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1. Stavropol region The formation of the pharmaceutical cluster in the territory of Stavropol region Minister of Stavropol region for Economic Development Y.V. Yagudaev http://www.stavinvest.ru

2. Stavropol region Situated southward of Russia • Population: 2,705 million people • GRPper head in 2010 year: 123 thousand rubles • Long-term creditratingofStavropolregion according toStandardandPoor` shas «B + » levelandratingaccording toanationalscalehas «ruA +» level. Theforecast – "Stable" (asofAugust, 24, 2010) Scientific strength SEI HPE «Stavropol State University» (biomedical and chemical faculty) –is a leading scientific and educational center of the Northern Caucasus, a member of the Association of classical universities and holds 14th position among 90 classical universities of Russia SEI HPE«Pyatigorsk State Pharmaceutical Academy» is a unique pharmaceutical academy in the region, a recognized leader of pharmaceutical education in Russia, listed in“UNESCO Higher Education Institutions Registry” SEI HPE«Stavropol State Medical Academy» - is in the top decile of leading higher education medical institutions of the Russian Federation and the largest educational-scientific and methodical center in the field of medicine in the Northern Caucasus «Stavropol Research Antiplague Institute»is included in the unified federal centralized system of antiplague establishments carrying out sanitary-and-epidemiologic supervision for plague, and other infectious quarantinable diseases. It develops, improves and fulfils scientifically-grounded preventive measures, diagnostics and struggle against these diseases 2

3. Components of pharmaceutical cluster State support Cluster infrastructure Science Small and medium enterprises (SME) Management company Industry Investment trends Scientific institutions Industrial infrastructure Investment in the operational enterprises Formation of the newly built factories in the industrial park 3

4. Investments in the operational enterprises • «Escom» JS SPC- is the largest producerof infusion solutions in Russia, produces more than 30 names of various infusion solutions; • «Biokom» JSC- produces firm medical products (generics) on a full work cycle and complies with international quality standard GMP; • « Pulse + » JS SPC producesmedical supplies; • «St-Mediafarm» JSC – produces more than 70 kinds of products. More than 40 kinds of medicinal herbs are constantly shipped to all territories of Russia.Assortment of production consists of packed and filter - sachet medicinal herbs, teas; • «Allergen» Branch of FSUE SPC «Microgene» - isthe top pharmaceutical enterprise which hastheleading position due to its assortmentvariety of medical drugs, number of employees andsales market geography; • «Stavropol Biofactory» FSUE- isone of the main domestic producers of immune biological veterinarypreparations.Assortment includes more than 45 brands. 4

5. Industrial engineering of a new generation of pharmaceutical drugs based on the technology of liposomal nanocontainers construction The key point of the project: industrial engineering of a new generation of pharmaceutical drugs based on the technology of liposomal nanocontainers construction (health-related nano biotechnologies) Project cost : 3 510,5 million rubles Project Initiator : «Eskom» JS SPC Project Location :Stavropol Commissioning date: 2013 Number of working places : 385 Financial resources: - Loan capital– 2 973,3 million rubles -own funds– 537,2 million rubles Yearly Tax proceeds : 270 million rubles 5

6. The increase of infusion solutions output and expansion of product diversification The key point of the project: line extension of ampoule pharmaceutical drugs thanks to the implementation of the new perspective kinds of medicine and the increase of production capacity, reconstruction and technical modernization of the 1st section for infusion solutions manufacturing in blisters Project cost : 450,0 млн. рублей Project Initiator : «Eskom» JS SPC Project Location : Stavropol Commissioning date: 2013 Number of working places : 129 Financial resources: - Loan capital– 150,0 million rubles; -own funds– 300,0 million rubles 6

7. Construction of a plant processing Jerusalem potato and producing inulin, pectin and other products for medical and food use The key point of the project : launch of the first Russian production of inulin and pectin on a commercial scale, based on nanotechnology Project cost : 1 606,0 million rubles Project Initiator : Agro-industrial company«Georgievskaya» LLC Project Location : Georgievsk, the territory of regional industrial park Number of working places: 315 Financial resources: - Own funds- 325,0 million rubles - Loan capital– 1 200,6 million rubles Yearly Tax proceeds: - federal budget– 847,2 million rubles - Regional budget– 216,0 million rubles 7

8. Formation of the newly built factories in the industrial park • Stavropol industrial park • Technological park «PHARMACEUTICS» • (within the territory of the industrial park) • Venture fund • Seed fund (early stage investment fund) • SME support structure: • Guaranty fund • Mortgage fund • Innovations and technology business center • Microfinance fund 8

9. State support • Reducedproduction costsdue to the centralizedrendering ofinfrastructure; • taxandotherpreferencesforresidentsof theindustrialpark: • 4,5 % reductionof incometax • assets tax exemption; • land fee isnothigherthan0,02 % fromcadastralvalue(but notmorethan 5 thousandrubles/1 ha peryear); • landtax exemption. • accessto the maintransporthighways. • land plots buy-out onfavourableterms; • administrationofinvestmentprojectsinthe «single window» mode. • credit interest rate subsidiesforrealizationof fast-payback capitalinvestmentprojects (attherateof 3/4 refinancing rate ofthe CentralBankoftheRussianFederation); • credit interest rate subsidiesfor working capital financing (attherateof 2/3 refinancing rate oftheCentralBankoftheRussianFederation); • stateguaranteesofStavropolregion; • Microfinance , Venture, Guaranty and Mortgage funds; • grant support for entrepreneurs-beginners; • up to 80% of actual expenses subsidiesfor the project; • the expenses on payment of interest and leasing contracts subsidies; • business incubator. 9

10. The model of investments in the formation of pharmaceutical cluster State support 20% - 100 mln roub Industrial park Stavropol region government 80% - 400 mln. rubles. 270 mln rubles Production State support Ministry of Health and Social development, Ministry of Industry and Trade of the Russian Federation 730 mln. rubles Technopark «Pharmaceutics» Co-investor 200 mln rubles. 25% - 100 mln. rubles Co-investor 50% - 200 mln rubles Venture fund 25% - 100 mln. rubles The overall project cost– 2100 mln. rubles., correspondingly: - Investments of Ministries of Health and Social development; of Industry and Trade of the Russian Federation– 1230 mln rubles. -Investments of Stavropol region government – 470 mln.rubles - Investments of co-investor– 400 mln.rubles Possible co-investors: regional enterprises, Russian Venture Company, Russian bank for development, commercial banks and investment companies (regarding venture fund) 10

11. Venture fund of Stavropol region Non-commercial organization “Stavropol regional fund of the promotion of venture investments development in the subjects of small and medium enterprises in the scientific and technologic sphere” Ministry for economic development of the Russian Federation Stavropol region government Preparation of projects for funding Management company Fund Supervisory board Closed-end fund 1 300 mln. rubles SC «ROSNANOTECH», VTB bank and other co-investors 11

12. Contacts: Ministry of Stavropol region for Economic Development Official address: 1 Lenina Sq. , Stavropol , 355000, Stavropolsky Kray, Russia. Postal address: 1 Lenina Sq. , Stavropol , 355000, Stavropolsky Kray, Russia. Tel/fax: (8652) 26-86-13, 35-06-38 E-mail: invest@stavinvest.ru http://www.stavinvest.ru 12