical products are still in demand mainly in the near abroad.

– Now a lot of capacities are being built in Russia, including according to GMP standards. But the demand for Russian medicines in the domestic market and the CIS market is small – some factories, for example in Tyumen and Kaliningrad, are even idle. But the owners of idle plants say: the state contract, then received from the region, will pay off the funds invested in the construction of the plant a hundredfold.

– Do you mean the regional order for your company? In fact, this is a normal practice when a region, in fact, stimulates an enterprise located on its territory.

– Or maybe it's not so bad that foreigners are building modern factories in Russia, because they pay taxes, create jobs, instill new standards in the market?

– Are we against it? We will not close our market from foreign manufacturers. Please, but they should understand that foreign companies, unlike Russian ones, will not have preferences in public procurement. To get a 15% discount, you need to have the status of a national manufacturer.

– Last year, the Association of International Pharmaceutical Manufacturers announced that it intends to invest about $ 1 billion in the Russian market. How do you feel about these plans?

– Very realistic. If last year the Russian pharmaceutical market was estimated at 420 billion rubles, then investments in more than 7% of this volume are real. If earlier foreign manufacturers did not talk about this at all, now we see examples of how foreign manufacturers are starting to invest in Russian pharma.

– Then how will the state regulate the process of attracting investments?

– Everything will depend on which option the investor will stop at: he will limit himself only to packaging or buy a ready-made development abroad in order to implement it from the stage of substance to finished products here. The jurisdiction of the manufacturer is important to us.

– What is the share of the pharmaceutical market in the creation of GDP today?

– We have less than 1%. For comparison: The EU's GDP is €14.5 trillion and the pharmaceutical market is about 250 billion, that is, about 2%. That is, we have an incentive. And if we implement our program, we will reach the average European level by 2020. I would like to note that our pharmaceutical and medical equipment market is one of the fastest growing markets in the world. Over the past five years, only growth has been observed in Russia. Even the crisis has not changed the trend. For example, the US market is growing by 4-5% annually, and we are growing by at least 15%.

– The pharmaceutical market is growing. Yes, but the life expectancy of Russians is not growing. Maybe the state is spending money in the wrong place?

– That's not quite true. If in 2002 the Russian pharmaceutical market was $3 billion, then in 2010 it was $12 billion. The life expectancy of the average Russian in 2002 was 64 years, and in 2010 - 68. Thus, the market has grown four times, and life expectancy in Russia has increased by four years. Now, for comparison, let's take the USA: 2002 – $200 billion market, 2010 – $250 billion, life expectancy was 77 years in 2002, and 78 years in 2010.

In order to increase life expectancy, it is necessary to change the healthcare system, which, in fact, is what the state is doing today. But this is not an easy process, and it will take some time. First of all, it is necessary to change the system of prevention and diagnosis. This is what the second part of the Federal Target Program is aimed at: to improve diagnostics, we plan to increase the production of modern domestic medical equipment.

Portal "Eternal youth" http://vechnayamolodost.ru14.07.2010