Biotech Values

[DewDiligence]

NVS Invests $500M in St. Petersburg Manufacturing Plant

[The pharma market in Russia has an annual growth rate in the high teens, much of it in branded generics. NVS wants to participate.]

http://www.novartis.com/newsroom/media-releases/en/2010/1474003.shtml

›December 20, 2010 07:15 CET

Novartis affirms commitment to Russia through USD 500 million multi-year healthcare investment

• Novartis signs Memorandum of Understanding (MoU) with City of St. Petersburg for construction of new Novartis manufacturing plant

• Overall commitment includes expansion of research and development collaborations and public health alliances to contribute to the Russian government's plans to strengthen healthcare system and improve health outcomes in Russia

• Investment in local manufacturing reinforces Russia as an integral part of the Novartis strategy for growth

Basel, December 20, 2010 - Novartis announced the signing of a Memorandum of Understanding (MoU) with the City of St. Petersburg, confirming its intent to build a new full-scale pharmaceutical manufacturing plant in St. Petersburg; Russia. This investment is part of an overall USD 500 million commitment in local infrastructure and collaborative healthcare initiatives planned over a five-year period. This comprehensive partnership addresses three core areas that include local manufacturing, research and development (R&D) partnerships and public health development. The MoU signing deepens the company's existing commitment to becoming Russia's leading healthcare partner in supporting governmental healthcare reform.

"Novartis is making a strategic investment in Russia for long term growth. This collaboration shows our commitment to contributing to the ambitious healthcare goals of the Russian government," said Joseph Jimenez, CEO, Novartis AG. "The ongoing partnership with Russia enables us to expand our commercial presence in a key emerging market. The scientific development and public health efforts have been prioritized to focus on the most beneficial programs for the Russian people."

The St. Petersburg site will be a modern, state-of-the-art pharmaceutical manufacturing plant. The facility represents a significant Novartis investment to date in Russia and will enable transfer of cutting-edge technologies and skills to the Russian Federation.

Once completed and approved for commercial production, the new St. Petersburg facility is expected to manufacture both high-quality branded generics as well as pharmaceuticals. This is expected to be one of largest investments by Novartis in local manufacturing and is planned to eventually serve the needs of the Russian market and other parts of the world. Construction is scheduled to start in 2011 and the plant is expected to produce approximately 1.5 billion units per year.

In parallel with the establishment of its own manufacturing facility in Russia, Novartis plans to continue to expand its investments in R&D and public health collaborations in alliance with the Russian government.

These activities include collaborations with both universities and academia, but also with emerging Russian private business in different areas of medical science. The scope of these collaborations may include such efforts as out-licensing of Novartis compounds to Russian companies with proven scientific capabilities, in-licensing and scouting for promising drug candidates from Russian scientists and universities and modeling and simulation activities for clinical trials. Novartis is actively working in all of these areas, identifying high potential projects to be jointly developed. Additionally, Novartis also has made a commitment to double its investments in drug development in clinical trials in Russia and expects to enroll approximately 4,000 individuals by the year 2013.

Russia is a fast growing emerging market, with high unmet medical needs, and a government that is increasing its healthcare investment and focus on both local and non-local healthcare market collaborators. With its increasing commitment to and demand for better healthcare, the Russian government is well suited to partner with Novartis to address their healthcare priorities and improve healthcare outcomes.

Novartis is committed to collaborating with the Russian Government in implementing its strategy to develop the local pharmaceutical industry and enhance the Russian healthcare system. The company, the first and only pharmaceutical business in Russia's Foreign Investment Advisory Council (FIAC), will be establishing public health partnerships with federal and regional health authorities. These joint efforts are expected to result in improved health outcomes for Russian patients.‹