, 06.06.23

The deal was closed at the end of May. Nanolek's previous owner was the Cyprus-based Nanolek Holding Limited, and since April 28 it has been the investment fund Management-Aktiv managed by the K2 Group.

K2 Group Management Company owned by Anton Pak, chairman of the board of the pharmaceutical manufacturer, is a new owner of Nanolek Vaccine Manufacturer. Earlier Nanolek was owned by the Cyprus-based Nanolek Holding Limited, according to "Vedomosti".

The change of jurisdiction occurs in the background of new regulatory requirements in place for Russian business. Last year, Vladimir Khristenko, the son of former Deputy Prime Minister Viktor Khristenko, ex-President of Nanolek, left the co-ownership; however in February 2023 he was be slapped with Canadian sanctions anyway.

Cyprus imposed a number of restrictions against Russia, so the transition to Russian jurisdiction over the past year has become a trend for pharmaceutical companies. Russia has created special economic zones with comparable conditions, according to Nikolay Bespalov, Development Director of RNC Pharma analyst company: — Nanolek is quite a large manufacturer; now they have a serious interest in developing the vaccine-related portfolio. They also develop their own vaccine portfolio, as well as cooperate with foreign partners, for whom they provide the service of contract manufacturing of these drugs in Russia; there are rather large partners among them. So this is a very significant player in the Russian market with very big ambitions.

— What were the most notable changes in the Russian pharmaceutical market over the past year or year and a half? — First, we had to tackle problems related to logistics. Many Russian companies were forced to look for new partners in terms of supply of raw materials and some auxiliary products needed for production, as well as in terms of equipment. It was a huge job that has been done last year. Second, priorities of foreign companies in the market have changed dramatically, partly due to sanctions restrictions and partly due to economic processes. A lot of foreign companies have suspended supplies of their products to Russia due to the fact that the sale of certain foreign-made drugs in Russia has become unprofitable. Most often this is due to increased competition from domestic manufacturers. Therefore, the companies have cleaned up their product portfolios in a very active way. All these processes, on the one hand, were the challenges for Russian manufacturers, on the other hand, provided some unique opportunities as they gave impetus to the development of their own competencies, opened up new competitive niches and enabled them to occupy these niches. Probably these are the most important things that actually happened last year.

In the context of growing prices for pharmaceutical raw materials, exchange rate fluctuations and cost-intensive logistics, supplies of these drugs from the list of vital and essential medicines to the market have become unprofitable for domestic drug-producing companies, says Sergey Kolesnikov, President of the Association of Pharmaceutical and Medical Product Manufacturers, Member of the Russian Academy of Sciences:

Sergey Kolesnikov, President of the Association of Pharmaceutical and Medical Product Manufacturers, Member of the Russian Academy of Sciences, “The growth of prices for vital and essential drugs has not been stopped, and the growth of prices for foreign drugs is not controlled, so the prices have increased two or three times. And the prices for vital and essential drugs have gone up even more, which causes them to leave the market. Who benefits from this? No one. The Government says that it protects patients. No, it protects foreign Big Pharma companies that come in and replace our medicines. So we have to wonder whether our market will develop after such measures or not. Agriculture and production of medicines ensure a gain in industrial output and, consequently, in gross domestic product. All other sectors, except defense, are down”.

Later Business FM editorial office received a comment from the Company, “In 2022, co-founder, president and ideologist of the Company Vladimir Khristenko sold his share in Nanolek to partners and management and resigned as president. In parallel, work has been underway to significantly simplify the management structure with a new set of shareholders. And these changes were reflected in the register in May 2023. Previously, the founder of Nanolek LLC was Nanolek Holding Limited incorporated in Cyprus. According to new regulatory requirements applicable for Russian business, the old management structure was no longer relevant, and this was the reason behind the changes that took place. This change will have not have any influence on the logistics of drugs and raw materials supply. The prices will not be affected as well, they are determined by the state, and we are dealing with government procurement contracts. The tax burden will also not change. We work as usual, all our partners stand by their commitments; the logistics tasks have undoubtedly become more difficult, but we understand our responsibility and continue to work. These are the challenges, which we successfully cope with.”

In addition to vaccines, Nanolek produces cancer drugs, antivirals, ARVs, and other groups. Last year the Company’s revenue was 19 billion rubles, net profit amounted to 2.5 billion rubles.