In 2025, the pharmaceutical market grew, and the number of transactions in it increased sharply. The high cost of borrowed capital, strict regulation and a valuation gap have made the legal structure of a transaction no less important than its price. The authors examine how Russian corporate law instruments work in the pharmaceutical industry — from the purchase of a pharmacy chain to a joint venture for product localisation.
Russian pharma ended 2025 with a result that many industries would envy. According to DSM Group and OKS Labs by Okkam[1], the market volume including public procurement reached RUB 3.34 trillion (plus 17%), with public procurement growing fastest (plus 26%) and the pharmacy segment (plus 14%), while the share of localised medicines in monetary terms exceeded half for the first time.
The number of transactions increased noticeably, and the lion's share of the growth came from consolidation of pharmacy retail. The reason lies in the structure of the segment: with almost 83,000 pharmacies, the bulk of revenue is generated by the largest federal chains, and the market remains highly concentrated. Rising costs are squeezing out small chains, federal players are absorbing regional ones, and the FAS annually approves dozens of such transactions. For 2026–2027, analysts forecast slower growth: the commercial segment is expected to add about 10–11%.
Behind the average picture lies a wide range of transactions, and each of them sets its own tasks for lawyers:
- consolidation of pharmacy chains — the most widespread type: the buyer acquires, in essence, not a business but licences and lease rights to specific outlets;
- transactions with production assets. Over a decade, the number of sites producing medicines from the list of strategically significant medicinal products has, according to industry estimates, fallen from about twenty-five to eighteen. This change is explained by the following economic factor: a portfolio of low-margin VEML positions ceases to cover the maintenance of GMP status, and the owner chooses between sale, repurposing and closure;
- purchase of portfolios — registration certificates, dossiers and trademarks for a group of medicines, without acquiring the company as a whole;
- localisation partnerships, where a Russian manufacturer and a foreign (increasingly Asian) technology holder create a joint venture;
- raising capital for full-cycle and biotech projects. The IPOs of Promomed and Ozon Pharmaceuticals in 2024 showed that the path from a private round to the exchange is realistic in the industry;
- the exit of individual Western companies from Russian assets, which continues, albeit in a fading mode.
There is another factor that is discussed less often: in companies founded at the turn of the 1990s and 2000s, the time for a change of owners is arriving. This process may generate no fewer transactions than the consolidation of the pharmacy market, but it will require its own toolkit.
All these scenarios share three circumstances. Borrowed money is expensive, and buyers finance transactions mainly from their own funds. Seller and buyer value the business differently: the former looks at multiples of a growing market, while the latter factors in regulatory risks, VEML price regulation, patent disputes and dependence of revenue on public procurement. Finally, almost every element of the value of a pharmaceutical business is tied to a permit issued to a specific legal entity, so the structure of the transaction is rarely neutral: it either preserves the asset's regulatory shell or destroys it.
Ten years ago, such a transaction was almost inevitably moved into English law: Russian law lacked both familiar warranties and mechanisms for their enforcement. Today there is no such necessity. The corporate agreement, representations about circumstances, compensation of property losses, options and conditional performance of obligations have travelled from the novelties of 2009–2015 to settled practice confirmed by clarifications of the Supreme Court[2]. Sanctions restrictions completed the job, turning foreign holding structures into a burden. A transaction with a pharmaceutical asset under Russian law has become the norm rather than a compromise.
What Is Actually Being Bought in Pharma
From a legal standpoint, the value of a pharmaceutical company consists of three permits and the corresponding entries in registers.
The first is a licence: a manufacturer operates under a licence from the Ministry of Industry and Trade, while a distributor and a pharmacy operate under a licence for pharmaceutical activity (for a retail chain, each pharmacy is a separate object in the annex to the licence). The second is a conclusion on compliance of production with GMP requirements: it is issued to a specific manufacturer for a specific site and confirmed by an inspection. The third is registration certificates for medicines, the holder of which is often not the plant but a separate company of the group. Alongside these are registered maximum prices for VEML, registration in the medicine movement monitoring system, patents and trademarks, clinical trial results, licence and distribution agreements, and government contracts.
Separately, the licence for activity with causative agents of infectious diseases is taken into account[3]: for immunobiological production facilities, it is this licence that triggers the application of legislation on strategic companies (see the section “Approvals: Antimonopoly, Investment and Regulatory”).
All of the above is attached to the legal entity and does not follow the property. A change of the company's participant does not affect it. The sale of a plant, portfolio or pharmacies as property, however, requires obtaining a licence anew, amending registration dossiers due to a change of the registration certificate holder, undergoing an inspection for a new GMP conclusion and re-registering VEML prices. Each procedure takes months, in aggregate up to a year, and throughout this time the medicines legally remain “someone else's”.
In industry groups, the regulatory shell is usually divided: one company holds the certificates and trademarks, a second holds the site and licence, and a third acts as a trading house. Therefore, the parties first of all determine which companies must enter the transaction perimeter. It is important for the buyer to obtain, together with the plant, the rights to the products manufactured there, otherwise it risks acquiring a site without an assortment. The seller, by contrast, needs not to transfer, together with the plant, the rights to medicines that it intends to continue producing.
Acquisition Models and Their Industry Consequences
The choice between buying interests (shares) and buying property is the first and most significant decision of the parties: the tax result, the scope of risks and the list of approvals depend on it. In pharma, it is additionally constrained by the regulatory perimeter. In practice, four models occur.
A direct purchase of interests or shares in the operating company remains the basic option, and in pharmacy consolidation it is practically without alternative: the buyer acquires legal entities with licences and rights under lease agreements, not premises and equipment. A typical transaction in this segment is the acquisition of a regional chain whose pharmacies are distributed among several legal entities: the perimeter includes the companies, not the outlets. The regulatory shell is preserved, but the entire history of the company passes to the buyer: Roszdravnadzor orders, disputes over government contracts, the risk of inclusion in the register of unscrupulous suppliers, tax claims, obligations under concessional loans.
The purchase of a holding company is justified when the business is built as a group and it is more convenient to transfer control over the entire structure — this is typical for pharma. But if the top tier is located abroad, foreign law, approval procedures and the attention of tax authorities are added, so such structures are now, as a rule, dismantled before the transaction.
An investor's entry into the capital occurs through an additional issue of shares in a JSC or an increase in the charter capital in an LLC. It differs from the first two models in the recipient of the funds: the money goes to the company itself, not to its current owner. For full-cycle projects, transition to biotech platforms and bringing sites to GMP, requiring multi-billion investments with expensive financing, this is especially important: the founder replaces debt with capital and retains a stake, while the investor obtains participation in a growing asset with the prospect of exit through a sale to a strategic buyer or an IPO. When planning timelines, the specifics of the procedure are taken into account: an additional issue of shares is registered by the Bank of Russia within up to 20 business days, but taking into account preparation of the issue decision, placement of shares and disclosure of results, the entire process in a JSC usually takes 2–3 months; in an LLC the procedure is simpler — after contributions are made, changes are registered in the USRLE, and an increase in charter capital, as a rule, fits within several weeks.
A similar instrument is a convertible loan (Article 19.1 of Federal Law No. 14-FZ dated 08.02.1998 “On LLCs” and Article 32.3 of Federal Law No. 208-FZ dated 26.12.1995 “On JSCs”). At the early stages of biotech development, where the company's valuation is inherently disputable, it is more convenient than an additional issue: the investor provides money now and converts it into a stake at the valuation of the next round or upon achievement of a pre-agreed development result — at early stages this is, as a rule, a scientific milestone (for example, obtaining preclinical data), rather than commercial indicators that are difficult to forecast. A convertible loan agreement in an LLC is certified notarially, and conversion goes through a notary — without the involvement of the company's bodies and with a limited range of objections on its part. For companies of strategic importance, this instrument is closed: they are not entitled to act as borrowers under a convertible loan agreement.
The purchase of assets most often takes the form of a portfolio transaction: the buyer receives rights to certificates, dossiers, trademarks, documentation and inventory, or a site with equipment, while the legal entity with obligations remains with the seller. This model is resorted to when due diligence has revealed risks material to the buyer or when the seller is divesting a non-core segment.
Convenience comes at a price. Revenue goes to the selling company, and its withdrawal to the participants entails additional taxation; transfer of rights to intangible assets is subject to VAT at the standard rate; licences do not transfer, and re-registration of certificates and prices takes months. For this period, transitional agreements are concluded — a supply agreement or a contract manufacturing agreement under which the seller continues to produce medicines as the formal holder of the certificates. Without such a bridge, the purchase of a portfolio means a pause in sales and loss of positions in procurement.
The conclusion is simple: if the value lies in the shell — certificates, GMP status, licences, government contracts — the company must be bought. If it lies in specific property or individual medicines, and the legal entity is burdened with risks, the purchase of assets with a well-designed transition period is justified.
Separately stands the transfer of the business to the next generation — for companies founded at the turn of the 1990s and 2000s, the question has moved from deferred to current. The toolkit here is different: phased transfer of control through options, a corporate agreement between heirs, participation programmes for key employees and a personal fund allowing ownership to be separated from management without splitting the stake. In pharma, the consequences are more tangible than in other industries: fragmented control can block decisions on which changes in dossiers, VEML pricing and participation in procurement depend.
Due Diligence as the Basis of the Transaction
No instrument works in isolation from due diligence: its results shape the representations, compensation of losses, conditions precedent and price. In pharma, due diligence has a pronounced regulatory bias.
Its first point for the coming years is the transition to the EAEU single market. Under the Rules for Registration and Examination of Medicinal Products[4], an application to bring a dossier into compliance with the Union's requirements had to be submitted by 31 December 2025; from 1 January 2026, national certificates, including indefinite ones, lost force. If the application was submitted on time, the certificate's validity is extended for the period of the procedure — no more than three years in the reference state and two years in the recognition states — but the submission itself does not guarantee obtaining a Union certificate.
Hence a direct consequence: portfolio due diligence begins with questions on which positions an application has been submitted, at what stage the procedure is, and what is happening with positions for which no application was made. The answer determines which part of the portfolio is generally subject to valuation and which has already become a source of expenses and risks. In the contract, the block is closed by a combination of representations on the status of the procedure, a condition precedent for key medicines and compensation of losses in the event of refusal.
The rest of the due diligence subject matter is conveniently grouped by blocks:
- registration — composition and validity of certificates, completeness of dossiers, status of EAEU procedures;
- production — term and scope of GMP conclusions, history of inspections and Roszdravnadzor orders, batch recalls, pharmacovigilance data;
- patent — for generics and biosimilars, absence of infringement of originators' rights; for original medicines, validity, terms and scope of patent protection, as well as disputes related to the portfolio;
- price and accounting — compliance with VEML maximum prices and correctness of work with the marking system;
- public-law and commercial — participation in public procurement and the risk of inclusion in the register of unscrupulous suppliers, concessional loans and subsidies, SPIC, agreements containing a change-of-control clause;
- compliance — promotional activity, interaction with physicians, anti-corruption requirements;
- personnel — the qualified person for quality, key technologists and developers, without whom the site or pipeline loses value.
The risks identified are allocated under the contract: certain ones are closed by compensation of losses, uncertain ones by representations, critical ones become conditions precedent or grounds for revising the price.
Contractual Instruments: How Risks Are Allocated
The framework of a pharmaceutical business sale and purchase agreement is formed by five constructions: representations about circumstances, compensation of property losses, options, conditional performance of obligations and the corporate agreement. All of them have become firmly established in practice and are applied by courts.
Representations about circumstances (Article 431.2 of the Civil Code of the Russian Federation) are the seller's statements about the state of the company on which the buyer relies when deciding on the transaction and determining the price. In pharma, their list is noticeably longer than average: validity of certificates and status of the EAEU procedure, existence of a GMP conclusion and absence of unfulfilled orders, absence of batch recalls, compliance with VEML prices, correctness of marking data, proper conduct of clinical trials, patent purity of the portfolio and absence of claims by right holders, and for original medicines — validity and terms of patent protection, compliance with restrictions on interaction with physicians and anti-corruption requirements, targeted use of subsidies and loans, absence of grounds for the register of unscrupulous suppliers.
Negotiations follow a familiar scenario: the seller narrows the wording with “to the best of its knowledge” qualifiers and materiality thresholds, while the buyer seeks unconditional statements. If the representations turn out to be inaccurate, the buyer is entitled to recover losses or a penalty; if they were material to it, also to terminate the contract; and if the contract was concluded under the influence of fraud or material mistake caused by such representations, instead of termination to demand that the transaction be declared invalid. An important role here is played by the clarification of the Plenum[5]: a person who has given a knowingly false representation is not entitled to rely on the fact that the counterparty could itself have discovered the inaccuracy from public sources. For pharma this is significant: much (orders, batch recalls, registers, arbitration case files) is public, and without such clarification the seller would rely on the incompleteness of due diligence. Warranty and indemnity insurance in Russia remains exotic, so the buyer has to be protected exclusively by contractual means.
Compensation of property losses (Article 406.1 of the Civil Code, an analogue of English indemnity) covers a different type of risk — known to the parties and not dependent on breach of contract. It is triggered by the occurrence of a pre-described circumstance, does not require proof of fault, the amount of losses and causation, and remains in force even if the contract is invalid. As a general rule, the instrument is available to entrepreneurs, but paragraph 5 of Article 406.1 makes an exception for the corporate agreement and the agreement on alienation of shares or interests: there compensation can be agreed with an individual as well. For pharma, where the seller is often the founder personally, this is fundamental.
The court is not entitled to reduce the agreed amount of compensation, except in the case of intentional contribution to increasing losses. There is also a related rule that is forgotten when drafting the contract: if the party in whose favour compensation is established has in bad faith contributed to the occurrence of the circumstance, it is deemed not to have occurred. The point is that a buyer who has accepted an asset with a known risk cannot accelerate its realisation in anticipation of payment.
In pharma, the instrument is in demand as nowhere else: compensation closes the outcome of a patent dispute, the risk of early repayment of a concessional loan, penalties under government contracts, consequences of batch recalls, refusal to bring a dossier into compliance with EAEU requirements, and tax assessments following pre-sale restructuring. If due diligence reveals an unfinished patent dispute — whether an originator's claim against a biosimilar manufacturer or a challenge to a patent for the target company's own development — the buyer need not wait for the court's decision: the seller bears the monetary consequences of losing, and the transaction closes. Often compensation is tied to individual representations, converting a soft promise into an obligation with a definite monetary price.
Options — the option to conclude a contract (Article 429.2 of the Civil Code) and the option agreement (Article 429.3 of the Civil Code) — allocate performance of the transaction over time. The constructions are different: under an option to conclude a contract, one party issues an irrevocable offer that the other may accept within the agreed period, and the contract is deemed concluded by acceptance. An option agreement, by contrast, is concluded immediately, and the entitled party may, within the agreed period, demand its performance. The right under both constructions is usually granted for a separate premium. A call option gives the buyer the right to buy out the interest under a pre-defined formula; a put option gives the seller or minority holder the right to exit on agreed terms. So that performance does not depend on the will of the obliged party, for interests in an LLC both the offer and the acceptance are certified notarially, and the notary itself files the documents for registration; an additional safeguard is a pledge of the interest (Article 358.15 of the Civil Code).
In pharma, options work in two situations. The first is transactions with developers, where the founder-scientist retains a stake until the development result is achieved: the right to buy out the remainder arises after registration of the medicine or completion of a research phase at a price tied to the result. The second is localisation partnerships, where it is important for the Russian side to secure in advance the right to buy out the foreign partner's stake if it leaves the market or fails to transfer technology. Options are also used to structure exits from deadlocks in joint ventures and tag-along and drag-along rights.
Conditional performance of obligations (Article 327.1 of the Civil Code) separates in time the signing and completion of the contract: the law permits performance to be made dependent on circumstances, including those dependent on the will of the parties. The list of conditions precedent usually includes FAS consent, and where there is a foreign element, permission of the Government Commission, consent of creditor banks and institutional investors (development banks, etc.). Also characteristic of the industry is the requirement to obtain the consent of a counterparty under agreements with a change-of-control clause: without it, the buyer risks obtaining limited rights under such agreements (for example, no ability to commercialise the portfolio) and other adverse consequences (early termination, etc.). A regulatory step — changes in certificates, completion of the EAEU procedure for key positions, a GMP conclusion for a new line, price registration — may also be a closing condition. The condition on absence of a material adverse change is filled with specifics: suspension of registration of a key medicine, revocation of a GMP conclusion, inclusion in the register of unscrupulous suppliers. Until closing, the seller undertakes to conduct the business in the ordinary course. If the conditions have not occurred by the long-stop date, each party is entitled to terminate the contract.
The corporate agreement (Article 67.2 of the Civil Code) is needed where the transaction creates a partnership: in a localisation joint venture, in a project with the founder retaining a stake, in a consortium of investors. For a JV with foreign technology holders, it goes beyond allocation of seats on the board of directors: it fixes the stages and terms of technology transfer, rights to improvements and local developments, exclusivity in the territory, the procedure for decisions on bringing medicines to market and pricing policy in public procurement, the research budget, responsibility for quality and pharmacovigilance, and actions in the event of the partner's exit. In addition, classical corporate governance issues are regulated: the list of matters requiring unanimity or a qualified majority (reserved matters), restrictions on sale of interests to third parties, tag-along and drag-along rights, deadlock resolution, profit distribution.
Breaching such an agreement is disadvantageous: in addition to penalty and losses, paragraph 6 of Article 67.2 under certain conditions allows challenging a decision of the company's body and a transaction of the party — with a caveat on protection of good-faith third parties. Paragraph 9 permits an agreement between participants and creditors or other third parties — a workable way to bind a bank or development institution that financed the site without bringing it into the membership, which may be particularly attractive in conditions of expensive credit.
None of the constructions requires recourse to foreign law. It remains to determine the form of dispute resolution — a state court or arbitration. For corporate disputes related to Russian companies, domestic institutions are increasingly chosen: the Arbitration Center at the RSPP, the Russian Arbitration Center and the ICAC at the Chamber of Commerce and Industry of the Russian Federation.
Price: From a Fixed Amount to Milestone Payments
The valuation gap remains the main factor slowing transactions. The seller proceeds from market growth, the share of localised medicines exceeding half the market, and a queue of buyers in retail; the buyer, meanwhile, takes into account price regulation, dependence on procurement, patent risks and the cost of money. In such conditions, a fixed price works increasingly poorly. Of course, legal instruments cannot completely eliminate the gap between the seller's and buyer's approaches, but they can make pricing in the transaction more manageable and balanced.
There are two basic calculation mechanisms. Under the locked box model, the price is fixed according to the balance sheet on an agreed past date and is not recalculated afterwards: it is assumed that from that date the economic result of the business belongs to the buyer. In return, the seller undertakes not to allow “value leakage” — dividends, payments to related parties, bonuses, debt forgiveness — and compensates them in full. The list of permitted payments is agreed separately, and for the period between fixation and closing the seller is often charged compensation for deferred settlement. The completion accounts model involves payment of a preliminary price at closing with subsequent adjustment in both directions. The final price is determined by actual net debt and working capital at the closing date against target indicators, and disputes are referred to an independent expert.
The choice between them cannot be arbitrary. Locked box provides certainty and is therefore convenient for the seller, especially in an auction sale with several bidders whose offers are easier to compare by a fixed price, but it requires reliable reporting at the price fixation date and discipline from the seller in the period before closing. Completion accounts more accurately reflect the state of the business at the moment of transfer and are usually more favourable to the buyer, but they stretch out settlement and generate disputes. For pharma it is significant that the approval route pushes closing months away from signing: the longer this interval, the more expensive the “frozen” price and the more carefully one must describe both the list of leakages and the adjustable items — inventory with a limited shelf life, reserves for batch recalls, retro bonuses to distributors, unfinished settlements under government contracts.
On top of this basis is built a deferred payment quite familiar to pharma, tied to “milestones”: milestone payments have long been the norm in global practice, and Russian law implements them through conditional performance and options. A milestone may be registration of a medicine, completion of the EAEU procedure, inclusion in the VEML list, winning the first procurement, reaching agreed revenue, or a GMP conclusion for a new site. For example, when buying a developer with two late-stage medicines, part of the price is paid at signing, part after registration of each, and the remainder upon achieving target revenue over two years: the seller gets a chance at the full price, while the buyer does not pay for what has not yet happened.
In the production assets segment, another model is also found: a plant with a low-margin portfolio is acquired for a nominal amount with assumption of the seller's debt and investment obligations. The real price becomes the volume of obligations assumed, so such transactions require careful elaboration of liability under contracts, loans and orders — through detailed representations and compensation of losses. Since 2025, a tax nuance has appeared: if an individual buys an interest at a price below the value of net assets, the buyer has a material benefit, and the market value is determined mandatorily — as the share of the value of net assets on the last reporting date (subparagraph 3 of paragraph 1 of Article 212 of the Tax Code of the Russian Federation). Economically the price may be fair, but the tax base is calculated formally, so a nominal price must be modelled in advance to avoid unexpected consequences after closing.
Claims under representations and compensation make sense only if they can be secured. The most reliable is escrow: part of the price is blocked with an independent agent and goes to the seller only after the warranty period expires without claims. Retention of part of the price, a security payment, a bank guarantee and a penalty work in a similar way. The seller's interests are protected by the disclosure letter and limitations of liability: the maximum amount of claims, the de minimis threshold for an individual claim, the minimum aggregate amount of claims and the period for bringing them. In pharma, the warranty period is often tied not to the calendar but to regulatory events — re-registration of certificates or a scheduled inspection.
The choice of settlement model is determined by revenue stability, the share of public procurement in the portfolio, the stage of development and the parties' appetite for risk. And whether the reached agreement will be performed depends on how the milestone is described and what secures the deferred payment.
Approvals: Antimonopoly, Investment and Regulatory
Even an impeccable contract will not lead to a result if the approval route is calculated incorrectly. In pharma it consists of three layers.
The first layer is antimonopoly control. FAS consent is required if the thresholds of part 1 of Article 28 of the Law on Protection of Competition are exceeded: the aggregate value of assets of the buyer's groups and the target above RUB 7 billion, or aggregate revenue above RUB 10 billion with the target group's assets above RUB 800 million. Since 1 September 2023, an alternative threshold has also been in force — a transaction price above RUB 7 billion, so a transaction that does not pass on the balance sheet may now require approval on price alone. For large manufacturers and federal chains this is routine. The specificity of retail consolidation is that the FAS assesses the buyer's position in local markets, and the acquisition of a regional chain may create dominance in a particular constituent entity; consent is then issued with an order on behavioural conditions or sale of part of the outlets — this is factored into the structure and timelines in advance.
The second layer is control of foreign investments. For transactions with sellers from “unfriendly” states, the approval (counter-sanctions) regime of the Government Commission for Control over Foreign Investments remains[6]. The conditions are set not so much by law as by decisions of the subcommission and have changed repeatedly: according to the extract from the Protocol of the Government Commission[7], a discount of at least 60% of market value applies (previously 50%) and a voluntary contribution to the budget of at least 35% (previously 15%) according to the established schedule (25% within a month, 5% each after one year and after two years from the transaction); for assets worth more than RUB 50 billion, Presidential consent is required. The parameters are checked at the date of structuring, not at the first negotiations. The regime covers not only the sale of interests: conclusion of options and corporate agreements changing control also requires permission — the contractual instruments themselves become the subject of approval.
For some assets, the Law on Foreign Investments in Business Companies Having Strategic Importance for Defence and Security is also relevant[8]. Licensed activity with causative agents of infectious diseases is classified as a strategic type, which affects a number of immunobiological production facilities and vaccines. Since 7 June 2026, the law applies in a new edition, and three changes are fundamental for the industry:
- the existence of a licence or other permit for a strategic type of activity has become an independent ground for strategic status: status follows the permit, not the actual scale of such activity;
- a new ground has appeared for notification of a foreign investor's ownership of 5% or more of shares or interests — the company's obtaining or changing of the relevant licence;
- the application must include a separate document on beneficiaries, beneficial owners and controlling persons of the transferring party, otherwise the application is returned without consideration.
Hence the conclusion: a company obtaining or re-registering a licence in preparation for a transaction must be re-checked for strategic status, even if it had not previously arisen.
Adjacent to this perimeter is a regime that has ceased to be an exception over the past two years — temporary management. Introduced in 2023 as a retaliatory measure to sanctions by unfriendly states, it transfers to an appointed manager shares and interests owned by foreign holders: ownership is formally retained, but the owner loses control over operating activity and profit. The list is supplemented by targeted decrees, and in September 2026 it included the Russian structures of Auchan, Nestlé and the former Leroy Merlin. In parallel, a new ground for external management has appeared, not related to a foreign element — failure to ensure the security of critical infrastructure facilities[9]. For pharma this is not a theoretical risk: back in April 2025, 100% of the shares of Nizhpharm, owned by the Luxembourg structure of the Stada group, were transferred to temporary management.
Three practical consequences follow. For a foreign seller, the temporary management regime sets a hard horizon: the longer the exit terms are discussed, the higher the probability that the decision will be made without it. For the buyer, it adds to due diligence the question of the ownership structure of the target company and whether there have been requests to introduce temporary management in respect of its assets. Finally, an asset under temporary management cannot be bought in the ordinary way: the owner has not changed, and the transaction will require a separate state decision, turning into an administrative procedure rather than a corporate one. The regulatory shell does not suffer — licences, certificates and the GMP conclusion remain with the same legal entity, production and supplies are not interrupted — but licence and distribution agreements should be re-read: a change of manager may well be interpreted by a counterparty as a change of control.
The third layer, industry-specific, is the most labour-intensive. A change of participant does not affect the licence, but in the event of reorganisation or an asset transaction, the licence must be re-registered or obtained anew, the GMP conclusion confirmed, amendments made to certificates, VEML prices re-registered, and marking data updated. If there is a SPIC, subsidies or concessional loans, a change of control usually must be agreed with the state and the development institution, or at least notified to them. Each step has its own timelines, and their sum determines the realistic closing date.
Conclusions for the Seller and the Buyer
Current conditions do not close the transaction market, but they raise the price of preparation mistakes.
The seller should start long before negotiations: bring the dossier into compliance with EAEU requirements (and where the procedure is not completed, document the status and timelines for each position), ensure GMP conclusions valid with a margin and closed orders, a clear patent situation and licence and distribution agreements checked for the change-of-control condition. Separately, re-check strategic status under the new edition of Law No. 57-FZ. If restructuring is needed, carry it out in advance and taking into account the tax consequences for the seller — an individual: income from the sale of interests held by him for more than five years is exempt from personal income tax (subject to statutory limitations), and restructuring may reset this five-year period. If several months remain before its expiry, postponing the signing date will cost less than any negotiating concession. A check on the seller's side is also useful — a view of the business through the buyer's eyes. If confident in the portfolio, it is more productive to offer milestone payments than to insist on an inflated fixed amount; and if capital is lacking, an alternative to sale may be attracting an investor — through an additional issue or, at an early stage, a convertible loan.
The buyer should value the asset conservatively and not economise on the regulatory audit: where a significant part of the assets depends on one inspection, one patent dispute or one unfinished EAEU procedure, a superficial check costs more than a deep one. Identified risks are not ignored for the sake of closing quickly but are closed by contractual means — representations, compensation of losses, retention of part of the price, escrow. A valuation gap is more reasonably overcome by tying the price to the result than by a simple concession. When buying a distressed asset, it is worth considering a portfolio transaction instead of interests, having calculated the tax burden in advance and planned the transition period so that medicines do not fall out of circulation during re-registration.
Both parties would do well to follow general recommendations. The transaction structure is chosen based on the asset's approval, tax and regulatory profile, not on habit.
The map of approvals — antimonopoly, investment, industry-specific — is drawn up at the earliest stage and translated into conditions precedent and a long-stop date. Lawyers are engaged at the term sheet stage, not after the price has been agreed: that is when it is decided whether the asset's regulatory shell will be preserved, how risks will be allocated and how realistic the timeline is.
The pharmaceutical market remains one of the few where high demand for assets persists. However, in conditions of expensive borrowed capital and strict regulation, the advantage goes to owners and investors who prepared for the transaction in advance: updated title and permit documents, determined the optimal transaction structure and built realistic timelines and approval procedures into the contract.
- According to the OKS Labs by Okkam study “Pharmaceutical Industry: 2025 Results and Forecast for 2026” (May 2026) based on DSM Group data, as well as the DSM Group annual report “Russian Pharmaceutical Market 2025” (March 2026). ↑
- Resolution of the Plenum of the Supreme Court of the Russian Federation No. 25 dated 23 June 2015; Resolution of the Plenum of the Supreme Court of the Russian Federation No. 7 dated 24 March 2016. ↑
- The Regulation on licensing activities in the field of use of causative agents of human and animal infectious diseases and genetically engineered modified organisms of III and IV potential danger classes, carried out in closed systems, was approved by Resolution of the Government of the Russian Federation No. 46 dated 25 January 2022. ↑
- The Rules for registration and examination of medicinal products for medical use were approved by Decision of the Council of the Eurasian Economic Commission No. 78 dated 3 November 2016. ↑
- Resolution of the Plenum of the Supreme Court of the Russian Federation No. 49 dated 25.12.2018 “On certain issues of application of the general provisions of the Civil Code of the Russian Federation on the conclusion and interpretation of a contract”. ↑
- Presidential Decree of the Russian Federation No. 81 dated 1 March 2022 “On additional temporary economic measures to ensure the financial stability of the Russian Federation” and Presidential Decree of the Russian Federation No. 618 dated 8 September 2022 “On the special procedure for carrying out (performing) certain types of transactions (operations) between certain persons”. ↑
- Extract from the minutes of the meeting of the subcommission of the Government Commission for Control over Foreign Investments in the Russian Federation No. 268/1 dated 15 October 2024. ↑
- Federal Law No. 57-FZ dated 29 April 2008 “On the procedure for making foreign investments in business companies having strategic importance for ensuring national defence and state security”. ↑
- Presidential Decree of the Russian Federation No. 302 dated 25 April 2023 “On temporary management of certain property”; Presidential Decree of the Russian Federation No. 604 dated 24.08.2026 “On measures to ensure the security of critical infrastructure facilities of the Russian Federation”. ↑