The international community has imposed a series of some of the most punitive sanctions on Russia, its finances, and many imports due to its invasion of Ukraine. While the sanctions do not directly target the pharmaceutical industry, the knock-on effects will certainly be felt by Russia’s pharma companies. As the majority of these companies within Russia are private entities, these sanctions will have a large impact on their financial viability, says GlobalData, a leading data and analytics company.

Quentin Horgan, Managing Analyst for the Drugs Database at GlobalData, comments: “The Russian pharmaceutical pipeline is dominated by private companies, which account for 70% of all companies involved. This is a complete contrast to Europe where public companies make up a greater percentage of the pipeline at an average of five times more than Russia, accounting for 12% of all companies in Europe. Government entities make up less than 0.2% of companies that are in Europe’s pipeline whereas in Russia this is much higher at 3%.”

With Russia’s economy suffering, it is unclear who will have the money available to finance drug development, as it has famously been a long and costly process.

Horgan continues: “Government and institution-based entities make up the bulk of the remainder of Russia’s pharmaceutical pipeline with 28% of all companies, including PharmaDiall and Pharmenterprises, supported by the Skolkovo Foundation, a government-backed scientific and technological center for the development and commercialization of advanced technologies, which has been a key investor that has supported many pharmaceutical companies. However, it has also been identified by the US government as part of Russia’s state security and spying apparatus, and may come under direct sanctions, further limiting financial investors in the country, especially for drug developers.”

As the war enters its seventh week, showing no signs of stopping anytime soon, so too will the deep sanctions that are so detrimental to Russia and its finances. The way pharma companies are structured in Russia’s pharmaceutical sector, prioritizing both private companies and government-linked institutions over public entities, may prove to be the market’s downfall.