Venture capital investments in Russia

Venture capital investment in Russia in pharmaceuticals: industry development and outlook

The venture capital market in Russia is not as well developed as in Western countries. However, domestic specialists actively adopt the experience of their foreign colleagues and try out modern approaches. Within the framework of innovations it was suggested to use venture investments in Russia for the healthcare sector. They are planning to invest in the creation of medical products.
This approach has long been used in developed countries. In the USA, China, and Europe the financing of drug development is carried out in large volumes, which Russia still has a long way to go. But the first step towards the development of this area is attracting venture capital funds to invest in new projects.
Experts in the sphere of biotechnologies and pharmaceutical industry have already started discussing this possibility of financing the sphere.
The need for venture capital investment in new drugs is more urgent than ever. The share of Russian-made drugs on the domestic market is growing and makes 30%. Besides domestic financing, foreign companies and funds invest in pharmaceutical development. In just 6 years, more than 120 billion rubles have been invested in this sphere.
In order to increase the share of domestically produced drugs, specialists insist on budget revision. The authorities met them and in the near future are planning to allocate 4.5 billion rubles to the Russian Venture Company. The latter is engaged in financing innovative projects in the segment of pharmaceuticals. But according to experts, this year such funds are not worth waiting for.

The situation in the USA is different. There, an annual sum of 0.4% of the total GDP is laid down for the development of venture investments, while in China it is slightly less – 0.3%. For comparison, only 0.04% of GDP is currently allocated for financing in Russia. According to analysts, even the promised amount of 4.5 billion is extremely small. For such investments to develop and yield results, it is necessary to invest at least 40 billion rubles.
One of the variants of venture fund organization is its creation as an investment partnership. Such an agreement can be made not only with domestic market participants, but also with the state. It is expected that the fund will include 13 companies.
Russian pharmaceutics is in urgent need of reforms and financing. According to experts, if we leave the volume of investments at the current level, in 5-10 years we will have to buy from other countries all new drugs. An important point is the production of not only domestic medicines, but also high-quality products that will not be inferior to foreign ones in terms of their properties. Therefore, it is necessary to attract venture capital funds to the development. There are about 60 such organizations in the world, 30-40% of which are financed by China. Most of the funds are located in the USA.