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India’s Cadila Pharmaceuticals, one of the countries largest, together with the Russian Direct Investment Fund (RDIF) have agreed to jointly finance a new manufacturing facility in Russia, with a total investment of ₽10 billion (US$113 million).
The agreement comes after numerous Western pharmaceutical companies withdrew from Russia under their governments pressure.
Russia’s civilian pharmaceutical needs were hit especially with the withdrawal of Denmark’s Novo Nordisk, who terminated supplies of its popular Ozempic diabetes drug to Russia at the end of 2023. Russia has strikingly higher diabetes rates compared with Western countries with the disease affecting about 19% of the adult population, or about 20 million people. Other European pharma companies who exited or scaled down in Russia include 3Shape, Acino, Allergan, Adamed, Bionorica, Bristol Myers Squib, Demant, Eppendorf, Essity, Orion, Ovaca Bio, Smartway, Steda, along with 14 American pharma companies.
This has created some difficulties for ordinary Russian citizens requiring specific treatments only available from the West. However, like Chinese auto manufacturers have replaced European brands in Russia, the decision has boosted India’s role in supplying medicines to the country. India is the largest generic drug manufacturer in the world.
According to the agreement signed on the sidelines of the St. Petersburg International Economic Forum (SPIEF), Cadila will provide an investment of ₽8.5 billion with the RDIF providing ₽1.5 billion in equity.
The launch of the new pharmaceutical complex, which is expected to manufacture gastroenterological drugs, as well as medicines for the treatment of cardiovascular diseases and diabetes, is scheduled for 2027. The plant’s annual production capacity is projected to amount to more than a billion of units of drugs and about 1,500 tons of active pharmaceutical ingredients, with the potential to increase the volumes.
Cadila currently supplies pain relief and antispasmodic drugs and eye drops used for treating glaucoma, among other products. The RDIF said production of medicines for the Russian market would be local. Some of the drugs planned for production at the new facility have not previously been produced in Russia.
Cadila also produces high-tech pharmaceutical equipment that is expected to allow the Russian plant to be provided with “advanced innovations in the industry.”
Cadila is focused on manufacturing active pharmaceutical intermediates, finished formulations, food supplements, biotechnology products, and pharmaceutical machinery, and currently operates production facilities in India and Ethiopia.
Earlier this year, Indian pharmaceutical firm PSK Biotech Private and authorities from Russia’s Sakhalin Region announced plans to set up production facilities in the Russian Far East. The company is expected to begin manufacturing of personal hygiene products, diapers, and medical supplies in the city of Yuzhno-Sakhalinsk as soon as November.
Businesses from India have been exploring opportunities in the pharmaceutical, diamond, and hydrocarbon sectors in Russia’s Far East. The regions trade with India increased by 40% last year’, while Russia-India bilateral trade hit US$65 billion, a 33% jump over 2022. New Delhi is also looking to make progress on an investment treaty with Russia as well as signing a free trade agreement with the Eurasian Economic Union, which also includes Russia along with Armenia, Belarus, Kazakhstan and Kyrgyzstan.
Further Reading
Russia-India 2024 Trade & Development
Our 2024 Russia’s Pivot To Asia Guide features comprehensive discussions on Russia’s relationship with India. It is a complimentary download and can be accessed in English here and Russian here.
