Building political tensions between Russia and the West are making it increasingly difficult for drugmakers in the region, prompting Germany's Fresenius to dump a partnership there. The announcement comes as other drug companies have reported their businesses are under pressure in the area.
Drugmakers have been buying out OTC companies left and right lately. But would that demand apply to a Russia-focused consumer company, considering the recent slow-down in Russian investment? Unipharm is about to find out.
Novartis is reportedly caught between EU sanctions on Russia and the dictates of Russian President Vladimir Putin, who has told Western drugmakers that he expects them to build plants and transfer technology as the price of admission to the growing market.
Russia is striving to produce domestically 50% of the drugs sold in the country, and, to do so, it's encouraging global manufacturers to buy, build or rent facilities there.
While geopolitical instability in Eastern Europe would appear to make Russia a risky bet, the size of the market and incoming targets on drug production mean the likes of Abbott Laboratories are still investing. For companies unwilling or unable to strike deals like Abbott's $495 million buyout of Veropharm, a new option is tipped to emerge: CMOs.
Diversified conglomerate Danaher emphasized organic growth rather than acquisitions at a recent investor meeting. That's despite much speculation on its M&A appetite following the Medtronic announcement that it will acquire Covidien.
Abbott Laboratories has said it plans to focus its branded generics business on a select group of rapidly expanding emerging markets. It appears Russia is one of them. The Illinois-based drugmaker will shell out up to $495 million to buy the fast-growing Russian generics maker VeroPharm from local billionaire Roman Avdeev.
Multinationals may lose some of their access to Russia's vaccines market thanks to pressure from state corporation Rosteh, with 11 billion rubles ($300 million) in state contracts at stake.
Last year, multinational drugmakers had their eyes on Russian biosimilars developer Biocad. But now, it's the country's own lead pharma company that will grab the St. Petersburg-based company.
While many Big Pharma players have only recently discovered the potential of doing business in Russia, India's generic drugmaker Ranbaxy Laboratories has been there for two decades. Ranbaxy has established itself by selling the low-price copycat drugs it has made its fortunes on, but is now looking at moving up the value chain.