Decree No. 1047 of 1 October 2015 constitutes a new state act for the promotion of the local production of medicines and pharmaceutical substances.



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Government of the Russian Federation
Постановление от 1 октября 2015 года №1047
2016 Update: Decree 860, 30 August 2016.

Inception date: 01 Oct 2015 | Removal date: open ended

Production subsidy

Decree No. 1047 introduces rules for the granting subsidies that affect the pharmaceutical and medical sectors. These subsidies are for partial compensation of expenses for the realisation of projects for production of medicines and (or) pharmaceutical substances. 

The subsidies under Decree No. 1047 are provided to registered in Russia organisations that have a license to manufacture drugs for medical application. An important condition that the potential beneficiary must fulfil in order to obtain state subsidies under Decree No. 1047 is to prove that s/he is able to generate income not less than 5 times the amount of the obtained subsidy for a total period of 3 years starting from the date of the commercial launch of the subsidised good (Article 6 of Decree No. 1047).

The provided official note that accompanies Decree No. 1047 states that it (together with other indicated as related state acts by the GTA) "will contribute to import substitution in the pharmaceutical and medical industries, will enhance the investment activity of the Russian organisations with the goal to create and modernise the production, will increase the share of domestically produced medicines and medical products, will create high-performance workplaces."

The state subsidies target the development of the innovative potential of the local pharmaceutical and medical industries. They form part of the state programme for the development of the pharmaceutical and medical production in the period 2013--2020 ("state programme").

The state subsidies also have the concrete purpose of achieving the target values of three quantitative indicators. They are set in the sub-programme No. 1 "Development of production of medicines" of the state programme as follows:

  • a share of domestic production of medicines in the total volume of consumption (defined in billion Russian Roubles),
  • a volume of investments in scientific research, development, technological innovations and re-equipment of production of medicines (defined in billion Russian Roubles)
  • implementation of the action plan on import substitution in the pharmaceutical industry, for whose products there does not exist a domestic manufacturer. These medicines are not indicated in Decree No. 1047. The state programme (point 2 and 3 of the list
    with state programme's main activities) indicate that these medicines must be innovative and must be designed for treatment of socially significant diseases.

The program has been amended on 30 August 2016, to reduce the "income-generated" requirements from 5 times the amount of subsidy received to 3 times the amount of subsidy received (Government Decree 860). 

The 2016 budget of the program was RUR 1,5B (USD 23M).

The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets and from foreign subsidiaries.