Northwest becomes an outpost of biopharma development

"Expert North-West" No. 41/42-2015

The stage of global economic development is coming when venture investors find themselves at a crossroads, wondering where the vector of investment activity will turn in the coming years. It's hard to imagine that a new project that will change the picture of our world will be another social network or online store, no matter how innovative they may be. In this regard, the IT sphere and Internet technologies are no longer perceived by many financiers as the only breakthrough sphere capable of bringing windfall returns on invested venture capital. The world's leading minds have long been breaking spears around what will be the innovative industry that will replace the IT sector. There are enough contenders to become the next "big thing". This includes robotics, neurotechnology, and renewable energy.

Biotech is undoubtedly among the most likely contenders for the podium. This industry is currently experiencing an upswing. According to the forecasts of the consulting firm Frost & Sullivan, by 2020 the biotech market will grow by 10-12% per year and in five years will amount to about $ 600 billion. The current volume of the biotechnology market, according to their calculations, ranges around 270 billion dollars.

Biopharmaceuticals and biomedicine are considered to be the most attractive segment of the biotechnological market for investment. It is symbolic that Internet industry gurus are already investing here - Microsoft founder Bill Gates, Google founders Sergey Brin and Larry Page, Oracle Corp founder Larry Ellison, PayPal founder Peter Thiel. Over the past 20 years, the NYSE Arca Biotechnology index, which includes 30 leading biopharmaceutical companies, has grown 52.8 times. In addition, according to the information FierceBiotech.com In 2014, 79 IPOs of biotech companies totaling more than $6 billion were held.

This trend is also evident in our country. According to RVC research, the Russian pharmaceutical market annually demonstrates double-digit growth rates in monetary terms. According to the analytical agency DSM Group, in 2013 its volume increased by 14% and exceeded 1 trillion rubles ($ 32.8 billion). Biotechnological drugs account for 8.5%, or $2.8 billion. At the same time, in the global pharmaceutical market – over 20%. In the next five years, the Russian biopharmaceutical market is expected to grow faster, and by 2018 sales will increase by 80% and amount to 5.1 billion dollars, which is equivalent to 2% of the global market.

In this regard, the Northwest is just becoming an outpost of biopharma development. In particular, St. Petersburg and the Leningrad Region, where the North-Western Cluster of the medical, Pharmaceutical industry and Radiation Technologies has already been created and is actively developing on the basis of both regions, which represents the historically established localization of more than 200 organizations. Of these, 40 are research and 120 are production. The total number of employees in the cluster is more than 59 thousand people.

With such a base, the region gets a unique chance to become a center of attraction for both biopharmaceutical companies themselves and investors (and not only Russian, but to a greater extent international) who will be able to create a new "biopharm valley" in the St. Petersburg agglomeration. And here the key factor is the support of this process by the regional authorities through a comfortable investment policy in relation to relevant startups and new research and production projects.

Expert S-Z made this issue a topic of public discussion at the round table "Attracting investments in innovative projects in the field of medicine, biopharmaceuticals, health and active longevity" within the framework of the VIII St. Petersburg International Innovation Forum, which was held on October 7-9 at the Expoforum Convention and Exhibition Center.

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14.10.2015