Russia’s pharmaceutical industry needs modernisation, but even the President admits it’s a serious challenge needing private capital, while visiting a new research center.

Russia’s pharmaceutical business is growing at 12% a year, but imports account for 75% of the market. It’s a bitter pill to swallow for both the local pharmaceutical industry and customers, according to Viktor Khristenko, Trade and Industry Minister.

“Out of 3 thousand drugs sold in Russia 650 are regarded as vitally important. 15 of them that help treat the 6 main causes of death are not produced in Russia. If we start producing them here then we will cut our expenses by 20%.”

President Dmitry Medvedev criticised the lack of innovation in the pharmaceutical industry, which relies too much on manufacturing generic drugs.

“By and large, our industry continues to make the same outdated products and, as a rule, imported generics from substances bought abroad. There is practically no work to create original medicines and technologies.”

That inefficiency is just one of the reasons behind a 22% price hike on Russian drugs, compared to that of 12% on imported products since the beginning of the year.

The government has accused retailers of setting excessive charges, prompting it to consider freezing prices. Igor Krylov, General Director of Pharmstandard says the move has its merits.

“This measure is designed to make drugs affordable. We support this policy. All market players both Russian and foreign should be on equal terms.”

The government wants private companies to take the lead in modernising the industry. One such project is Generium – a Russian joint venture of innovation company, Lekko, and Pharmstandard.

It produces generics using brand new foreign equipment, but the most sensitive technologies have Russian copyrights.

The private joint venture attracts Russia’s best scientists in genetic engineering. Here they develop medications to cure such diseases as haemophilia. Big hopes are pinned on this project and the most important is to replace costly imports and make vital medicine affordable for people.