Aim is to boost drug development in the both countries.

Russia’s $10 billion state-owned technology fund is joining with a U.S. venture capital firm to put $760 million into U.S. pharmaceutical, diagnostics, and medical device companies as well as create a manufacturing plant and increase drug development in Russia. The Russian Corporation of Nanotechnologies (Rusnano), created to finance nanotech and other high-tech companies, will join with Domain Associates to invest $330 million each, most of which will be used for about 20 companies.

Rusnano and Domain said their investment targets “will include groups developing innovative products in the fields of pharmaceuticals, biotechnology, medical devices, and other areas of life sciences that have significant applications for patient populations in Russia and that complement Rusnano’s focus on nanotechnology-based innovation.”

Rusnano and Domain also said they will build a GMP pharmaceutical and medical device manufacturing facility in Russia that will hold exclusive rights to manufacture and market products developed by the investee companies in the Commonwealth of Independent States. Those products, according to Rusnano and Domain, will include therapeutics for treatment of viral infections, cardiovascular diseases, and cancer. The joint venture said it will manage advanced-stage clinical trials in Russia of new pharmaceuticals and other products that will support regulatory approvals in Russia, the U.S., and other markets.

The partners have engaged the management company Team Drive, led by Leonid Melamed, to develop the project. Melamded said life sci companies account for 20% of Rusnano’s portfolio, a percentage the fund appears intent on increasing. Last year, for instance, Rusnano invested $4.5 million in a venture with U.S.-owned BiOptix Diagnostics to expand production of label-free biodetectors and bionanoslides. As part of the $19 million project, two U.S. VC funds, Boulder Ventures and Peierls Foundation, joined with private investors to invest another $4.5 million.

Domain has an exclusive focus on life sciences as well as $2.4 billion of capital under management. Its three major investment segments are pharmaceuticals, specialty pharmaceuticals, and medical devices, while additional areas of interest that include biomaterials, bioinstrumentation, and diagnostics. Domain says its partners have been involved in the formation and growth of more than 235 life science firms including 102 biopharmas like Exelixis, Geron, and Clovis Oncology.

Brian Dovey, partner at Domain, told Reuters he was attracted to Russia because it is one of the fastest-growing pharmaceutical markets in the world. Dovey noted that “Russia has a commitment from the top down to pharmaceuticals and hi-tech.” And it does: Russian Prime Minister Vladimir Putin committed Russia last year to growing its biopharma industry to a 5% share of the global market by 2020, up from just 0.2% in 2011. Putin has included biotechnology among five business sectors on which his nation and its economy are counting to deliver fast growth over the next several years.

More important than words, however, Russia has committed big money to its biopharma dreams. Last year, Putin’s government announced approval of RUB 120 billion (about $4 billion) toward Pharma-2020. The program, approved but not funded in 2009, calls for boosting investment in Russian manufacturing capability, growing the market share of domestic drugs from 20% to 50%, and creating more high-skill jobs to elevate Russia’s pharmaceutical industry.

To read the Reuters’ story, click here.

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