R-Pharm jointly with RVC announced the establishment of a venture capital fund in the sphere of medical technology, RusBio Ventures. The amount of finance under management by the fund at the first closing will be RUB 2.07 bln. The new fund will be the first major investment partnership established in the Russian Federation with the participation of RVC and private investors. RVC investments in the fund will amount to RUB 1 bln; the same amount will be contributed by another anchor investor, a leading Russian private pharmaceutical company, R-Pharm, which contributes expertise of its key researchers and management to the partnership, in addition to the money.
RusBio Ventures plans to invest in development of world-class innovative technologies, in companies engaged in development of medical equipment and medical products. In addition, companies developing IT solutions in the field of biomedicine, as well as projects in related industries, are considered as targets for investment.
Initially, the Fund's portfolio will include 8-10 companies. A significant portion of the portfolio will be occupied by early-stage companies, in respect of which the "hands-on-management" approach is implemented; and this means multi-level support provided to such companies at all stages of their development. The Fund also plans to apply the practice of syndicated transactions with the world's leading venture capital funds.
In accordance with the Fund's investment strategy, it is assumed that at least 50% of all funds accumulated by RusBio Ventures will be invested in Russia. In this case, a certain portion of the Fund's projects will be implemented in the global markets, in particular, to ensure the comprehensive participation of the national biomedicine in globalization processes.
“Recent trends in the biomedical sector are directly associated with convergence of various technologies. As a result of blurring the boundaries between the pharmaceuticals industry sectors, diagnostics, instrumentation and IT, the investment focus will soon be determined not by the type of invested technology but by its applications per sectors, – says Alexey Konov, CEO of RusBio Ventures. – In this regard, the investment focus of the Fund will be set for domestic and foreign projects capable of meeting the new demands of the market.”
The Russian market of pharmaceutical and health care products is marked, for the time being, by a high level of dependence on imported products. Experts believe that such a degree of import dependence jeopardizes the national security. The situation is aggravated by lack of major players in the domestic market capable of co-investment in funding any venture capital biomedical projects.
“We are building an international pharmaceutical company, so we are extremely interesting in considering solutions, products and technologies that are currently at early development stages or even exist in the form of ideas and initial experiments and have not yet been captured by radars of the R-Pharm Group. Venture capital investments, with partners who are ready to share high risks, is, in our view, an effective vehicle of not only searching for projects for the future portfolio but also of entering new markets and into new partnerships. In this regard, we are pleased to have responded to the initiative of a team of RusBio Ventures professionals and we welcome the strategic partnership with RVC, a leading development institution and a fund of funds, hoping that other investors join this initiative. In addition to the money, R-Pharm will contribute its expertise and knowledge of the market to the Fund and we hope that together we are able to launch some very successful projects for the Russian and global markets. And, of course, I am glad, as a President of Business Russia, that the established Fund is the first major Russian partnership organized under a new law. This is, however, a small but real step towards deoffshorization of this traditionally offshore area of business" – said Alexey Repik, Chairman of the Board of Directors of the R-Pharm Group of Companies.
Thus, participation of a profile investor, R-Pharm, the largest player in the Russian pharmaceutical market and also in the public procurement segment, in the establishment of RusBio Ventures will create a landmark precedent. Apart from this, experience of R-Pharm and availability of expertise in promotion of innovative brands on the market are of value in terms of supporting the future portfolio companies of the Fund.
“Today, the Russian venture capital market has some distortions: both in industry and at the sector level. A significant share of investments in the market is intended for IT and Internet projects with only a small proportion invested in biotechnology and other promising industries” – said Igor Agamirzyan, CEO of RVC. – Launch of the venture capital fund in the area of biotechnology in the current economic environment manifests, first of all, confidence of private investors in the venture capital market, confidence in RVC as a professional investment partner and objective understanding of commercialization opportunities in domestic and global market projects and technologies, including those originating from Russia.”
No less important is participation of RVC in establishing the Fund as an anchor investor. The company will contribute the reputation of the oldest and leading technology investor to the project, will create a point of attraction for first-class foreign investors, and will provide access to expertise available in RVC on a wide range of industries at the Russian technology market. In addition, RVC will actively contribute to promotion of products, technologies and services of the Fund’s portfolio companies on the Russian and international markets.