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. Last Updated: 07/27/2016

Sevrier to Make Diabetes Drug in Russia

The French firm Servier will open a production line in Russia this month to produce a drug for treating diabetes, part of a growing trend in which Western pharmaceutical companies are setting up local plants in exchange for access to lucrative hard-currency contracts.

Jean-Pierre Lalain, Moscow representative for Servier, France's biggest independent pharmaceutical firm, said that Servier had already signed an agreement with the Health Ministry to purchase Diabeton, Servier's drug for diabetics. The plant, which opens July 14, will produce 10 million boxes of the drug each year.

He said that Russia intends to purchase the drugs using hard-currency credit lines from the European Community, the World Bank and the French government.

Lalain said that Russia had bought the drugs both because of the commitment Servier had been showing to develop production in Russia and because Russia needed a high quality drug for its 11 million diabetes sufferers.

The British drug company The Wellcome Foundation has also recently set up a joint venture in Kursk to produce a children's pain reliever and U. S. drug company Bristol Myers Squibb has invested $7 million in a packaging line for a drug that controls blood pressure.

Ivan Tulyayev, director of Akrikhin Corp. , the plant where both the Servier and Bristol Myers Squibb plants are located says that both firms had signed deals enabling them to rent factory space and workers from Akrikhin and pay by investing in new facilities.

He said that both companies were initially only packaging their products in Russia but added that both had undertaken to transfer more know-how and produce the pharmaceutical ingredients here in Russia within a few years.

The dangers of setting up local production facilities in Russia are considerable. Upjohn, a U. S. drug company that set up a vitamin packaging plant in Russia last year, had to close its operations after the Russia government failed to pay debts of $19 million for the drugs.

The Russian government has in the past bought foreign pharmaceuticals at a special lower exchange rate and has subsidized 80 percent of the cost of drugs to consumers but Sender's Lalain says that reliance on centralized credits is now diminishing.