Vladimir Putin: Good afternoon,

We are actively working to prepare regional programmes to modernise health care and provide it with substantial funding, on a level that we haven't allocated for a long time.

Obviously, our efforts to improve the quality of health care must rest on a powerful technological foundation, on the modern pharmaceutical industry and the medical industry. We have repeatedly discussed this issue in public and at the government level.

How do matters stand today? Not much has changed in terms of monetary value in the last few years and domestic producers account for about 20% of the pharmaceutical market. In commodity terms the figure is around 65%. Probably, everyone present knows that they make the simplest and cheapest medicines. Just to repeat that they account for a mere 20% of domestic production in monetary terms. As for high-tech medical equipment, almost all of it is imported. I'm not saying that all of it is imported, but most of it is.

The dominance of imports carries certain risks. We should not talk about conspiracy theories or speak in vain about such vital spheres as national security, but it is clear that we are becoming dependent on foreign monopoly producers. I'm not even talking about national security issues here, but this could lead to shortages or price hikes on medicines. In fact, this is what we see happening from time to time.

Needless to say, we cannot tolerate this state of affairs, and we must fundamentally modernise our pharmaceutical and medical industries. Basically, we'll have to develop a new industry that will attract investment, generate innovations, create efficient jobs, and, most importantly, that will produce competitive, safe, high-quality and affordable products for our people and our health care system.

We must reach a strategic goal – meeting domestic requirements in pharmaceuticals and equipment ourselves. By 2020, we must produce no less than 90% of the most vital medicines and up to 50% of medical equipment.

At the same time, Russia should seriously strengthen its position on international markets. Pharmaceutical exports should increase by eight times. This is a very difficult and ambitious task that can only be carried out through a concerted effort on the part of the government, science and business on the basis of a new approach.

The federal targeted programme that continues until 2020 must become a key instrument in the implementation of these plans. Today we must discuss and come to terms on its main parameters and financial allocations. It seems that we were doing this until midnight yesterday. I think we finished our meeting at about midnight. These are difficult but extremely important issues. Today we'll continue and, I hope, finish our discussion.

I'd like to draw your attention to the following points: The government is ready to earmark more than 120 billion roubles from the federal budget for this purpose. This substantial amount should serve as start-up capital for modernising this industry and making innovative breakthroughs.

This is not the first time that we have discussed this subject. We discussed it a year ago and also several years ago. I think that the material base of our pharmaceutical industry has changed for the better. At any rate, we have introduced modern personnel and modern production lines. They are ours. And they are integrating, or have almost integrated, completely into other areas of activity in this field. And this is a good precondition having the allocated funds yield real results.

The total investment into the federal targeted programme amounts to 185.3 billion roubles, including 122.9 billion roubles from the federal budget. I think it is right to channel government funds primarily into promising research projects and the technical modernisation of more than 160 plants.

Now the second point. The chain of research, clinical trials and production should work effectively to guarantee the development and introduction of modern medicines and medical equipment. Under the programme, we plan to establish 17 research centres to develop medicines and medical equipment, including those in leading universities and research organisations such as Moscow State University, Urals Federal University, Volga University, and the Moscow Institute of Physics and Technology. All in all, 17 research centres should provide a good foundation for work in this sphere.

Furthermore, we won't be able to implement all of our plans without developing the personnel potential of the pharmaceutical and medical industries. Therefore, we should make the training of specialists and the advancement of their skills an absolute priority of the federal targeted programme. This should include practical training in the best domestic and foreign research centres.

And, finally, the fourth point. Incidentally, as far as I can see, this is how this work is organised at ChemRar, where we are now. Mr Ivashchenko (chairman of the board of directors of ChemRar) has just told me about this. They not only invite specialists from abroad (and a number of promising employees have already moved here) but they have also launched a plant in the United States. They are actively working with Europe, constantly communicating and cooperating with them.

In effect, this amounts to the division of labour and integration. This is the way to go. We must support such activities and create the best possible conditions for attracting private investment and new technology to the industry. I am referring, in part, to the expansion of leading pharmaceutical concerns and producers of medical equipment to Russia, certainly with a gradual localisation. In this sense, our plans for this industry are not very different from those for others. And we have encouraging examples of such cooperation. Foreign partners have launched production lines in the Orel, Kaluga and Yaroslavl Regions.

Let's discuss all these issues. Mr Khristenko, please go ahead.

Viktor Khristenko: Thank you, Mr Putin. Colleagues, you have the slides of the presentation speech, which will probably be easier to follow, and they will be on the big screen as well. I will try very briefly to go over them and make some comments – first of all, concerning the situation in which we find ourselves. Mr Putin has already said that the market is quite active and rapidly growing, both in general and in the more specific fields of medical technology, pharmaceuticals, and medical products. It grew primarily due to the essential role of the state in these markets. So, over the last few years, the market has shown strong growth.

In any case, I must say that for the past three years, it is perhaps the pharmaceutical industry that has been most affected by actual state involvement in the sector. Moreover, during this time, a development strategy for the pharmaceutical industry was adopted through 2020, there was a significant reappraisal of the regulatory framework for distributing pharmaceuticals, a number of projects were launched with funding from the federal budget, and so on. This created a slightly different atmosphere in the market, and I must say that the only thing the domestic pharmaceutical industry did over the past three years was grow to match the market.

Vladimir Putin: Mr Khristenko has said that "the market has grown," but everyone who is present here understands what is at stake. We, the state, simply – let's say, artificially – raised the demand for an entirely different level of quality. We started to distribute resources that we had never distributed before. It's a shame that 80% of these public resources are spent on foreign producers. This is what is at stake. But it's not just that. The fact is that we were confident that we can regulate both volume and price with modern market mechanisms. And if we keep depending on imports, this will be almost impossible to accomplish. We do not yet know what their quality will be, but if we keep importing generics from India, our own primary product will never be developed.

Viktor Khristenko: So, 'pharma' followed the market all this time due to state involvement in the industry – probably due to the change in declared policy itself, including procurement policies. And we have at least matched industry development with the growth rate of the market. The behaviour of the market for medical devices, which still relies largely on state resources for its development, is no less volatile – it's quite clear on the slide. But it is apparent that the domestic medical industry could not catch up to these rates and yields in recent years, and as a result, it relinquished its market share to imports. As a result, the production of the Russian pharmaceutical industry to date is 22% domestic and that of medical supplies is 15% domestic. This, unfortunately, is what we are dealing with today.

If you look at the next slide, showing the structure of this market itself, it is quite obvious that the state's role in the pharmaceutical market accounts for approximately 38%, and in general purchases, it accounts for 85% of medical equipment. This slide clearly shows how the state fills this demand on the market. Here, the presence of domestic companies falls short of the market itself – it represents 16% of the pharmaceutical market and about 19% of the medical equipment market.

The next slide shows what has happened in recent history. And in this sense we can confidently say that the key element for changing the operating conditions is the adoption of the "Pharma 2020" strategy, which actually allowed the active process of modernisation to begin, creating new production facilities in Russia. We of course will see the results later – after a few years. But this process, we can say, is now active, and not only Russian but foreign players have become involved. I could cite a whole set of such examples, but in order to save time, I will not.

We did exactly the same work – perhaps with some shift in the timeline – on pharmacy equipment. And today we're in very active negotiations with all major players in the market, including some of the largest foreign companies. In the coming months, we will get a complete package of proposals for industry development in Russia with the participation of major global grants.

In this regard, it is crucial for us to maintain the chain of mechanisms that have been used to support the development of these industries – the federal targeted programme is not the only such element, but it is an extremely important piece of this entire system of support. The challenge for the federal programme – this is also clearly visible on the next slide – is the transition of the Russian pharmaceutical and medical industry to an innovative development model. In other words, we are talking about going from screwdriver assembly to a full-cycle industry that spans from development to production and meets compulsory integration into the global markets.

The program solves the following main problems. First, it retools the pharmaceutical and medical industries. This is a socially important issue of drugs and medical products. This is marketing innovative domestic pharmaceutical and medical products. This is the launch of an innovation cycle – increasing the export potential of the domestic industry and, of course, bolstering pharmaceutical and medical workforces.

Slide six clearly demonstrates the challenges that we are currently working to overcome. And, perhaps unlike many other industries, we possess fairly good academic schools – solid scientific schools, both in chemistry and in the biotechnical industry – and as a result, we have every opportunity to expand the industrial base. But there are no drive belts or gears connecting these two significant engines.

By and large, the convention of previous years was to rely upon the emergence of ideas and developments on the fundamental level or at the outset, which, when supplied with a distributor, found their application in other systems or in other countries, where the tools and mechanisms of interaction between these two sectors were already well established.

This gap between science and industry is a key problem to be addressed by the federal targeted programme, and, in fact, we have been working for years to find the tools for its resolution.

I cannot say that the federal targeted programme is the only tool. The Russian Venture Company and Rusnano have shown that there are already models for moving in this direction and filling this gap. But there are significant risks that these development institutions are unable to assume, for which co-financing from the federal budget is the only possible solution.

The next slide shows a road map for the federal targeted program. The first phase – until 2015 – is intended to modernise the pharmaceutical and medical industries through research and development in production engineering, especially in products that are currently imported. These are the lists of essential, strategic medicines the larger share of which, 90%, can and must be marketed domestically. The profits earned from this can be invested in the development of innovative solutions during the next phase, at the corporate level. I'd like to note that the modernisation of production facilities will be funded privately, while the state will finance those parts of the projects that develop new engineering technology for these facilities during the preparatory phase.

Next year we will also start several innovative projects in the 'pharma' industry, in which we will take advantage of technology transfer, with the resulting drugs expected to go on sale in 2015. To sum it up, through this programme, we will develop new drugs from scratch and from transfer technology. Specifically, we will purchase long-term patented medicines under license, primarily those that account for a significant share of Russia's pharmaceutical market.

During the first phase we will also start to create innovation infrastructure, investing in government-funded companies and universities. This investment will mainly go towards retraining programmes since we'll need specialists who can use this new technology and can adopt international manufacturing standards, GMP.

I'd like to remind you that Russian standards are to be harmonised with Good Manufacturing Practices (GMP) by January 1, 2014, as required by law. In essence, we will need to ensure that manufacturing technology and infrastructure in Russia measure up to the standards used at the most advanced production facilities in Europe and the United States.

During the second stage, from 2015 to 2020, we will need to boost the innovation export potential of our pharmaceutical industry through R&D projects for new drugs and medical products.

According to most projections, the influence of import substitution on the industry's development potential will begin to wane by that time. But we will be able to compete effectively on the global market only if we market innovative products that are protected by patents.

This slide shows the programme's effects, which include the creation of over 10,000 high-tech jobs and the development of about a hundred innovative medicines. I need to clarify that these are not only absolutely new molecules but also new ways to deliver medicine to the nidus. These solutions will compose Russia's innovative drug portfolio, accounting for 90% of the list of medicines of strategic importance, life-saving and essential drugs. As you can see, we have set quite ambitious goals.

The customer and coordinator of the programme is the Ministry of Industry and Trade. The main customers also include the Ministry of Healthcare and Social Development, the Ministry of Education and Science, the Federal Medical-Biological Agency, the State Nuclear Energy Corporation Rosatom and Moscow State University.

As Mr Prime Minister said, over the next 10 years we plan to allot some 123 billion roubles from the federal budget for these purposes. We will also attract off-budget funds, so the total investment in the programme is expected to amount to 185 billion roubles.

Clearly, progress in this programme will largely depend on the life cycle and development cycle of pharmaceuticals and innovative medical products, which can sometimes exceed eight and even 10 years. This is why while working on the programme it was critical to develop processes to ensure that new products be introduced to the Russian market within the next 10 years. We will continue to review several alternatives, including the one we discussed late last night. It fully complies with the programme's concept, but we have decided not to change the programme just yet...

As for investment breakdown, since this is basically an R&D programme, the larger share of the funds, 77%, will be allocated for R&D projects. A far smaller amount, 21%, will go toward companies' official capital and 2% toward miscellaneous expenses, primarily human resources.

The next slide shows seven groups of measures to be implemented through this programme. I'm not going to list them all, I'll only say that they target the pharmaceutical and medical industries and will improve their human resource and IT potential.

The industry's R&D and modernisation potential will be developed through the production of essential drugs that will replace imports. This is what the pharmaceutical industry will focus on over the middle and long term, up to 2015. The lists of these drugs have been approved by the government and were taken into account while designing the industry's development programmes and corporate policies.

The next slide shows the distribution of funds across the first group of measures. We used two criteria to determine the amount of the allocation: the production process (either chemical synthesis or biotechnology) and the patent protection level. As you can see, the costs of the projects in these four sectors differ a great deal; some will require several dozen times more investment than others.

We are starting several projects in patent-protected areas to launch full-scale domestic production of exclusive drugs that are of critical importance to the Russian market and healthcare. To this end, we will need to purchase licenses for these drugs.

On the next slide you can see a list of measures to form a portfolio of innovative drugs through the programme. Programme priorities were based on the diseases with the highest mortality rates and the most wide-spread diseases, with consideration for the prognosis up to 2030, the capacity and development dynamics of various markets, the portfolios of international pharmaceuticals manufacturers and the availability of Russian solutions.

The next slide shows the conclusions of the analysis report on the main mortality factors and a prognosis for related dynamics up to 2030. They largely depend on living standards across the country. The breakdown changes as living standards improve. We took note of this factor while drawing up the programme.

As you can see from the portfolios of ten major international manufacturers, their top priority is the development of solutions to treat cancer, central nervous system diseases and other diseases. We also took this into account while selecting the priorities for our federally targeted programme.

Slide 17 presents a model for technology transfer which we consider effective. It is an important factor, as you say. We have discussed it at various meetings – particularly at the meeting in Zelenograd. We discussed technology transfer then and have said it again here, with the crisis, as businesses consolidate, many of them are reconsidering their R&D projects and are shelving some of them – either because they cannot afford certain innovations or have no time for them or, again, because they are shifting strategy. So we end up with a considerable stockpile of projects and have an opportunity to implement them for the Russian and even the world market.

The slide presents just such a model that envisages a foreign company passing a project to its Russian partner for pre-clinical and clinical tests. Then they patent the new drug together and share the risk and the achievement. For instance, the Russian partner would retain the Russian and CIS market rights while the foreign partner would promote the drug on the world market, which implies a sizeable investment. For this, the foreign company would use its global network, influence, etc. Sales would entail reciprocal royalties between the companies. We think the model, which we only talked about at that meeting, is of great interest.

I would like to mention that ChemRar and Mr Andrei Ivashchenko are at the point of testing this very approach themselves. They are working with world leaders, Hoffmann-La Roche to be specific. We think this is a significant development with the potential for cooperation with other pharmaceutical leaders and is an approach we are currently analysing.

The next slide shows distribution, which is related to the second group, that is, investment money channelled into the development of innovative drugs, their pre-clinical studies, basic risks and the main part of the work – clinical tests, technology transfer and the creation of technologically new platforms.

As I have said, we intend to launch this innovative cycle next year. Slide 19 shows, as an example, a choice of projects for 2011 based on these precepts.

I must say that we have collected considerable experience in cooperation with innovators and developers. Today, we are considering more than 300 projects in the pharmaceutical and medical industries. They are under consideration by the ministry’s scientific and technical council established for this very purpose, and by the working group of the presidential commission for modernisation. By and large, a pool has been made – a system for the selection and promotion of these projects. We cannot say that all of these 300 projects are unique or promise breakthroughs but at least everyone knows where they can be submitted and tested. This system is working now.

The third and fourth groups concern the development of the medical industry. They take into account market priorities and medical products that healthcare services need the most. Slide 21 illustrates deferred demand or, in other words, potential demand for medical industrial products in Russia. Clearly, the statistics from the past years, including quite recent ones, differ greatly from the tasks we are formulating now and from the funding being diverted to modernise healthcare.

Anything involving mandatory medical insurance and its implementation, or the national healthcare project, or anti-cancer and other programmes, and nuclear medicine, a programme which is under discussion now – together, they create an additional market worth several hundred billion roubles. This market will be sufficiently localised not only geographically within Russia but also in terms of time.

This time frame – the next five to six years – will give the market great impetus which will result in markets for servicing, updating and, later on, replacing technology. So the situation will be quite new, quality-wise. It is critically important to us, from the point of this programme, to catch up with the breakthroughs in healthcare, and offer timely services through the Russian medical industry. As I have said, we certainly see this in terms of global partnerships with leading manufacturers. Our negotiations are ongoing.

In addition, proposals have been drafted to amend the notorious 94^th law on state purchases that will allow long-term purchases based on reciprocal terms using so-called offset instruments that require a certain level of localisation, that is, a transfer of technology to Russia, are offered at a tender in exchange for a long-term contract. This is new for Russia, but many countries use this approach extensively and to great effect in promoting advanced industry and research. A recent example is Israel, where this system has been used for a long time and is very effective, as is its legislative basis. Israel’s location in the Middle East and its status as member of the World Trade Organisation are no obstacles.

The task of drawing up such amendments has been posed, and they are ready now.

Vladimir Putin: The defence industry uses this arrangement everywhere.

Viktor Khristenko: Yes, and the way Israel uses it, purchases for the defence industry create a counter inflow to civil industries. This is what makes this approach so effective. When the state decides it is ready to buy some particular equipment in specific amounts in the years to come and when it is willing to contract a manufacturer for a specified term, it not only wants the equipment but also wants to know how the manufacturer intends to localise production and arrange the transfer of rights to Russia. I can say that the principal participants understand this process and are ready for it. We have done the preliminary work with all of them already.

The next slide shows the approaches we need for the medical industry to make innovation breakthroughs on the global market. This applies primarily to nuclear medicine and biomedical technology. Let us lay the emphasis on the sector connected with implementing the modernisation programme, which rests largely on import substitution and on cooperation concerning products manufactured currently by principal exporters to the Russian market.

All of this of course should proceed from the needs of the Ministry of Healthcare and Social Development. The next slide shows fund distribution based on equipment type. The slide speaks for itself. I would only like to add that when we were designing the programme, we managed to synchronise it entirely with Ministry of Education and Science programmes for biological environment and related research and development. Our work will not overlap. Our programme is like a relay race. It meets the needs of the healthcare service demand, which guarantees purchases and reduces end user risks. We transfer the demand into a system of practical standards so that everyone sees from the start who is developing what and to what end.

The next slide shows the concentration of resources in particular fields of innovative development. This is primarily diagnostic visualisation and biomedical equipment, and the development and manufacture of bio- and other special-purpose materials.

Human resources, shown on Slide 25, are among the crucial tools and demands. This implies a system of perpetual education at company expense, and regular updates of scientific methodology for college and university curricula. Related goals include an information infrastructure for industrial development, which would include product promotion. Within this programme we intend to support anything involving exhibitions or trade shows with Russian participation in order to promote the new products we are developing in the federally targeted programme.

Slide 26 shows what we know for today and how it concerns the regions that are the most prepared to develop pharmaceutical and medical innovation centres. Actually, with consideration for client proposals on the targeted programme, we have selected projects and investments that guarantee equipment upgrades and a shift to innovative development.

Government investment is channelled into strategically important pharmaceutical and medical companies, as well as universities that train personnel for the industry and that are located in the most promising regions in the country. The last slide related to the programme shows the means for re-equipping the Russian pharmaceutical and medical industries and indicate the amount of funding for certain purposes – particularly, the establishment of technology transfer centres.

I would like to say in conclusion that the programme is, in fact, the missing link in the structure of pharmaceutical and medical industry development. This slide shows the goal we are posing today with 2020 in view. It envisages changes in the share of Russian manufacturers in the domestic market. By “Russian manufacturers” we mean not only those whose capital comes from Russia but, strictly speaking, any production based in the Russian Federation and sufficiently localised.

The increase in the share might appear small (it is slightly more than double in either industry) but, if we take into consideration that, say, the medical equipment market will grow by six times by 2020, according to the most modest estimates, with the share of Russian manufacturers more than doubling, the volume of the medical industry will increase by 12 times in the decade from 2009 until 2020. The pharmaceutical industry market will grow slightly less, roughly by four times by 2020. Nevertheless, the share of Russian manufacturing should double – which means that the volume of the Russian pharmaceutical industry will grow by eight times. This federally targeted programme is the pivotal factor in attaining these ambitious goals. Thank you.

Vladimir Putin: Thank you, Mr Khristenko. Ms Golikova has the floor.

Tatyana Golikova: Mr Putin, Ladies and gentlemen,

Let me begin by saying a few words about the breakthrough that the pharmaceutical and the medical industries are about to make in the field of public health. I’d also like to point out some initial steps or stages in healthcare development, to which the progress of these two sectors should be linked.

As Mr Putin said in his opening remarks, in addition to the massive financial injections in the healthcare sector in recent years (I'm referring to the federally targeted Public Health programme), the industry stands to benefit from additional allocations planned for 2011 and beyond, as well as from new modernisation projects, under which about 460 billion roubles is to be invested in total over the first two years. Re-equipping our medical institutions is a key modernisation priority.

The projects’ first phase, involving all of Russia’s regions, confirms the statistics we’ve talked about time and again over the past few years. Cardiovascular, respiratory and gastroenterological disorders as well as cancer and infection are the most common diseases and also the main causes of mortality in Russia.

I’m mentioning all these health conditions here because they’re listed as the principal targets of allocations to be released under the given projects. The development of the medical and pharmaceutical industries in the years ahead should therefore be oriented toward these same priorities.

What’s been done to that end so far? In order to reorient our medical and pharmaceutical industries accordingly, we’ve developed, ahead of the project launch, a set of standards for refitting medical institutions and for providing medical services. These standards, developed in collaboration with authoritative medical practitioners and institutions, are to be introduced within the next two years. In this regard, I’d like to cite figures we hardly ever mention. According to last year’s federal financial report, only 38.2 billion roubles of nationwide government spending went to finance medical equipment purchases while another 47 billion was spent on fixed assets (not counting investments).

Under the new modernisation programmes, as much as 300 billion roubles will be spent over the next two years on facelifts and major repairs to clinical buildings, as well as on new equipment. This is quite a challenge for our medical industry, isn’t it?

Speaking of medical equipment, we can distinguish between two main categories: basic appliances, including electrocardiographs, screening machines, lung assist devices and physiotherapy equipment, and more sophisticated equipment, including body scanners (computed tomography, magnetic resonance imaging, angiographs, and so on). Today, Russia’s needs for this latter group are satisfied almost entirely with imports. Nothing is produced domestically. So this is what our industry should focus on when planning to upgrade medical institutions to the new standards.

Expendables present an even more complex problem, which became evident during the implementation of the Public Health programme. Trade in expendables currently exceeds the turnover of medical products in Russia by many times.

Here’s one simple example. We have 31.9 million cases of cardiovascular disease per year and 1.1. million related deaths. At least 16.7 million tests are needed yearly to diagnose that type of disease alone. The cost of expendables required for these tests totals an estimated 865 million roubles. And treatment for heart disease will take at least 127,000 procedures, with estimated costs at about 1 billion roubles. That’s the amount needed for cardiovascular disease alone, mind you, and just for diagnosis and treatment.

Along with expanding the assortment of domestically produced replacements for imported medical goods, we also need to focus on the upgrading of equipment, especially incubators, and monitoring and life support systems, such as lung assist devices and gauging tools.

I also want to mention the need to improve the quality of equipment for the treatment of children suffering from physical disabilities. Our ministry has just received instructions to that effect.

Now on to medications. According to 2009 reports, the year’s state purchases of medical drugs were worth a total of 177 billion roubles.

Looking back on what has been done in this sector in recent years, I’d like to focus briefly on just four areas of activity.

In 2008, we decided to allocate money for the centralised purchase of drugs targeting seven types of disease. We now buy 18 international unpatented titles on these seven listed conditions.

When we were introducing this programme in 2008, not a single domestically-produced medication was on the list. Only imported drugs would have been used. But two Russian titles appeared in 2009, and the number increased to three this year. Bidding for next year’s contracts is not over yet, but we expect five Russian made drugs to be selected.

This doesn’t seem like a lot, you may argue. Yes, but the number attests to the significant progress we’ve made toward replacing imported goods with Russian-made products.

Second, we drew up a list of 57 vitally important medications. Soon, it will include about a dozen new drugs for therapeutic use against the most common diseases I mentioned earlier.

Third, the 57-item list was revised in 2009 for the next year and then again in 2010. The percent of medications made by domestic producers, on their own or in collaboration with foreign counterparts, accounted for 67% of the 2010 list and 69% on last year’s.

The positive trends we see in the development of Russia’s pharmaceuticals market and the medication titles currently undergoing clinical registration are setting a precedent for continued progress down this road for the foreseeable future. This will reduce the cost of treatment as well as the cost of medical services that is consistent with the standard we’ve been talking about.

Fourth, the government released an initiative to subsidise the price of pharmaceuticals classified as essential to cushion the impact of the economic crisis. This measure aroused a lot of controversy at the start, and was criticised for making life harder for domestic producers. We’ve accepted all those criticisms, and have settled these controversies.

The list of vitally important medications now features up to 7,701 titles. Of these, over 52,5% are identified as Russian. Admittedly, though, this group includes 241 medications that are packaged in Russia, but actually produced abroad. Production lines for these titles are expected to be launched in this country soon, as part of the federal targeted Public Health programme.

When considering drug price registration modes and the planned transition to GMP starting in 2014, our business partners and we were unanimous in that the programme should provide additional opportunities for Russian producers, both in terms of pre-clinical support and in clinical trials for domestic development.

The year 2013 will be a momentous one for our pharmaceutical industry. The current modernisation projects in the sector will be completed in 2012. Resources we now spend largely on the re-equipment of (medical) institutions could then be channeled into efforts to introduce new standards for healthcare, much of which is based on drug therapy. It’s highly important therefore that our pharmaceutical industry be ready to meet the challenge, as well as to face up to the imminent increase in consumption, especially among hospital patients. Some of Russia’s pharmaceutical producers must reflect on how they could readjust their production plans and development to be in a position to set some (positive) trends by 2013.

The year 2015 will be the next landmark. “High-tech” aid should then become part of the basic medical insurance package. These days, we use the term ”high-tech aid” in reference primarily to therapies that involve the use of expensive drugs. Most of these are imported from abroad. But we would like to see the production of Russian analogues launched in this country by 2015. And then again, we have some original inventions of our own, which we intend for mass production within the framework of the modernisation programme.

Finally, I’d like to make it clear that federal agencies (are not just supervising the modernization programme, but) are themselves taking part in its implementation. Three institutions affiliated with the Health Ministry are among the participants, and serve as a breeding ground for fresh medical talent as well as a place where pharmaceutical clusters are formed. Officials from these institutions are here today, and they’ll tell us about their specific areas of competence and what they’ve managed to accomplish so far. 

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Vladimir Putin's closing remarks:

What do I want to say in conclusion? Many of you present here work in science, industry and education, so I want you to know that, first, the programme is in demand and necessary. Second, it has been very carefully prepared. Third, it will be adopted. It will be adopted with the financial indicators and amounts that were mentioned today, a bit more than 123 billion roubles. This amount will be maintained.

The issue is not letting all our obligations remain only on paper, as sometimes happened with defence, security and economic programmes in the 1990s; we determined target figures, but then we failed to reach them and everything was stalled. Of course, we have to proceed from the realistic possibilities of the budget and our forecasts for the development of the national economy in general, so we just cannot afford to ignore the Ministry of Finance.

We will think about ways of adjusting this programme: it may need to be stretched out, maybe not, but we will look at some of our other priorities to stretch it out at some points and make additions to this programme. It is also good to remember what the deputy minister of finance just said. I am also urging the business community to revise their plans slightly. Eventually, this will be done for you too. Of course this is intended for the country as a whole and the people, but also for you – in order to support your businesses with huge budget resources that we apply to purchase technology, equipment and medical products for development. And you are interested in this no less than the government.

So I call on you to cooperate with the ministry and see how you can sort out your priorities.

In any case, we will adopt and implement this programme. I am asking you to finalise it together with the ministry as soon as possible, to be exact within a week, and submit your final proposals, so that we can find a compromise that is suitable and beneficial for everyone. I have no doubts that we will not only adopt the programme, but also make it a reality.

Thank you.