Page 20 - bne magazine March 2017 issue

20 I Companies & Markets bne March 2017
“In addition to the security argument, some firms were added because
the switch to the new public procurement system could
threaten their competitiveness”
are now considered “significant to ensure... the security of the State” out of a total of 25 firms. This includes Rosatom’s two “federal nuclear centres”, Russia’s main facilities for the development of nuclear weapons, as well as Atomflot, which controls the country’s fleet of civilian nuclear icebreakers.
Though most of the firms in the list seem to fit the description of strategic assets, there are some other eyebrow-raisers
of the same ilk as Book Expedition. A Kaliningrad-based printing house was also included, as well as a defence ministry company dedicated to the “protection of historical objects”.
The decree gives no details about on what basis companies are selected for inclusion and it appears some vigorous lobbying was involved in the drawing up of the final version. A source close to the Russian government told Russian
daily Kommersant that, in addition to the security argument, some firms were added because the switch to the new public procurement system “could threaten their competitiveness”.
The exemption list comes as a disappointment, say investors and campaigners, as the government appears committed to doing something about the level of corruption and the new state procurement system is the spearhead of that effort. Tenders are now obligatory on all state orders and state-owned companies
have to seek special permission to hold a tender with only one bidder. Almost all the bidding process has been put into the cloud; computerising government services like paying taxes and procurement is turning out to be something that Russia is actually good at. The entire tax administration’s IT system was upgraded last year, which led directly to an improved tax take.
Likewise, President Vladimir Putin himself introduced a rule several years ago that bans state entities from signing contracts with companies where the beneficial owner cannot be identified – aimed at killing the scam where government company bosses sign deals with companies owned by their wives. When the rule went into effect in 2013, some 60% of state orders had to be cancelled.
But the results have been mixed, partly because “state bodies are still reluctant to use all the instruments available and to follow the procedures”, says Nakou.
Russia saw almost no improvement in its standing in the
last Transparency International Corruption Perceptions Index and remains ranked at the bottom of the list in Europe. Likewise, Russia’s Federal Antimonopoly Services (FAS) slated the government in a report it was asked to prepare on Rus- sia’s competitiveness that was published on February 7, saying the state companies should stop buying companies and start selling non-core assets as the government itself is the biggest impediment to increasing competition, Vedomosti reported.
Though the exemption list currently comprises a limited num- ber of state corporations, more could be added in the future, prompting fears that this could be used by state officials to wiggle out of the obligations the government is trying to impose on the bureaucracy. Nikolai Arefiev, a deputy from the Communist Party, told Kommersant that the bill amounted
to “a law on how to bypass the procurement system”.
Drug maker Richter sets innovative
example for Hungary’s economy
Blanka Zoldi in Brussels
In 2016 Hungary’s Gedeon Richter launched a new medi- cine in the US that could help around 2.6mn Americans suffering from schizophrenia, making it the first drug dis- covered by an Emerging European pharmaceutical company that has received approval from the US’ notoriously tough Food and Drug Administration.
With innovation at the forefront of its strategy, backed by
a robust business performance over the last few years, the Budapest-based Richter illustrates the potential of Hungary’s first-rate pharmaceutical sector, which many in the industry,
www.bne.eu
including Richter’s CEO, expect to become the key driver
of the Hungarian economy. However, the burdens that the government has placed on companies like Richter, including a 20% special tax and the introduction of the so-called blind-bidding system, where products offered at the lowest price receive preferential treatment from the state health service, are forcing pharma companies to increasingly
look at export markets like the US to stay afloat.
The antipsychotic drug Cariprazine, licensed to Allergan in the US and sold under the trademark name of Vraylar, was dis-