The development of Russia’s pharmaceutical industry requires significant and systemic investment. The state offers businesses a range of support instruments—from tax benefits to guaranteed sale mechanisms. Each has its own features, limitations, and strategic rationale. The GxP News editorial team examines the types of assistance, their key characteristics, and effectiveness.
1 Subsidies: a faster solution for specific tasks
This is a form of targeted reimbursement for previously incurred costs, particularly in demand for production expansion, technology localization, or launching new areas, including R&D.
The key advantage of subsidies is their targeted and applied nature. Unlike mechanisms involving complex legal structures and lengthy coordination (e.g., IPPA (investment protection and promotion agreement) or SPIC (special investment contract)), subsidies allow for relatively quick compensation of investments already made in fixed assets, research, or infrastructure. For pharma companies operating in a highly competitive environment and under sanctions pressure, such support becomes not just an aid, but a survival factor.
Example: In 2024, the Russian government allocated about 600 million rubles from its reserve fund as a subsidy to the Gamaleya Research Center for the purchase of 41 units of equipment necessary to launch production of innovative mRNA drugs, including for cancer therapy. As Prime Minister Mikhail Mishustin stated, this project is designed to ensure timely patient treatment and reduce dependence on foreign supplies.
2 IPPA (Investment Protection and Promotion Agreement) – Tax Stability and Investment Return
This mechanism was introduced in 2020 as a crisis tool to reboot investments. It is a form of investment contract between the state and business, providing for fixed key regulatory and tax conditions for a period of 6 to 20 years. For pharmaceutical companies, the mechanism is primarily interesting for reducing regulatory risks and obtaining partial compensation for infrastructure costs. However, entry into an IPPA is possible with an investment volume of at least 1.5 billion rubles, which can include both equity and debt capital.
One of the most illustrative cases is the project of R-Opra (part of the R-Pharm Group), implemented in the Moscow Technopolis SEZ. In December 2020, the company concluded an IPPA with the Ministry of Economic Development and the Moscow government. The investor received guarantees of stability in the tax and administrative environment: a three-year freeze on regulatory conditions and a six-year freeze on tax conditions. Compensations are also provided for changes in legislation affecting the timing and volume of state support. The total investment in the project is 8.5 billion rubles, of which 2.3 billion rubles are the company’s own funds. It was planned to use the money to launch 12 production lines for the production of 31 INNs, including drugs for the treatment of cancer, endocrine, and cardiovascular diseases.
3 Offset contracts: guaranteed sale for localized production
This is a form of long-term government contract where a company commits to localize the production of certain medicines, and the state guarantees the purchase of fixed quantities of the products at an agreed price. For business, this is not just a contract, but a model for predictable planning: the term of such agreements is usually from 7 to 10 years. The most active regional player is Moscow. In April 2024, Mayor Sergey Sobyanin announced that the city had concluded 10 offset contracts with manufacturers totaling 95 billion rubles, saving 25 billion rubles in the process.
Business interest in offsets stems from a combination of three factors. First, guaranteed sale provides the manufacturer protection from market and logistical risks in the country’s turbulent economy. Second, high budget predictability: fixed prices and volumes allow for building production and financial models without a “cushion” for possible fluctuations. Third, an offset contract is a serious incentive for advanced localization: obtaining a contract without establishing a production base in Russia is virtually impossible.
An example of the offset contract mechanism is the agreements between the Moscow government and Velpharm-M. In 2024, the company secured a contract through a tender to supply the capital with 43 INNs of medicines from 2027 to 2030 for 6.95 billion rubles. A similar contract was concluded a year earlier: in 2023, the company was selected to supply the city with drugs worth 2.9 billion rubles.
4 SPIC 1.0: stimulating technology transfer
The Special Investment Contract (SPIC) is one of the key tools of state support for industrial projects, providing businesses with stable tax and regulatory conditions in exchange for commitments to implement modern technologies. The mechanism was first introduced in 2015 and has since undergone significant changes, evolving into two independent versions: SPIC 1.0 and SPIC 2.0.
Version 1.0 allows an investor to directly conclude a contract with the state. The main condition is the implementation of a project to create or modernize industrial production in the Russian Federation. No competitive selection procedure is required for participation—application is initiated by the business. Projects are coordinated by the authorized body and an interdepartmental commission.
Key advantages of SPIC 1.0 include a law profit tax rate, with zero percent rate possible (upon meeting conditions related to the share of project income), property and transport tax benefits, the possibility of land lease without auctions, simplified access to the “Made in Russia” status, and participation in government procurement as a sole supplier.
One of the few public examples of SPIC 1.0 application in the industry is Aktivny Komponent, a Russian producer of pharmaceutical substances. In 2019, it concluded a SPIC with the Ministry of Industry and Trade for a project to create a full-cycle production site and modernize an existing enterprise. Under the contract, the company received tax benefits, access to land lease without auctions, and the “Made in Russia” status for its products.
5 SPIC 2.0: A modernized version focused on technology
The main difference of SPIC 2.0 is its focus on implementing modern technologies. The investor must introduce a technology from the list approved by the Ministry of Industry and Trade. The new SPIC mechanism has stricter requirements: the contract is concluded not upon investor application, but based on the results of a competitive selection. The project must use technologies included in a special list approved by the Ministry of Industry and Trade. The mechanism involves a competitive selection, and the parties to the contract include not only the investor but all levels of government: federal, regional, and municipal. Furthermore, limits on the amount of state support are set—it cannot exceed 50% of the capital investment. The term of SPIC 2.0 contracts can reach 20 years, if investments exceed 50 billion rubles.
An example of this support is the special investment contract (SPIC 2.0) concluded in autumn 2023 for the construction of a radiopharmaceutical plant between the state corporation Rosatom, the Russian Ministry of Industry and Trade, and the government of the Kaluga Region. The contract term is 8 years, with completion planned for the end of 2030. The total investment exceeds 12 billion rubles. According to the Governor of the Kaluga Region, the enterprise is going to become the largest in its segment in Europe. The production will allow for the substitution of critically important imported items and also access to export markets.
6 PPP: flexible models of infrastructure partnership
Public-Private Partnership (PPP) is a form of long-term cooperation between the state and a private investor, where the implementation of a capital-intensive project is carried out with the funds and under the management of the private party, and the state compensates for the investments over a set period. Simply put, PPP is an infrastructure lease for the state: it gets the asset or service here and now, and pays in installments with interest.
A recent example of a PPP in pharma is the project of the Indian company Saffarm in the Murmansk Region. Under an agreement signed at SPIEF 2023, the investor will invest 10 billion rubles in building a drug manufacturing plant. Within 3 years, it is planned to establish production of over 1.3 billion doses and up to 6,000 tons of pharmaceutical substances per year. In return, the region is ready to provide support—from infrastructure to guaranteed demand from the public sector. The plant will supply antibiotics, hormones, cancer drugs, and vitamins for hospitals and pharmacies.
7 IDF loans: preferential financing for specific purposes
Loans from the Industrial Development Fund (IDF) are one of the most sought-after financial instruments among Russian pharma manufacturers. The mechanism was launched on the initiative of the Ministry of Industry and Trade in 2014 to support industrial modernization, import substitution, and the launch of new manufacturing facilities. The Fund provides preferential loan financing at rates from 1% to 5% per annum for up to 7 years. The loan amount ranges from 5 to 750 million rubles. Typically, the IDF covers no more than 70% of the project cost, with the company required to co-finance the remainder itself.
One of the latest examples of using this instrument is the project of Binnopharm Group in the Moscow Region. The Alium production site in Serpukhov received a preferential loan of 150 million rubles from the regional IDF for equipment modernization. The total investment in the project will be almost 190 million rubles. It is planned that the launch of new capacities will increase output by 935,000 packages per month. The upgraded equipment will produce drugs for pain therapy, treatment of chronic venous diseases, gastric ulcers, as well as antiepileptic and urological agents.
8 SEZ: tax incentives through territorial ties
Special Economic Zones (SEZs) are specially designated territories with a special legal status that provides residents with access to tax benefits, customs preferences, and ready-made engineering infrastructure. This is a federal mechanism created under a special law and subordinate to the Ministry of Economic Development. Participation gives companies a fixed package of benefits approved at the level of the Russian Government.
One of the most famous SEZ-based pharmaceutical clusters is the Moscow Technopolis, which hosts production facilities of Biocad, R-Pharm, Generium, Velpharm-M, and other companies. Participation in the Moscow SEZ gives companies not only tax incentives but also logistical advantages: proximity to key sales markets, including the capital’s public procurement system, as well as administrative support from the city.
9 Regional programs: support for entities of the Russian Federation
In addition to federal instruments, pharmaceutical companies in Russia can rely on support measures at the regional (federal entity) level. These are regional programs including tax benefits, loans, property preferences, accelerated administration, and direct support from authorities.
For example, in August 2024, the Industrial Development Fund of the Moscow Region granted Binnopharm Group a preferential loan of 150 million rubles for the modernization of the Alium production site in Serpukhov.
Also, the Moscow Region is implementing the “Land for 1 Ruble” entrepreneur support program, allowing for the lease of land plots at a subsidized price for projects aimed at import substitution and strengthening technological sovereignty.