Greed pill. Sergey Lavrov’s son-in-law to take over pharmaceutical market?
Russian deputies are contemplating subjecting US medicines to sanctions and replacing them with oak bark. Meanwhile, the Russian government is willing to sell medicines wherever possible. It does not mind yet another monopolist at the pharmaceutical market either; Minister of Foreign Affairs’ son-in-law Aleksandr Vinokurov is sure happy about that.
Health for sale
Russian officials cannot be said to be completely inhumane; seeing how State Duma deputies are about to ban US medicines that miraculously made it past the Ministry of Health’s red tape, the government bothered to figure out a way to help the government’s “sanctionary” medicine go down. The Ministry of Industry and Trade could not find more fitting time to finish a draft bill allowing to sell over-the-counter medicines in grocery stores even if it tried. Someone there is going to make sure oak bark recommender by Petr Tolstoy is available at all times, it seems. However, what exposes the population to dangers of self-medication can also help a certain individual make it to the Forbes list of the richest people. This certain individual is none other than Minister of Foreign Affairs’ son-in-law Aleksandr Vinokurov.
The Minister of Foreign Affairs’ son-in-law Aleksandr Vinokurov
Deputy PM Shuvalov is the one behind the “revolutionary” idea to sell over-the-counter medicines in regular grocery stores; the Ministry of Industry and Trade has been drafting it for four years. Aleksandr Vinokurov had already replaced Mikhail Fridman as the A1 Investment Group President when the drafting began. However, he was quick to jump into the pharmaceutical market once familiarized with the Deputy PM’s idea. Vinokurov bought 50% of SIA Interneyshnl Pharmaceutical Company’s stock in 2015. Vinokurov is infamous for not only being Deputy PM’s son-in-law but tendency to illegally seize companies as well. The media referred to acquisition of SIA Interneyshnl yet another such seizure.
Igor Rudinsky who died after a long fight with a disease in 2014 used to own SIA Interneyshnl that would stay one of the largest Russian pharmaceutical retailers under his management. SIA Interneyshnl owned Sintez Plant (Kurgan), Biokom Production Facilities (Stavropol), and Biokhimik (Saransk). SIA Interneyshnl made 98.5b rubles ($1.56b) in 2014 (144m rubles ($2.3m) in net profit). However, SIA Interneyshnl had been skillfully and swiftly run into the ground prior to Vinokurov’s acquisition. Nota-Bank – one of whose beneficiaries was none other than Rudinsky – suddenly got its license revoked. Rumor had it Rudinsky’s heirs were going to go bankrupt. The heirs were quick to sell the troublesome assets, especially since it was not hard to find a buyer; Vinokurov had been waiting just around the corner. There is no doubt he got a nice discount, too.
Technically, pharmaceutical business runs in Vinokurov’s family, so to speak. His father Semiom Vinokurov is a Genfa Pharmaceutical Retailer co-owner. Genfa sells more than 30 generic medicines in Russia. Genfa had not been all that impressive despite having rights to sell a large number of medicines. It all changed after Aleksandr Vinokurov got what he wanted from Rudinsky’s heirs in 2015. That was precisely the moment Rostec decided to create the National Immune & Biological Company; Sergey Lavrov’s son-in-law’s unremarkable company became one of its co-owners. By then, the market players had already figured out the Vinokurovs began winning the turf war for Russian pharmaceutics.
Vinokurov started an offensive against competitors a mere year into the incredibly lucrative SIA Interneyshnl acquisition. It is worth mentioning that SIA Interneyshnl owned the Mega Farm Chain Pharmacy. SIA Interneyshnl owed 7b rubles ($111.3m) to creditors and partners in 2016. It launched a legal war against its *, filing one lawsuit after the other. However, Aleksandr Vinokurov has a couple of more elegant tricks up his sleeve. For example, Vinokurov managed to strike a deal with 36.6 Chain Pharmacy co-owner Roman Avdeev who is now believed to be a stakeholder only on paper, while Vinokurov is believed to be the de-facto owner. It is reasonable to expect both are going to soon get tired of this farce, ending it with Avdeev selling his stake to Vinokurov’s companies.
Roman Avdeev. Photo — Vedomosti
Vinokurov mastered the art of illegal corporate seizure back in his home country. He had graduated from the Cambridge University. Vinokurov became a TPG Capital Investment Fund manager in 2006. Fast-forwards four years, TPG Capital illegally seized Lenta. Vinokurov is believed to be the mastermind behind the move. TPG Capital showed not a hint of shyness and simply overran the target using firearms and tear gas. Such audacity paid off – TPG Capital representative Jan Dunning is the chain CEO even to this day.
Vinokurov polished his skills acquired at TPG Capital when working for the A1 Investment Group. By then, not only had he worked for the Magomedovs’ Summa but had become friends with one of the Foreign Affairs Minister’s relatives. Vinokurov did live up to his new employer Mikhail Fridman’s expectation.
Illegal seizure of Evrodon and Stroyfarfor Construction Companies is one of the things he is “credited” for. While he took a back seat during illegal seizure of Evrodon, Vinokurov acted in a manner akin to that of gangsters from the 1990s when dealing with Stroyfarfor; the plant was simply seized by armed people without insignia. However, it is worth mentioning there was a humble bailiff (roughly equivalent to a US Marshal, translator’s note) among them.
Vinokurov decided to leave A1 and go back to pharmaceutics in 2017. He had been hatching a Plan B in advance. Still a SIA Interneyshnl stakeholder and A1 head at the time, Vinokurov signed an agreement with the X5 Retail Group in 2016. SIA Interneyshnl got the right to place A-Mega and Da, Zdorov pharmacies in the retailer’s stores. It is worth mentioning that at this point the Ministry of Industry and Trade was only drafting the bill for free sale of over-the-counter medicines and it was not exactly clear whether it will ever make it out of this stage, but Vinokurov promised to invest 6b rubles ($95.4m) to open more than 3 000 pharmacies in stores of the Pyaterochka, Perekrestok, and Karusel Grocery Chains. It seems as if Aleksandr Vinokurov knew about the draft bill more than others did.
Being the winner
It began looking more and more like it when in late 2017. Back then, the Ministry of Industry and Trade revealed it was going to finish the draft bill ahead of schedule; the pharmaceutical market was “thrilled” to hear the news. It just so happened this coincided with Aleksandr Vinokurov completing his SIA Interneyshnl takeover. However, the draft bill changed, now allowing retailers to sell over-the-counter medicines by themselves. Moreover, the Ministry of Industry and Trade stated retails do not even have to license their pharmaceutical activities. It would seems as if the Vinokurovs’ dreams came crushing down. However, it was not the case. In fact, it meant exactly the opposite of that.
The first thing retailers eager to get their slice of the new market segment will need is outlets for medicines. It is worth mentioning that there is not that many large retailers. Bearing the agreement with the X5 Retail Group in mind, one could easily expect Pyaterochka to step in and offer its services for just this purpose. It is also unlikely Jan Dunning forgot how he had made it to the Lenta top management. Meanwhile, pharmacy chains did not take kindly to the draft bill. Large players such as Rigla and Neofarma warned they will be closing thousands of pharmacies across Russia due to failure to compete with retailers if the draft bill is passed.
Vinokurov is the only one who is not bothered at all by the draft bill. That is not surprising really, given it looks as if he himself helped legislators write it. Prescription medicines will continue to be sold only in pharmacies whose number is about to drop drastically. Moreover, Vinokurov’s Marathon Group merged with Rostec’s Natsimbio in February. Natsimbio is infamous for not only corruption scandals, but being a part of the capital of Russia’s vital pharmaceutical plants as well. In one way or another, Natsimbio controls production of vaccines and tuberculosis medicines. Natsimbio now also have chances to become Russia’s major HIV medicines supplier under government procurement contacts.
The enormous empire created by Sergey Chemezov could end up in Vinokurov’s hands in a blink of an eye. The agreement between Natsimbio and Marathon Group means Vinokurov gets the right to acquire 100% of Rostec’s subsidiary, given Natsimbio has ceased being the only supplier under government procurement contacts. This brings us back to the issue of corruption. The police accused former Natsimbio CEO Nikolay Semionov of 10m ruble ($159 000) embezzlement and went after him a month after the odd agreement had been signed.
Detention of Nikolay Semionov
It is worth mentioning that Semionov who had been leading a laidback lifestyle in Switzerland returned to Russia for some reason, only to be immediately placed under house arrest. Semionov’s unheard-of consciousness makes one think someone is interested in the Natsimbio investigation more than in others; Aleksandr Vinokurov seems to fit perfectly. He is just one step away from taking over the Russian pharmaceutical market.