Novartis AG, Europe’s third-largest drug company by sales, signed a memorandum of understanding with the city of St. Petersburg as part of a five-year, $500 million investment in Russia.

Novartis will build a new plant in the country for the production of branded generics as well as pharmaceuticals, the Basel, Switzerland-based company said in a statement today. Construction will start in 2011 and the plant will produce about 1.5 billion units per year, the company said.

“Novartis is making a strategic investment in Russia for long-term growth,” Novartis Chief Executive Officer Joseph Jimenez said in the statement. The agreement “enables us to expand our commercial presence in a key emerging market.”

Drugmakers such as Novartis are seeking growth in Russia as part of a wider push in emerging markets, where sales are rising faster than in developed countries. The Russian government has pledged to improve health care in the country and develop a local pharmaceutical industry, Novartis said.

The Swiss drugmaker said it plans to expand its research and development and public-health collaborations with the Russian government. As part of the project, Novartis may license some of its own compounds to Russian companies or buy rights to promising drug candidates from Russian scientists and universities, the company said.

Novartis also pledged to double its investments in drug development in clinical trials in Russia and expects to enroll about 4,000 people in studies by 2013, the company said

News source: Bloomberg L.P.
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