Dmitry Morozov, the head of the young biotech company Biokad, is not a professional scientist. He is a financier by education who acquired a taste for science-related business in the mid-1990s. Marketing gurus from Japan were trying to convince Morozov that IT and telecommunications, as well as entertainment and biotechnology, were the most interesting markets at the time. Morozov believed them and began to look at those markets more closely. He rejected IT and telecommunications right away. They were already overcrowded and there was no room for newcomers. Morozov had an aversion to entertainment. He knew absolutely nothing about biotechnology, but it looked incredibly complicated. The more complicated the problem, the more interesting it was for Morozov.
After a quick course in self-education, Morozov discovered with satisfaction that Russian biotechnologies had been literally neck and neck with the Americans right up to the collapse of the USSR. The accumulated knowledge and basic scientific developments were the perfect foundations for modern business. The rapid development of biotechnology encouraged him as well.
Reflecting on all this for some time, Morozov made his mind to quit the banking business for good and establish a biopharmaceutical innovation project. He set himself the very extremely ambitious goal of developing the technology and production of GMP-based drugs to cure life-threatening diseases like cancer, asthma, and Alzheimer’s disease. Scientific developments are the main component of the biopharmaceutical business. However, for the financier and marketer, starting with investment in science was tantamount to suicide.

Morozov decided not to start with science or even production. Instead, he started with distribution and set up a small wholesale office offering biopharmaceutical medications. They were dealing mainly with Russian plants and drugstore networks.
The next move in the ex-banker’s bio-strategy was to set up production. After visiting a number of enterprises in hopes of purchasing them, Morozov was deeply disappointed and decided to build a company by himself – from scratch.
When the plant came into operation, Biokad managers came up with new products that could be launched quickly. “It was important for us to keep to the biotech theme. We didn’t want to make Citramon or nasal drops. We chose bifida and lacto-bacteria,” Morozov relates. “They are recognized and well-marketed remedies.” Bifidumbacterin, a well-known medicine for upset stomachs, was the first product that went down the Biokad assembly lines. But Biokad managers were in earnest even about this simple remedy. They didn’t follow the example of most producers, who were putting unpalatable powder into sealed capsules inconvenient for customers. Biokad added tasty flavors like lemon, banana, and strawberry and put it in attractive packets to catch drugstore customers’ eye.
Today, Biokad specialists continue to develop the bifido-line, and new products will include a range of various combinations of diverse cultures. According to the specialists’ plan, these products, the simplest in biotech, should, with time, not only be sold separately but in conjunction with complex protein-based medications.

Distribution and the Bifidumbacterin production line paved the way for more complex and scientifically advanced projects. Now, according to Morozov’s plan, was the time to establish a scientific research division at the company. The search for scientists began almost concurrently with the plant’s construction. It was difficult and easy at the same time to find them. On one hand, there are oceans of scientists in Russian who have little to do or are underpaid. On the other hand, it is not always simple to find scientists with the right research specialty.
“In practice, it was very hard to train scientists to strive not only for a scientific result but also for a finished medication, and to work with a deadline,” Morozov grins. Russian scientists are inclined “to drill into” their subject, to dig deeper and deeper and digress to other, unrelated areas of interest. Thus, Morozov had to introduce innovation to the scientific environment and get scientists accustomed to business methods and strategic planning.
There is an integrated operational schedule for each medicine at Biokad. These schedules enable the company to run several projects at a time. The company’s structure itself, combining science, production and distribution in the process chain, enabled scientists to realize that a result could only be achieved by using such a chain. “It is clear that you are fussing with gene structures not only to satisfy your scientific ambitions, but to create a treatment that hundreds and thousands of seriously ill people have been waiting for,” says Boris Radko, a senior scientific officer at the company’s genetic engineering laboratory.

Morozov has gotten one step closer to his main objective – to make new medicines against the diseases that defied treatment so far. But it was too early to speed up independent research activities. The company could lose everything investing in the development of some unknown medicine. Therefore, Morozov decided to set up production of fairly high-tech and well-known drugs, so-called bio-generics. Medications based on alpha-2-interferon cytokine are currently at the registration stage. Biokad specialists, though, decided to launch it in the market in the form of suppositories rather than injections that are quite widely used. In their opinion, suppositories are more efficient for treating infections such as herpes, chlamydia, and prostatitis that strike mucous membranes, as they provide local treatment. In addition, they affect the body only mildly.
The second Biokad medication, also currently at the registration stage, is also based on a cytokine and is a granulocytic colony-stimulating factor. “This is a revolutionary treatment for oncology,” says Nina Pustoshilova. “It restores blood after chemo- and radiation therapy five times faster than the body itself. This is vital, because while blood is being restored by the body after radiation, cancerous cells again have time to spread. This medication doesn’t give them this head start.” In three years, the company will launch its third cytokine-based preparation, beta-interferon. It is administered to patients with disseminated sclerosis. “This medication doesn’t cure sclerosis but provides stable and long-term remission and makes the patients’ healthy life longer,” says Biokad Deputy General Director, Lev Denisov. “There are imported medicines available but they cost a patient $15,000 a year, and it has to be injected on a regular basis. We want to make this medicine more affordable.”
The scientists are working on other generics, but Morozov doesn’t want to list them at present and show all his cards. Incidentally, he doesn’t like the term “generics.” “When any other group of scientists are growing and scaling complex protein molecules, some nuances appear that make their approach somewhat different from the original. That’s why I call our medications analogues.”

Biokad is developing a second and, perhaps, more important product line, innovative medicines unavailable on the global market. Biokad specialists are developing new technologies practically in parallel with leading western companies.
These pharmaceuticals are also based on cytokines, which when at the wrong level in the body or when functioning improperly cause difficult-to-cure diseases like asthma, allergies, rheumatoid arthritis, Alzheimer’s, and Parkinson’s disease. “These problems are still at the stage of basic research,” Nina Pustoshilova continues. “Scientists are literally snatching up new knowledge that can already be used in to make new recombinant proteins and structures.”
In theory, the development of this second group of medicines may enable Biokad to compete and even leave behind leading global companies. “But even if this occurs, I would prefer to wait a while and let Western competitors go ahead and could prepare the market. We won’t be able to scratch up the marketing funds.” Morozov believes that such a strategy will allow Biokad to outpace its rivals on the Russian market, at the least. Interestingly, Morozov is not afraid of producers from China, India, and South America, who are successful due to the low cost of their products. He is convinced that Russian companies similar to Biokad have their own niche. In his view, in the US pharmaceuticals are of good quality but at high costs, while in Asia, medicines are made cheaply but their quality is poor. In Russia, it is possible to ensure high quality at low costs. “I’m convinced that in about 10-15 years, when we have worked out our business methods and will make enough money to carry out R & D and marketing activity, we’ll not only produce our own medicines to fight incurable diseases but will also create the market for them. Then, we’ll be in a position to compete with the global giants,” Morozov concludes.

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