Bayer signs MoU to establish pharmaceutical production in Russia

In a move that indicates it is going to join the ranks of other drug giants by making major investments in the fast-growing Russian market, Germany’s Bayer AG (BAY: DE) plans to significantly strengthen its positions in Russia’s pharmaceutical market and to launch production of a number of branded drugs, as part of a recent agreement signed between the company and Yunona Holding (Ural Pharmaceutical Cluster; UFC), Russia's pharmaceutical cluster in the Ural region, according to local media reports.

Responding to a request for further details from the firm about its Russian plans, a spokeswoman for Bayer stressed that at this stage it is only a Memorandum of Understanding (MoU), signed on September 19, which outlines the scope and vision for potential collaboration in the field of joint manufacture of Bayer’s pharmaceuticals. The intention is to collaborate and establish strong local development, manufacturing, marketing and sales competencies in the Russian market, she stated.

Earlier this year, Jorg Reinhardt, chairman of the board of management of Bayer HealthCare, told The Pharma Letter that Bayer is “cautiously” investing in Russia, where it has a strong position in the over-the-counter medicines market, but modest in the prescription sector, noting that the rules of the game in that country keep changing (TPL March 2). Russia’s fast-growing pharmaceutical market is expected to reach a value of over $50 billion by 2018.

According to Eduard Rossel, head of the supervisory board of the UFC, Bayer has long considered active expansion into the Russian pharmaceutical market, sales in which, so far, were small, not exceeding 180 million euros ($243 million). He also added that the agreement involves joint work in R&D of new drugs and new technologies, according to the local media reports.