Russian Police Search Novartis & Teva Offices

Russian Police Search Novartis & Teva Offices

July 6th, 2011 // 12:52 pm @

Russian police have searched the offices of four drugmakers in Moscow, including Novartis and Teva Pharmaceuticals, according to Reuters, which cited the Vedomosti web site, which quoted a police source as saying the searches were carried out as part of an investigation into an alleged carve-up of the market for supplying the state healthcare system with essential drugs by major distributors.

The government runs a system of subsidized drug purchases for low-income citizens. An investigation found the bulk of state supply contracts worth over $2 billion went to six distribution firms from 2006 to 2008. Shady dealings are of concern when it comes to Russia. A report earlier this year from Transparency International found that, on a scale of 1 to 10, with 10 being ‘highly clean,’ Russia notched 2.1 .

A Novartis spokeswoman in Moscow confirmed the search took place and the drugmaker is cooperating with the police, but she declined to explain the substance of the investigation, according to Reuters, adding that no one at Teva’s Moscow offices was available to comment. The two other firms are Russian drugmakers Valenta and Akrikhin, Vedomosti wrote.

Earlier this year, Russian Prime Minister Vladimir Putin warned global drugmakers, which control about 80 percent of the domestic market, that such dominance threatens national security and that, consequently, they face restrictions if they fail to develop local production and transfer technology.

Toward that end, Novartis recently announced plans to invest $500 million in Russia over the next five years and build a new plant in St. Petersburg to strengthen its position in the market, which is expected to exceed $60 billion by 2020. Teva, meanwhile, plans to invest up to $100 million in a drug production plant in Russia as it aims to more than triple Russian sales by 2015.

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