Moscow (GxP News) – The Russian pharmaceutical market, ranked among the world’s top twelve, is facing a paradox: despite growth and import substitution, it remains poor in truly groundbreaking innovations. Between 2023 and 2025, only four innovative drugs were registered in the country, while regulators in the USA, Europe, and China approved hundreds. What is the reason, and does the industry have a chance to break free from the “generics model”?
The Russian pharma market is one of the largest in the world. It ranks 12th by volume and has been steadily growing in monetary terms in recent years. The majority of drugs circulating on it are domestic. However, in terms of value, foreign manufacturers hold a significant market share, as Russia has few of its own breakthrough technologies, which are precisely the ones that are expensive. GxP News investigated the reasons for the absence of first-line drugs on the market and whether the situation could change in the near future in the first article of its new special project, “Science and Pharma.”
In February, presenting the government’s annual report to the State Duma, Russian Prime Minister Mikhail Mishustin stated that drug production in Russia increased by 15.5% in 2025, and the production of medical devices grew by 10%. According to the Prime Minister, domestic scientists have achieved significant results in the development of new medicines.
However, “new” does not always mean “breakthrough.” According to expert calculations and data from the State Register of Medicines, only four innovative drugs were registered in Russia between 2023 and 2025. For comparison, over the same period, the US FDA approved 151 drugs, the European EMA approved 123, and the Chinese regulator granted marketing authorization for 198 new drugs.
Innovative drugs are generally those distinguished by their novelty or technological improvement compared to the previous generation. Innovativeness can also be associated with patent protection of the pharmaceutical substance, the manufacturing technology of the dosage form, or the delivery method. For instance, high-tech medicines usually fall into this category. However, different regulators assess innovativeness differently. For example, the FDA does not classify vaccines, blood and blood component products, or cell and gene therapies as such. The Russian regulator, however, includes blood products, as well as cell and gene therapies, in the innovative category.
In practice, in Russia, the term “innovative” is often applied not only to first-in-class drugs but also to other advanced or cutting-edge medicines. For example, a drug developed by an American company may be produced on the Russian market by a domestic manufacturer who positions it as an innovative solution, even though they are not the original developer.
According to GxP News’ calculations, only a few original drugs that could be classified as first-in-class have emerged in Russia in recent years. These include R-Pharm’s goflikicept for the treatment of idiopathic recurrent pericarditis and Biocad’s seniprutug for the therapy of Bechterev’s disease (ankylosing spondylitis), developed jointly with the Pirogov Russian National Research Medical University and the Shemyakin-Ovchinnikov Institute of Bioorganic Chemistry of the Russian Academy of Sciences. Russian pharmaceutical companies have announced several other innovative drugs currently in development.
Sergey Shulyak, General Director of DSM Group, believes the discrepancy in defining innovativeness stems from semantic issues. “Innovation is a wonderful word; it gives the internal feeling that the company is doing great,” he noted. “But an innovative drug, or a ‘first-line’ drug, must have a fundamentally different therapeutic effect than anything that existed before it. There aren’t that many such drugs anywhere in the world.”
The root of the problem
Fundamental research is the only source of breakthrough innovations. However, private companies are not conducting enough of it, believes Roman Ivanov, Chairman of the Scientific Council of the Sirius University of Science and Technology.
“The development of ‘innovative’ products by Russian pharmaceutical companies, with very rare exceptions, follows the path of creating next-in-class drugs,” the expert says. “A side effect of risk minimization is the lack of real advantages in efficacy and safety compared to first-in-class products and, consequently, a lack of export potential.”
The reason, he says, is simple: developing such drugs requires not just large, but enormous amounts of money.
“Despite Russia being the world’s 12th largest pharmaceutical market, private companies lack sufficient funds for both R&D and clinical trials,” agrees Sergey Shulyak. “The drug development funnel is very narrow: out of 10 promising molecules, only 3-5 make it to becoming a drug.”
Moreover, even if the investments were found, recouping them is very difficult because the market is still too small, Shulyak notes. He is echoed by Evgeny Barinov, General Director of Nanolek. In a conversation with GxP News, he noted that a focus on international expansion is necessary, but the space for such interaction, given the sanctions, is severely limited.
The main customer is the state
Speaking at the State Duma, Prime Minister Mikhail Mishustin noted that research on new vaccines against various types of cancer continues in the country. According to him, these are promising developments that could be integrated into the healthcare system in the future. The work is primarily carried out by state scientific centers—the Gamaleya National Research Center for Epidemiology and Microbiology, the Blokhin National Medical Research Center of Oncology, and the Lopukhin Federal Research and Clinical Center of Physical-Chemical Medicine.
At the same time, the state is introducing additional support measures to stimulate pharma companies to develop original drugs. Specifically, the Ministry of Industry and Trade last year announced a program to subsidize costs for Phase III clinical trials, which will come into effect in 2027. Applications for compensation will be reviewed after the manufacturer has obtained a marketing authorization for a first-in-class or best-in-class drug. Additionally, the existing “Cluster Investment Platform” mechanism, a preferential lending program, has been refined for innovative drugs. “We would not want to become hostages of the so-called generics model,” Minister Anton Alikhanov recently explained.
Russia has a large number of research institutes engaged in developing new technologies, and pharmaceutical companies are actively cooperating with them. For instance, Pharmstandard is conducting projects with a research university in Belgorod, a medical university in Bashkiria, and with Sechenov University in Moscow. R-Pharm is developing scientific partnerships with the Almazov National Medical Research Centre, the National Medical Research Center for Hematology, Siberian State Medical University, and other scientific centers in the regions.
However, academic researchers have their own limitations, notes Roman Ivanov from Sirius University. These include not always correctly formulated research objectives, difficulties with intellectual property management, a lack of trust between science and industry, and limited funding.
“State funding does not allow for the risk that is inevitable in the development of innovative products,” he noted. “And pharma companies are not ready to invest in university developments with a low level of technological readiness due to high uncertainty and a long investment return horizon—often 6-8 years.”
The ready-made solution
In the West, state funding is successfully replaced by a robust startup model. The largest pharmaceutical companies engage in real battles to acquire them. A recent example is the competition between Pfizer and Novo Nordisk for the biotech startup Metsera, which specializes in experimental obesity drugs. Ultimately, Pfizer acquired Metsera for $10 billion, even though its initial offer was $7.3 billion.
In January 2025, J&J also acquired the biotech company Intra-Cellular Therapies. The deal value exceeded the biotech company’s market capitalization by 39%. This is what J&J paid for the drug Caplyta, which had its patent protection extended until 2040. At the time of the deal, it was the only antipsychotic approved by the FDA for treating bipolar I and II disorders.
Last year, Novartis also strengthened its position by acquiring Avidity, which develops innovative RNA-based drugs for rare genetic diseases, including myotonic dystrophy type 1 and Duchenne muscular dystrophy. In that same year, 2025, Novartis acquired three US biotech companies—Tourmaline Bio for $1.4 billion, Regulus Therapeutics for $1.7 billion, and Anthos Therapeutics for $3.1 billion.
“Indeed, the vast majority of first-in-class drugs abroad have their roots in universities and private research institutes,” said Roman Ivanov. “They license the created intellectual property to startups, often founded by the inventors themselves, and these startups attract venture capital to bring the product to a level of technological readiness that becomes attractive to pharma companies, which then invest in clinical trials and market launch.”
In his opinion, this model is the only effective mechanism for creating first-in-class innovative drugs. For Russia, such successful startups represent the future, according to participants in the domestic pharma market.
“We do not yet have a generation of biotechnologists and scientific researchers who have gone through the corporate school, proven themselves at various industrial sites, and are ready to launch their own projects,” Evgeny Barinov, CEO of Nanolek, told us. “By my estimates, such a generation will emerge within five years.”
In about five years
Startups do exist in Russia as well—special clusters have even been created to support them. For instance, as Roman Ivanov explained, a program was recently launched at Skolkovo, under which the first 10 university projects will be prepared to attract funding from the venture fund Sirius.Innovations, established last year.
However, world experience shows that the impetus for the development of this area comes from a complex set of factors, including the state of the economy, the number of multi-millionaires willing to engage in high-risk investments, and the existence of long-standing traditions in private drug development, notes Kirill Danishevsky, Vice President for Corporate Communications at Petrovax Pharm.
“Startups are always a big risk, but also an opportunity for big profits,” the expert reasoned. “However, the latter factor is determined by the size of the market into which a new project can be launched. Currently, the geographical expansion of startups and Russian companies in general is somewhat difficult, which limits potential profitability against a backdrop of persistent significant risks.”
Biotechnology requires a laboratory base and expensive equipment. A breakthrough is possible when investors are ready to invest in creating infrastructure and provide it to teams of successful scientists, adds Evgeny Barinov. “In Russia, this model is only taking its first steps due to the weak development of venture financing,” he says.
Today, the country still relies heavily on state support for the development of key drugs, added Kirill Danishevsky. However, the state is indispensable in this process, according to R-Pharm.
“The startup model could work even more effectively in Russia if there were mechanisms for state co-financing,” the company emphasizes.
If Russia truly does not want to remain largely within the generics model of pharmaceuticals, it faces a long journey in forming its own innovation ecosystem.
This is precisely why GxP News is launching a special project, “Science and Pharma.” Its goal is to examine the topic from all angles and help market participants, research centers, the state, and private investors find a common path towards creating genuine, not just nominal, pharmaceutical innovations.
