Here’s How Russia Is Helping Grow the Biotech Sector

“Life is short, and the process is long.” That’s what Cleveland BioLabs (NASDAQ:CBLI) President Dr. Michael Fonstein told Forbes last year while discussing the U.S. Food and Drug Administration’s regulatory process. Cleveland BioLabs shifted the development of several of their drugs from the U.S. to Russia, the birthplace of the company and a land where regulations are more flexible, in order to expedite the process towards commercialization.

In 2011, Cleveland BioLabs and Rusnano, a company and fund owned by the Russian government, partnered to start Panacela Labs in collaboration with Roswell Park Cancer Institute, Children’s Cancer Institute of Australia, and Cleveland Clinic Foundation. Rusnano agreed to provide up to $26 million in funding over a four-year period to Panacela, which maintains operations in Buffalo, New York, and Moscow, Russia. Cleveland BioLabs also has a 59-percent ownership in Incuron another Russian Federation-based joint venture (with Russian closed mutual venture fund, Bioprocess Capital Ventures) conducting clinical trials in Russia.

Russia has made no bones about its initiatives to command a larger portion of the global biotech market. In 2010, Russia only had a 0.2-percent market capture, but promises by now-President Vladimir Putin were meant to boost that to 5 percent by the end of the decade as part of The Comprehensive Program for Development of Biotechnology in the Russian Federation through 2020.

Retooling its biotech framework and dedicating funds, Russia has been encouraging Western companies to consider bringing their technology there. It seems to be working as the Ministry of Health approved 210 new clinical trials in the third quarter of 2013, up 59 percent compared to the year prior quarter, according to an orange paper by Synergy Research Group, a Russia-based contract research organization. Companies from 18 different countries were represented in those trials.