First Deputy General Director, Director of the Vaccines Division at Nanolek delivered a speech at the session “Pharmaceuticals of the New Time: Market Trends and Investment Goals.” The session was moderated by Elena Kalinovskaya, Head of Analytics at Pharmaceutical Bulletin and Medical Bulletin. Anton Lavrentiev, CEO, Primer Capital; Pavel Morozov, Managing Partner of Skolkovo Ventures, and Konstantin Sharlovsky, Head of Pharmaceuticals and Healthcare Practice at Pepeliaev Group were involved in the discussion as well.
The participants discussed new opportunities and challenges the pandemic has brought to the industry, trends that are now crucial for the pharmaceutical industry, the government’s role in the development of the sector, and problems investors are facing today.
Maxim Stetsyuk explained why the calls to “make your products and full-cycle production” sound beautiful and straightforward, but these efforts are not always practicable.
“We need to develop pharmaceuticals and all related industries, to produce equipment for factories. We are moving towards biotech products, and this is a complex production. The pandemic revealed that we are ready to set up production, but there are difficulties with the equipment. Getting a molecule in a test tube is just a part of the trouble; it is vital to scale up production, transfer it to large reactors and build necessary infrastructure,” said the expert.
This being said, the experience of Nanolek proves that it is realistic to produce products domestically and even export them. If you are planning to export your products, you have to comply with foreign regulations, with new requirements emerging on a continuous basis. The main proof is quality control, which takes place in several stages and involves 250 of the 700 factory employees. Besides, Nanolek cooperates with multinational companies and undergoes 12 audits a year. Maxim also noted that Russian companies dealing with bioproducts often face a shortage of personnel. We have only a few scientists in the relevant industries in Russia, and they need to be educated and raised fr om school days.
“The period of the pandemic has shown that for the next ten years, we need to partner with institutions, scientific institutions, public and private partnerships, and businesses to work in a coherent team. This is a combination, wh ere each participant is an expert in his particular field, this is how they work in the West, because the Western countries have long abandoned the model when all processes are performed in-house,” commented M. Stetsyuk.
The session participants paid particular attention to the problems of investments in projects of the pharmaceutical industry. Pavel Morozov, the managing partner of Skolkovo Ventures, posed himself a question: why do the “crossover investors” not invest in medicine, which is always at the top of priorities, like food and education? The reason is that the market in Russia is well-regulated, in contrast to the United States, where money is of primary importance to the system, not government regulation. The developers of new medical devices in Skolkovo may e.g. not receive investor capital only because investors do not understand at what prices medical devices will be sold and in what quantities will they be purchased by the governmental authorities. “We need to reconsider the basic approach, we need transparent regulation, and the pricing should be clear,” Pavel summed up.
Speaking about investments, Maxim Stetsyuk confirmed that it is a tricky task to attract venture capital into medicine. In his opinion, this is also due to long terms of drug development: at least seven years, while investors want to see results in two or three years.
“There are medicines with a long-term forecasting and planning cycle,” explained M. Stetsyuk. Their production takes 22 months, and there is a time when people have to work 48 hours a day and then there is a period when you need to dismiss all workers for a quarter. It may be the case when one plant should be built for one vaccine, and the need for vaccines is 3 million doses per year, and investors do not express any interest in that. In such circumstances, you should either cooperate with the government or try to tap into foreign markets. This is an approach used by large companies that have access to markets of 100–150 countries.”
In this context, a member of the Nanolek Management Board is confident that investors in the pharmaceutical industry have a wide choice: no matter what they invest in, whether it is development, infrastructure, or IT solutions, the main thing that matters is an expertise in the chosen direction.