Japanese pharmaceutical manufacturer Takeda is considering selling its Russian plant, which has invested more than €117 million. The site produces a drug for patients with multiple myeloma, the state procurement of which has doubled over the past three years. Foreign companies are forced to reduce their presence in the Russian Federation under political pressure, although the pharmaceutical industry has not been sanctioned. This may lead to a washout of innovative drugs from the local market, experts warn.
The fact that Takeda is considering selling its plant in Yaroslavl was told by two sources of Kommersant in the pharmaceutical market. According to them, a number of companies were interested in the cost of the enterprise, but so far there have been no specific negotiations. One of the regional officials also heard about the possible sale of this asset by a Japanese company. Takeda’s Russian office declined to comment, calling the information a “market rumor”.
Takeda is based in Japan. According to SPARK-Interfax, in 2021, the revenue of Takeda Pharmaceutical, the Russian legal entity of the company, amounted to 21.9 billion rubles, which is 22% more year-on-year.
According to its own data, Takeda has invested €117.43 million in the Yaroslavl plant, where the production of a number of innovative drugs is localized. Some of these drugs are also supplied to the EAEU countries. The plant’s capacity is designed to produce 90 million ampoules and more than 3 billion tablets per year.
In Yaroslavl, Takeda manufactures one of its marketed drugs, the innovative ixazomib-based Ninlaro for patients with multiple myeloma.
According to Lyudmila Balandina, head of the strategic development department at Headway Company, in 2022, 4.55 billion rubles of this funds were supplied as part of public procurement, which is twice as much as in 2019–2021. If the plant is sold, the buyer can get the rights to manufacture this drug, so this is unlikely to seriously affect the production volumes, Nikolai Bespalov, RNC Pharma Development Director, believes.
Takeda, like other foreign pharmaceutical manufacturers, against the backdrop of the Russian-Ukrainian military conflict, faced demands from some of its shareholders to reduce its presence in the Russian market, although Western sanctions did not affect the pharmaceutical industry, one of Kommersant’s sources explains. At the same time, just a year ago, immediately after the outbreak of hostilities in Ukraine, Takeda stated that it “does not see any risks for its activities in Russia.”
The sale of the plant in Yaroslavl does not mean that the company is completely curtailing its Russian business, says the interlocutor of Kommersant.
According to his forecasts, many Western pharmaceutical companies that have localized production in Russia may follow Takeda’s path this year.
Now there are 570 foreign pharmaceutical companies operating in the country, says Tigran Sahakyan, partner at Yakov & Partners (formerly McKinsey). According to him, companies from unfriendly countries occupy more than half of the Russian drug market, the volume of which in 2022 amounted to 2.57 trillion rubles. Russian players account for 36%.
Most foreign companies have localized the production of drugs in Russia, says Nikolai Bespalov. But he doubts that the sale of these capacities will become widespread: “Those who wanted to leave the Russian market could do it in a year.” Two American manufacturers, for example, Bristol-Myers Squibb and Eli Lilly, which transferred the Russian business to the distributor Swixx Biopharma (see Kommersant of March 28), announced the curtailment of work in the Russian Federation. In general, according to Tigran Sahakyan, about ten pharmaceutical companies and distributors from unfriendly countries faced difficulties due to the break in supply chains and the political situation, which forced them to reconsider their plans for the Russian market.
Most foreign companies have stopped investing in their Russian projects, and this may subsequently lead to the complete withdrawal of their drugs from the local market, which will also affect public procurement, the expert believes. According to him, Western manufacturers account for about 25% of the entire budget segment.