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Investing in Russia 'Bumpy' But Necessary: Novartis CEO

Russia remains a strong market with a wealth of opportunities despite growing concerns that the political system in the country is breeding dissent among the population, Joe Jimenez, CEO at Novartis told CNBC's “Squawk Box Europe”.

RUSSIA - MAY 07: The Neva River runs past Saint Isaac's cathedral, left, in Saint Petersburg, Russia, Sunday, May 7, 2006. St. Petersburg is one of the world's most beautiful cities. Its rare qualities come from the survival of two elements: the planned center with its palaces and canals and the ring of Czarist parks and grounds encircling the city. With the collapse of communism and the rise of the new Russia, the city is changing radically. (Photo by Elena Gorshenin/Bloomberg via Getty Images)
Bloomberg
RUSSIA - MAY 07: The Neva River runs past Saint Isaac's cathedral, left, in Saint Petersburg, Russia, Sunday, May 7, 2006. St. Petersburg is one of the world's most beautiful cities. Its rare qualities come from the survival of two elements: the planned center with its palaces and canals and the ring of Czarist parks and grounds encircling the city. With the collapse of communism and the rise of the new Russia, the city is changing radically. (Photo by Elena Gorshenin/Bloomberg via Getty Images)

“The government has said that it would like to invest in and develop the pharmaceutical sector and help diversify away from oil and dependency on oil. We see big opportunities here, it’s a growing market. That’s part of the reason this government is so receptive to companies like Novartis investing here,” Jimenez said.

Vladimir Putin was re-elected as President in controversial elections earlier this year and public protests continue against the political establishment but Jimenez said while Putin’s influence would still be significant and issues remain, they would have little impact on the market.

“We are here for the long term so it’s not going to be smooth and a straight line. It’s going to bumpy at times. If you fundamentally believe this is a good market for healthcare and pharmaceuticals you have to be here,” he added.

“We’re expanding in three areas, we’re building a state of the art pharmaceutical plant here in St Petersburg. We’re working on collaborations with universities, and we have a public health program in the regions,” Jimenez said.

The Russian economy has been in a state of flux in recent months with first quarter GDP (gross domestic product) revised downwards to 4 percent from 4.9 percent previously and capital flight has been significant as concerns about political instability have seen some caution among investors return.

With the euro zone debt crisis having dominated the global economy for more than two years now and with no imminent solution on the horizon, the crisis remains a pivotal danger.

Xavier Rolet, CEO at the London Stock Exchange told CNBC he believed the crisis had turned a corner with “continued improvements”.

“I am cautiously positive that the euro will hold together. I believe none of the member nations will exit and continue on the difficult and slow recovery path,” Rolet said.

“Time is on the side of the euro because it does take time. In the meantime we need to finance that overhang of debt. Germany continues to, legitimately so, demand improvements. I think liquidity release at points of stress and maintaining pressure towards greater competitiveness is what makes me the most optimistic to a positive resolution,” he said.

Rolet said London remained a key international hub for companies in the face of regional tensions.

“London’s fundamental characteristic is that it remains open to investors. China is making a significant investment in London with the LME transaction,” he added.

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