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36.6°C – The ideal temperature for investment in Russia

We have heard mixed accounts of Russian businesses lately, and against this backdrop I was pleased to note some positive developments in the Russian pharmaceuticals industry.

According to a report from RBC, the US firm Walgreens Boots Alliance (WBA), the world’s largest network of pharmacies, has acquired a 15 per cent stake in the Russian pharmacy chain 36,6. This forms part of a wider deal, which also includes the acquisition by 36,6 of WBA’s distribution arm ‘Alliance Healthcare Russia’, whereby 36,6 is aiming to add to its retail activities by making inroads into the wholesale market.

From relatively humble origins back in 2003, 36,6 (whose name refers to the healthy human body temperature of 36.6°C) grew quickly and became the first Russian pharmaceutical company to hold an IPO. As Forbes reported nearer the time, by 2007 it had grown its network to over 1000 stores nationwide. Indeed, the company’s earnings in 2015 amounted to RUB 54.1 billion (around $817 million).

Although 36,6 has been challenged in the markets recently, a number of steps taken in 2015 and 2016 indicate that it will consolidate its market position. Most excitingly, the latest partnering with WBA will, in the words of the general manager Vladimir Kintsurashvili, give it “access to the experience and knowledge base of one of the world’s leading international companies”.

The pharmaceutical and healthcare industries are often being cited as ‘recession-proof’ (, and the WBA-36,6 deal is another indication of the strength of this sector in Russia. On this blog back in the summer of 2014, I highlighted two major pharmaceutical deals from the time which provided reasons to be confident in some of the more ‘off the beaten track’ sectors of Russian investment. The point clearly remains valid today.

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