European drug giant eyes up Russian stake

One of Russia's largest drug companies may hand a majority stake to a European distributing giant. Celisio has revealed it's in exclusive talks with Russia's Protek Group, in what would be a record industry deal.

Russian pharmaceuticals is one of the world's fastest-growing health markets and it's tipped to expand by 20% annually over the next few years.

In 2006, the Protek Group held a market share of approximately 24%, and saw a turnover of more than $US 2.3 BLN.

“Our co-operation with Celisio will create an unparalleled company with very strong financial performance and synergies which can be obtained in the operational part, especially in retail and distribution,” believes Timofey Prokopov, Finance & Investment VP at Protek.

Plans for a state distribution centre could be the reason why Russian pharmaceutical companies are looking for foreign investors.

According to David Melik-Guseinov, Research Director at Pharmexpert in Moscow, “Recently there has been speculation that Russian manufacturers and distributors, fearing nationalization of the industry, have been looking to sell to foreign companies – particularly in distribution but I do not think this is going to happen. What should be considered are general commercial interests and the expanded economic development in the country.”

Though Russian companies have fallen behind in the research and manufacture of drugs, they lead in distribution. And the best prescription to keep that lead might just have to be imported.