Frederik Paulsen, Chairman of Ferring Pharmaceuticals Board of Directors (III Столыпин-Форум)

It's a great pleasure for me to be here, and I'm always happy to be present in the MGMO activities.

Yes. I have basically two different pharmaceutical interests. One of them is Ferring, which is a highly specialized biotech company mainly working in reproductive medicine. And then there's a separate company which we called Sever, which here in Russia has two factories, one in Izarina and one in Kazan. But these activities are completely separate.

Yes, actually we are together with the MBU University. We're now building new labs for developing special technology related to international absorption. I think that's going to be very interesting. We have about 10 different projects which we will develop and hopefully patent. Then we are also looking at the possibility of doing biotechnology work in Kazan, and we are also with our company Nano Pharma in Kazan developing new nanotechnologies.

We're already started. I think we have a lot of support from the authorities. I know that many foreign companies find Russia a difficult country to do business in, but that's not our experience. We've had a lot of help and support from federal authorities, from the Minister of Research, and we've also had a lot of help from the local authorities, in particular in Tatarstan.

I think it's very important that we have a close collaboration with innovative university centers. We have it here in Moscow, and we will also have it in Kazan. Hopefully we will be able to expand into a research collaboration in Saint Petersburg also in the future.

I think there are two things which are very important. One of them is that we have a level playing field. Although we have a lot of activities here in Russia, we are still a foreign company, and we want just to be treated as the Russian companies are being treated, so there is no preference for us or for them. We just want to be treated equally. That's the first thing. The second thing is where we can get help, and we are already kind of getting help, is to do development of new innovative products. We've had several grants which have been very helpful to develop products, and we are very grateful for that and we hope that will continue. So many of these grants which we have received had subsequently led to patents, and these patents we are filing them not only in Russia but also abroad. I think that's a very positive collaboration, and we're very grateful for all the help we have received.

Well, I don't think Russia is very different from any other country. I think most businessmen have a very mixed relationship with tax authorities in any country in the world. And I think taxes are relatively low in Russia. Of course, when the tax authorities come, they do a very thorough job to try to find something, but I wouldn't say that it's more difficult than in any other country.

No, but Ferring itself is a highly specialized niche products. It's quite clear that we cannot work with large-scale distributors. Of course we have small niche distributors that will help us. And then the other issue is, if you talk on a more much broader scale, it's of course the future of the pharmaceutical industry in Russia. There is a policy to localize manufacturing, which I can completely understand, but there is one backside on this: the Russian market is relatively small. You cannot start producing economically for a market like Russia; it's just too small, the prices are too low. So the only way it will be justified – this is one of the issues we are confronted with today – is that we have to internationalize the sales of the products we produce in Russia. And that's an extremely important question because there we would need to have assistance from the authorities. We need to have the production here in Russia, the manufacturing here in Russia, done at standards which are being accepted internationally. I'm not saying that the Russian standards are lower; I'm saying that the Russian standards are slightly different in terms of quality control, quality assurance, all the various aspects of manufacturing. I think it's very essential as an aspect of this localization of production that together with the authority of the pharmaceutical industry will develop a set of rules that will allow us to export as easily as possible.

That's a very important question. When we were hit by the crisis in the second quarter of this year, we stopped basically investments all over the world. It's not just in Russia, but we stopped all over because we wanted to see what was happening. Now things are becoming clear and we will reactivate our investment plans here in Russia. That's a question of months, and we will probably only have lost six to nine months in our investment program. Well, I have a special interest in Russia which is a little bit wider than the manufacturing of pharmaceutical, and that's the demographic situation. I see that the challenges facing Russia over the next two or three generations are... everybody puts a lot of effort into politics, the economy, the environment, threat from the outside, and that's not really the issue. The issue is the Russian demographic changes – that the population is really decreasing. And what can we do? I know that the president is very aware of this and there's a lot of programs going on in Russia to assist, but I think also the industry and private individuals can help with this. For instance, I'm trying to give a Russian city a fertility clinic as a present every second year; we've given already four clinics. That's one way of assisting that you can do as a private individual. The other thing we can do is of course start local production here of the fertility treatments, and that's one of the investment programs I was referring to earlier. So I think that these are some of the things you can do on a bigger natural scale. There's constant changes in society, constant changes in technology, so the policies that were discussed and put into place four or five years ago become outdated, and there has to be from the side of the government a constant revision of the policies and addressing these new changes that appear in society.