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Russia pushes for domestic drug development

But building a complex industry from scratch won't be easy.

Russia's nascent commercial drug industry could get a shot in the arm from a US$163-million project announced yesterday. But the project - which is partly bankrolled by a state-owned non-profit corporation - faces a challenging future, despite government backing.

The Russian Corporation of Nanotechnologies (known as Rusnano) in Moscow, along with a yet-to-be announced co-investor, plans to fund the development of up to 15 potential drug molecules that have unique mechanisms of action, taking them from the preclinical development stage through to Phase 2 clinical trials.

"We expect that of the 15 compounds, a few will support the investment," says Andrey Ivaschenko, chairman of ChemRar, the Moscow-based pharmaceutical and biotechnology services company that will provide the first five target molecules. Although the investment is not a huge sum, he notes, a compound can be developed to the Phase 2 clinical stage in Russia for $5-10 million.

Development and commercialization rights for one of them, an anti-HIV compound, were transferred to ChemRar from the pharmaceutical company Roche, headquartered in Basel, Switzerland. Ivaschenko expects the final portfolio to contain compounds obtained from both foreign and domestic companies.

"This is a sort of new model for Russia because it also includes projects that were abandoned in the West for non-scientific reasons," he says.

Russia currently imports about 80% of its pharmaceuticals. But even domestically produced drugs are often made from active ingredients obtained abroad, notes Tatiana Nikolenko, director of infrastructure programmes at Rusnano, adding that less than 1% of novel drugs sold in the country are produced there.

Drug booster

The Russian government has made several recent steps towards seeding a domestic biotech and pharmaceutical market. A national strategy announced in 2008 aims to boost the amount of drugs produced domestically to 50% by the year 2020, and on 19 June the government said that it would inject $4 billion into the pharmaceutical sector over the next decade.

The idea that Russia can boost its domestic drug production so dramatically is no doubt overly optimistic, says Aleksey Eliseev of Russian life-science venture company Maxwell Biotech, and a managing director at the firm's US office in Boston, Massachusetts.

"But even if it is partially successful, it could spawn a new industry," he says. "What is important is the [government's] commitment to developing this industry."

Maxwell Biotech, backed by some $100 million of funding, was launched in Moscow at the end of 2008 by the Russian Venture Company (RVC), a government 'fund of funds' created in 2006 to support innovation in a range of sectors. The RVC also established a second $100-million life-science venture fund called Bioprocess Capital Ventures, and both companies have a mandate to invest in companies that develop innovative drugs in Russia.

A third fund with initial capital of $50 million, to be launched by the end of the year, will invest in companies that provide services to the drug-development sector — such as particular kinds of sample analyses, or the creation of special formulations of compounds on demand.

Such service companies are sparse in Russia, says Eliseev, while several other key factors needed for drug development to flourish are not in place either.

For example, many preclinical testing labs and drug-manufacturing facilities are not compliant with Western standards, and the country's drug-regulatory system is not comparable to that of the US Food and Drug Administration (FDA) or the European Medicines Agency.

What's also lacking, notes Eliseev, are large pharmaceutical companies that are ready to acquire products made by small biotech firms. "That complementary industry does not exist in Russia today," he says.

Collaborations abroad

These gaps are partly why international collaborations will be crucial to building the industry, according to Rusnano's Nikolenko — in addition to the fact that basic research in Russia is not currently strong enough to support innovative drug discovery. "I think it's the only model that will work," she says.

Bioprocess Capital Ventures has found another way of collaborating with partners abroad: tapping the expertise of expatriates.

In January, the Russian venture firm signed a deal with Cleveland BioLabs, a biotech company based in Buffalo, New York, establishing a joint effort that will conduct clinical trials on anticancer compounds called curaxins. These compounds were co-discovered by Cleveland BioLabs' chief scientific officer Andrei Gudkov, who emigrated from the Soviet Union 20 years ago.

The new company, Incuron, will be based in Russia but will launch clinical trials of its drugs in both Russia and the United States.

"The idea is, if in Russia we can bring the drug to clinical trials, even though this data would not satisfy the FDA, positive data would make American development significantly less risky," says Gudkov, who is also senior vice-president of basic science at the Roswell Park Cancer Institute in Buffalo.

The scheme is working so well, he says, that Bioprocess Capital Ventures is now forming a second company called Tartis with the Roswell Park Cancer Institute to focus on the research and discovery of anticancer compounds.

Expatriates can navigate the peculiarities of the Russian business environment in ways that other foreign partners might not, Gudkov notes, adding that many, like himself, still have access to decision-makers in Russia, which may help to grease administrative wheels.

There are nostalgic as well as pragmatic reasons for expats' interest, he says — and both suit their Russian partners. "They understand that we are not likely to return, but for us there is a mix of attractions there."

Alla Katsnelson
© 2010 Nature Publishing Group

 

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