Over a half of the foreign pharmaceutical companies that export medicines to Russia are considering the establishment of production operations in the country, Russian business daily Kommersant reported.

The daily cited a survey conducted by PricewaterhouseCoopers (PwC) and the Association of International Pharmaceutical Manufactures (AIPM), which indicates that of the 23 biggest drug suppliers to Russia, 33% are currently considering setting up production operations in the country in the next two or three years and another 19% are planning on such a move within five years' time.

Eight percent of the surveyed manufacturers said they were willing to buy a stake in a Russian pharmaceutical company and 23% expressed an interest in starting a local business from scratch. Other respondents said they would like to set up joint ventures with partners in Russia or place orders for the production of their drugs locally.

Experts asked by Kommersant to comment on the PwC & AIPM survey's findings said the trend was due to a new government programme providing free or discounted drugs for disadvantaged population groups, with the foreign supplies limited to just 30%.

One other reason is the Russian pharmaceutical market's steady growth, at an annual rate of 15 percent, experts said. "Against the global background, the Russian pharmaceutical market is now one of the few [markets] left with more potential to grow," Anton Artyomov, chief executive of the Aston Consulting think tank, said. "Western investors are also attracted by the market's increasingly civilized appearance and, consequently, lower financial risks."

David Melik-Guseinov, a senior fellow at the Russian marketing research institute Pharmexpert, said: "Producers of cheap generic drugs, who traditionally tend to base their production units closer to markets, are particularly interested in expanding their geography.".