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Open Dialogue: A New Meeting Format of Russian Pharmaceutical Manufacturers and the Media

25 March 2013

March 21, 2013: the briefing "Open Dialogue" took place at the Radisson Royal Hotel. The initiators were the group of companies "Geropharm Ltd" and NGO "Medical and pharmaceutical projects: XXI Century".

The meeting between the General Director of "Geropharm" Petr Rodionov, Partnership Director Dmitry Chagin and journalists from leading media companies was launched on the eve of the award ceremony of the regional journalists' contest "Golden Pen". This year, the organizing committee of the competition included a special prize "For the best coverage of the issues of the pharmaceutical cluster development in St. Petersburg and the Leningrad region."

The main task of the special prize of the contest "Golden Pen" is to draw attention of the media community to the subject of the pharmaceutical industry in the region and the need for its full coverage. Initiators of the special prize awarding believe that given the large potential of the journalistic community, a quality information support of the industry reformation will promote a meaningful dialogue among all participants and the speedy transition of pharmaceutical industry to the innovation way and, therefore, it will

increase the competitiveness of domestic products, ensuring the Russian health care with modern, effective, affordable home-produced medicines.
The meeting allowed covering a wide range of issues relating to various aspects of the pharmaceutical industry: economic, manufacturing, social, personnel.

One of the first meeting issues was the discussion of realization prospects of the Federal Strategy Pharma 2020: The industry can reach 50% of import substitution by 2015 and 90% by 2020. Positive changes are already here: the share of the domestic medicines production is growing steadily. "At the moment, nothing is impossible, no one product or technology that we could not do, - says Petr Rodionov. - It is only the matter of time and conditions. Known postulate: if you want to create an industry, create a market, and business will always follow the opportunities."

The Russian pharmaceutical market keeps a good dynamics and it became the only market that has grown even during the financial crisis. According to expert’s forecasts, by 2020 the market volume can reach 40-50 billion dollars, i.e. to grow twice in contrast with existing indicators. Journalists asked a series of questions about the role of clusters in this process, including about the work results of the St. Petersburg pharmaceutical and medical cluster, which is among the 13 priority regional innovation clusters in Russia. St. Petersburg has a number of prerequisites to become a pharmaceutical capital. Historically here formed a strong scientific base, but for the successful development of the industry is also necessary a business component, which could introduce promising ideas into production. And the cluster development gives hope that a breakthrough will still take place. According to Dmitry Chagin, today the cluster consists of about 115 small and 20 large companies, and summarily only founders of the Partnership (companies "Geropharm", "Polysan", "Biocad" and "Vertex") pay more than 0.5 billion rubles of regional and more than 1 billion rubles of federal taxes. However, it is early to speak about the synergy from the interaction or about the acquisition of the real benefits from preferences to the association members. The main motive for joining the cluster is the possibility of dialogue, also with government structures.

"You cannot move to the innovation model at once - says Petr Rodionov. - A strong infrastructure should be created first. Thus, our company as one of the first projects has implemented an R&D center establishment, where now are working about 50 people, this year we are expanding the area of the center twice, to 1,500 square meters. Today we can do the researches here, develop new technologies in the laboratory conditions, and integrate them into commercial production." Currently "Geropharm" develops more than a dozen medicines, some of them belong to the first-in-class category, i.e. first in the world such as a medicine for treatment of nephro-and neuropathy in diabetes."Experience shows that a small numbers of employees in R&D centers is optimal, - says Petr Rodionov. - As far back as ten years ago foreign companies are being consolidated its research centers, which will eventually become inefficient structures, and now these companies are on the way back. 50-100 people is the best composition, if there are more people, the spirit of innovation get lost.

Geropharm is aimed to create the global products, the development of which comes under the new rules and which will be recognized in the whole world. Among the priority lines are products from the field of endocrinology, including insulin's analogs: lispro and glargine.

By implementing the strategy of "Pharma 2020" it became clear for market professionals that some serious steps are necessary: investing in science, creation of laboratories, opening the production facilities according to GMP standards. Today we need a good industry planning, - said Dmitry Chagin. - An import substitution should have planned steps. And it is necessary to encourage those companies that invest in the creation and upgrading of existing facilities exactly by GMP, for example, to provide them preferential credit terms, make long-term contract for the supply of innovative drugs."

Topic about the GMP introduction evoked a great interest among the meeting participants. By 2014, Russian producers have to move to the new standards, it is a lack of time and there are still enough issues to be resolved: there is a need of clear statements and consolidation of rules and concepts, the creation of the inspectorate, which would check not only local but also foreign production sites, protecting the internal market from unfair competition from foreign manufacturers. In Europe the inspectorate is one of the non-price tools of admission import on the market, - says Petr Rodionov. - For example, in Romania, where we go through the registration process, there are only 2 people in the inspectorate, who go to the foreign sites. The recording for the audit is on 2019 now. That is the regulation. An opportunity should be allowed to the development of the own local industry."

Speaking about the experiences of other countries, participants asked a logical question of whether the competition of domestic companies with foreign giants is possible in principle. "We need to stop inconsistent judgments that all domestic products are at lover quality than imported, - said Dmitry Chagin. - All that we have done is undoubtedly quality, the main problem is that for too long the foreign companies that are interested in a huge share of the Russian market, trying to message the contrary." We need to change the stereotype, because without the right attitude of society to the domestic medicines the successful implementation of development strategies is impossible for the pharmaceutical industry. Public policy, directed at the development of the domestic pharmaceutical industry, does not guarantee the manufacturer a market, but encourages the implementation of investment projects, both Russian and foreign companies, many of which have decided to locate their production in Russia: about 15 companies announced projects, total investment of which amounted to more than 22 billion rubles. The adoption of the strategy Pharma-2020, policy of the GMP introduction, the transition since 2011 to bid for public drugs procurements in the form of an electronic auction are important steps for the development of the Russian pharmaceutical market. We must not lose this positive vector, which will greatly impact not only the pharmaceutical industry development, but also related fields. The complex of further measures should include GPP - the so-called practice of proper public procurement, which is adopted, for example, in Kazakhstan. GPP provides the exclusion of imported products from trading on conditions that there are two or more domestic producers with local products. Kazakhstan also creates the conditions for the technology transfer: for example, in the case of a production of insulin, which is currently missing in Kazakhstan, the producer receives a guaranteed volume of purchase orders at specific prices that significantly reduces the risk of the investor. Currently Geropharm negotiates with Kazakhstan about the possibility of establishing there the insulin production on basis of company technology.

Journalists were also able to ask the realization process of Geropharm projects. The Company completes the work on the creation of GMP plant in the Moscow region - the opening is scheduled on this autumn. At the same time company continues to work on the project of technological complex in Pushkin. Here will be released existing and also new products, created in the R&D center of the company in the SEZ "Neudorf", for example, a low-molecular heparin. An investment volume for the project in Pushkin will be about 1.3 billion rubles.

Talking about the financial results of the company, Petr Rodionov said that at present the share of public order does not exceed 10% of the revenue, which in 2012 exceeded 2 billion rubles. However, in the coming years the company plans to increase the share of public order to 25-30%, respectively, revenues should amount to 2.7 billion rubles in 2013 and reach the level of 5 billion rubles by 2017.This growth should be provided by the launch of new products, what takes at the average of 1 to 3 years, and by the expansion of our exports.

The participants of the meeting noted that between speakers and journalists formed an active dialogue that helped to exchange views on many important issues of industry development and regional clusters, and to understand what aspects of these processes are the most interesting to the media. The dialogue was truly open, and it gives hope that the issue of development of the domestic pharmaceutical industry receives and will receive further qualitative information coverage.

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