TUESDAY, OCTOBER 28, 2014
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T h i s s p e c i a l a d v e r t i s i n g s u p p l e m e n t i s p r o d u c e d a n d s p o n s o r e d b y R o s s i y s k a y a G a z e t a ( R u s s i a ) a n d d i d n o t i n v o l v e t h e r e p o r t i n g o r e d i t i n g s t a f f o f t h e I n t e r n a t i o n a l N e w Yo r k T i m e s .
Russia has a long history of accomplishments in science and medicine. Today, Russian doctors are working in West Africa to combat the Ebola outbreak, while Russian researchers are making progress toward developing a vaccine against the disease.
Scientists are also using technology to fight brain cancer and work with stem cells to help those with both physical and psychological problems. Read about these programs in this issue of RBTH, which focuses on Russian medicine and science. AFP/EASTNEWS
RUSSIAN SCIENCE TAKES ON EBOLA After a recent flight to Moscow from Malaysia via Abu Dhabi landed at Domodedovo Airport, the passengers were kept on the plane until two employees from Rospotrebnadzor, the authority responsible for monitoring the epidemiological environment in Russia, walked through with infrared thermometers to take the temperature of each passenger. Their goal, and that of their colleagues who have been inspecting all international flights into Russia since September, is to detect Ebola. Russia does not have any direct flights from the West African countries considered to be the main centers of the epidemic: Liberia, Guinea and Sierra Leone. The authorities believe, however, that they can’t be too careful in preventing an outbreak. Right now, the main problem facing the sanitary authorities is that the incubation period for Ebola can last up to three weeks. This means that it is possible for people infected with Ebola to cross international borders showing no symptoms whatsoever. An additional problem is that the symptoms of Ebola are similar to those of other diseases, such as malaria. According to the Rospotrebnadzor chief, Anna Popova, there have been about 20 suspected cases of Ebola in Russia since the beginning of the year,
Authorities and scientists mobilize to keep the disease out of the country and help regions affected by the epidemic. but none have been confirmed. Since then, approximately 600 people traveling from West Africa have been put under a doctor’s supervision, but now almost all of them have been cleared. Mikhail Shchelkanov, an Ebola expert and head of the Laboratory of Virus Ecology at the Ivanovsky Virology Institute [whose opinion piece appears on page 3], said that the Russian authorities were prepared to cope with the virus. “The population does not even suspect that [the country] has a bacteriological security system making it possible to detect and isolate more than 200 cases of exotic viruses penetrating the country each year,”said Shchelkanov. Despite these assurances, people are afraid. According to a poll by one of Russia’s leading public opinion research centers, the Public Opinion Foundation, 47 percent of Russians think there is a risk of Ebola spreading into Russia, while 60 percent say they believe the government needs to strengthen measures to combat the virus. Of that group, 18 percent sug-
gest improving sanitary control for people traveling to Russia, 10 percent think a vaccine needs to be developed, while 9 percent think entry into Russia should be restricted for people coming from Ebola epicenters. According to official reports, all this and more is already being done. These reports state that Russia has allocated $19 million to the fight against Ebola and redoubled its efforts to create a vaccine. In addition, a Russian epidemic control team has been working on the ground in Guinea since August. The team is using Russian test systems that have been confirmed as effective by the World Health Organization (WHO), and is helping local doctors diagnose and treat Ebola. The team has a mobile laboratory based on a Kamaz truck. According to Popova, Russia will also send extra epidemiologist brigades to West Africa. TheVirological Center of the Defense Ministry’s Microbiology Research Institute in Sergiev Posad and the Vector State Scientific Center of Virology and Bacteriology are working on an
Ebola vaccine. Both institutions started working on Ebola — including creating biological weapons on its basis — during the Soviet era. Their work is still classified, although scientists sometimes disclose information. In mid-October, Vector Deputy Director Alexander Agafonov said the center had managed“to construct several vaccines against Ebola” and that it was preparing for preclinical trials. The vaccines have already been tested on guinea pigs and monkeys, and one vaccine is deemed to be effective. Scientists have not revealed any details about how the vaccines were created or when they can be used. A query about the vaccine that RBTH sent to Rospotrebnadzor, the parent organization of Vector, in September was never answered. Alexander Chepurnov, the former chief of Vector’s laboratory of dangerous viral infections, told the news Web site Gazeta.ru that judging by Agafonov’s statement, it is “very difficult to conclude whether they have actually managed to collect some vaccine
or whether it is wishful thinking.” Chepurnov started working with Ebola at the end of the 1980s. His laboratory also researched other deadly viruses, including Lassa, Machupo and Marburg. In 1996, the laboratory discovered the “genetic basis of the virulence” of Ebola. “Usually the virus infects only humans and primates. We introduced the virus into guinea pigs, some animals with certain manifestations of the disease were selected, the virus was isolated from their tissue, and we injected it into the next ones. This is how we derived a strain of the virus that could kill guinea pigs. If we compare its genome with the genome of the wild strain, we can find the genetic factors of virulence,” Chepurnov explained. Within four years, Vector had identified the mutation of the virus that is responsible for virulence. However, the research was not conducted without tragedy. In 2004, Vector lab technician Antonina Presnyakova died after being pricked by the contaminated needle of an infected syringe. Although the military research
institute in Sergiev Posad had developed an antibody immunoglobulin to Ebola in 1995 that can help patients who already have the illness, it did not save Presnyakova. Chepurnov said that this was likely because she had already been infected with the disease twice before and may have developed immunity to the immunoglobulin. Despite the progress made with theantibody immunoglobin, the institute has yet to develop a vaccine. According to Chepurnov,“a working vaccine can only be made with a recombinant [a virus created by recombining pieces of DNA ].” He said that “such vaccines have been made abroad, but with the help of our scientists, who are former employees of Vector.Victor Volchkov, who now works at the University of Lyon, supplied several components to make a prototype of the vaccine on the basis of the vesicular stomatitis virus. Alexander Bukreev, who now works at the Galveston National Laboratory in the United States, did an entire prototype of the vaccine based on the parainfluenza virus.” According to WHO data, the most recent Ebola outbreak has killed approximately 4,600 people. ■GLEB FEDOROV JOURNALIST
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FORMING EFFECTIVE CREATIVE MARKETS FOR INNOVATION VLADIMIR KOROVKIN RESEARCHER
WE TAILO R O U R CONTE N T TO E ACH OF OUR PLAT FORMS!
ccording to the latest version of the annual Global Innovation Index (GII), developed jointly by the Johnson Graduate School of Management at Cornell University, the Insead Business School and the World Intellectual Property Organization, Russia now ranks as one of the world’s top-50 most innovative
countries. More significantly, Russia continues to advance in the rankings, moving up from 62nd to 49th position in the rankings over the past year. Unfortunately, the same week this summer when the 2014 Global Innovation Index was announced, so was a new package of international sanctions. This created uncertainty about
the future of innovation in the Russian economy. That leaves one basic question for Russia’s innovation agenda: To what extent will Russia’s innovation potential be affected by sanctions and the threat of global isolation? The GII attempts to produce a comprehensive view. There seems to be a significant de-
gree of consensus within the country and even abroad about what could improve Russia’s innovation potential. It has one of the highest percentages of enrollment in higher education in the world, with a significant proportion of students choosing science and engineering. This, combined with a large research work force (Russia ranks 17 in “knowledge intensive employment”), produces a sizeable number of domestic patents and utility model applications (#7 and #8, re-
spectively, when related to gross domestic product). One factor hampering Russia’s innovation is the quality and profile of the nation’s institutions. While the scores for “political environment” can be considered to have a built-in bias, the low standing on the quality of regulatory environment (98th position globally) seems to be based on what is found within the country. CONTINUED ON PAGE 3
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RUSSIA BEYOND THE HEADLINES A global media project sponsored by Rossiyskaya Gazeta www.rbth.com
RUSSIANS EXPLORE GENOME RESEARCH ory. He refused and was dismissed from the institution where he worked.
The cost of genetic testing remains high as interest in the process grows.
Several companies in Russia now offer genetic testing for specific disorders, as well as entire genome sequencing.
Russians cannot order direct-to-consumer genetic testing from abroad due to a 2007 ban on the export of human medical specimens.
The forbidden science
NEUROSURGEONS AND SOFTWARE ENGINEERS TEAM UP TO FIGHT BRAIN CANCER Software program combines results of several MRIs to create a complete picture of the brain. health,” said Gleb Sergeyev, a neurosurgeon and the author of Brain Target’s algorithm.
A team of young Russian neurosurgeons and IT developers has created new software that will help doctors visualize and measure residual brain tumors as well as monitor them. The new program, called Brain Target, can also help to prevent brain hemorrhages in treating arteriovenous malformations, a congenital vascular anomaly that connects arteries and veins to each other directly. It occurs most often in the central nervous system. “When I graduated from medical school, I got the idea of creating something that would allow doctors to make objective decisions in risky situations that might threaten a patient’s life and
Targeting tumors Patients with brain tumors usually opt for surgery when possible, but surgery is rarely a complete course of treatment on its own. Even when the operation goes well, doctors must still monitor any changes in the brain and, in many cases, even if doctors believe they have removed the tumor completely, patients must undergo a course of chemotherapy in order to eradicate any possible remnants. In other cases, a tumor cannot be fully removed be-
of Genetics of the Soviet Academy of Sciences, heading the campaign to persecute researchers. Lysenko’s theory of genetic traits argued that acquired characteristics could be inherited. During this time, many talented geneticists who embraced Mendelian theories of hereditary traits were arrested and killed. Arguably the most famous of these was the plant geneticist Nikolai Vavilov, who was accused of being an English spy and eventually died of malnutrition in prison. In 1948, Josef Rappoport, who had discovered chemical mutagenesis, was told to renounce the chromosomal the-
Russians with a curiosity about genetics weren’t always able to pursue this interest. Starting in the 1930s, geneticists were persecuted in the Soviet Union. Official propaganda claimed that citizens of socialist countries could not have genetic diseases and that discussions about genes were the foundation for racism and fascism. The American scholar Hermann Muller, a Nobel Prize laureate, wrote that being a geneticist in the Soviet Union was like being Galileo at the Inquisition. In 1940, Trofim Lysenko became the director of the Institute
cause surgery might affect the functionality of significant parts of the brain. Traditionally in Russia, the degree to which a tumor has been removed is assessed “approximately,” based on the strength of the surgeon’s experience and on a postsurgery MRI scan. Such an assessment is subjective, however. It is sometimes very difficult to detect the remnants of a tumor, since blood, hemostatic agents and tumor fragments all have more or less the same color on an MRI scan. Brain Target software has the potential to help solve this problem. The program simultaneously processes dif-
The market for genome research is growing rapidly in Russia. According to data provided by the Genotek laboratory, which performs genome testing, the number of people asking for DNA tests is steadily growing by 10 to 12 percent per month. As in other countries around the world, reasons for the interest range from simple curiosity to a desire to begin early treatment for inherited diseases. The first companies offering genetic testing in Russia appeared in the mid-2000s. My Gene opened at the Innovation Park of Moscow State University in 2007 offering noninvasive prenatal diagnosis of fetal chromosomal pathologies. My Gene representatives claim that the method they use is only available in six other laboratories in the world — one in China and five in the United States. In 2009, Florida-based CyGene began offering direct-to-consumer genetic testing in Russia. Today, the international pharmacological giant Roche conducts genome research in Russia, while Genotek, which opened in 2010, also offers complete genome testing. The inspiration for Genotek’s business model was the American firm 23andMe, which Google founder Sergey Brin’s former wife, Anna Wojcicki, created with Linda Avey in 2008. A new project by Atlas Biomed Group, also inspired by 23andMe, launched in Russia in late September.
Taking a specific approach
Brain Target software makes it easier for doctors to read brain scans.
ferent MRI images and produces a combined version that is then examined by a neurosurgeon. In Brain Target, tumor remnants, blood and hemostatic agents have different colors and are easily identifiable. The software can be used in treating both cancerous brain tumors and diseases related to the vascular system. During an arteriovenous malformation embolization, for example, the program can assess to what degree it is excluded from blood circulation in order to prevent a hemorrhage.
Identifying the danger zones The Brain Target software has been
STEM CELL USE HELPS BODY AND MIND Scientists hope to cure physical and psychological traumas.
During the Soviet War in Afghanistan, scientists attempted to use stem cells to help returning soldiers overcome psychological traumas brought on by war, such as post-traumatic stress disorder. This put Russian researchers at the forefront of stem cell science. Russia has only recently became a part of the multibillion-dollar stem cell research market, however, and has just seven large banks for preserving stem cells. In comparison. there are about 300 institutes in the United States and more than 80 in Europe. Part of Russia’s difficulty in commercializing the technology is that stem cell science in the country was developed first for the Defense Ministry, so for many years this research was top secret. Nevertheless, the neurologist Andrei Bryukhovetsky, who has dedicated more than 25 years to such research, said that the science of stem cell use has grown steadily and that the work on using stem cells to combat and perhaps cure psychological trauma continues within the Defense Ministry today. Alexander Vlasov, the deputy director of the Military Medical Department of the Defense Ministry announced this summer that a new scientific division will be formed within the Military Medical Academy that will work on the creation of a stem cell bank for soldiers.Vlasov says that
Russian researchers are exploring new uses for stem cells.
the division will be divided into three units: biological-pharmaceutical, medical-prophylactic and engineeringtechnical. The first will actively develop a stem cell bank for military personnel who participate in risky assignments and in dangerous areas.
Banking for the future Banks for preserving umbilical cords and cord blood, which are a main
source of stem cells, began to appear in Russia in the 2000s, but it has been difficult for them to stay in business. Despite the growing interest in regenerative medicine, Russians are still not ready to pay the high price for storing cord blood, even though the costs are relatively low compared with such costs in other countries. Storing an umbilical cord at one of Moscow’s stem cell centers, for example, costs approxi-
mately 95,000 rubles (some $2,620). In the United States, the same service costs approximately $12,000. Russian patients have reason to be cautious, however. This summer, the Flora-med stem cell bank in Moscow disappeared. It had been in existence since 2003. The cords and cord blood stored there disappeared along with the clinic itself. Yet interest in preservation continues to grow along with the success stories. In 2013, the Human Stem Cells Institute (HSCI) opened the Genetico Center in Moscow, which treats patients suffering from genetic diseases. Among the diseases it treats are congenital immunodeficiency, Krabbe disease, Omenn syndrome, DiamondBlackfan syndrome, Fanconi anemia and many others. The first child to save an older sibling from Shwachman-Diamond syndrome was born in Russia in 2014. The center will soon start working with families from Europe and Asia. HSCI has also developed a drug called Neovasculgen, which is being registered in the United States. It is designed to cure patients suffering from critical limb ischemia, which has become a global pandemic in recent years, with more 200 million people currently afflicted by the disease. ■VICTORIA ZAVYALOVA JOURNALIST
Many Russian genetic testing firms focus on locating the gene for one specific genetic condition, or a range of conditions that could affect one part of the body. St. Petersburg company Sequoia Genetics has collected more than 1,500 DNA samples from patients with cystic fibrosis. Oftalmik, based in Moscow, specializes in the genetic testing of people suffering from eye diseases. Genotek also began offering tests that indicate a tendency toward specific conditions, such as diabetes. Tests for specific genes are much cheaper than an entire genome sequencing, which makes the service attractive to a wider range of people. Genotek also negotiated for discounts from its equipment suppliers so it could offer more affordable tests. “The market for genome research is very dynamic and a large number of people in Russia are now working to obtain genomic information,”said Marianna Ivanova, founder of Oftalmik. Russians cannot order direct-to-consumer genetic testing from firms based abroad because of a 2007 ban on exporting human medical specimens, so Russian start-ups have a captive audience for to their products.
A risky business model While several Russian genome testing companies cite 23andMe as a model, they may be more able than the American firm to keep up with the latest trends. In 2013, the U.S. Food and Drug Administration (FDA) banned the sale of the company’s kits for personal genetic testing. In its explanation of the decision, the FDA said it was concerned about possible errors in the test that could cause the company’s clients to make radical decisions about their health and health care. As a result,
tested at the neurosurgery division of the E.N. Meshalkin Research Institute of Blood Circulation Pathology in the Siberian city of Novosibirsk. “We checked patients immediately after surgery and identified areas where tumors could re-emerge in the future,” said Brain Target’s Sergeyev. “After six months or a year, we checked them once again. Practice has shown that Brain Target clearly identified dangerous zones.” Positive feedback on the program has already been received from another Novosibirsk clinic and from the medical center at the Far Eastern Federal University in Vladivostok. The results are promising, but to ensure that this software is introduced at every clinic, a multipurpose study is needed. According to Russian law, the program must be used to analyze the MRI scans of approximately 1,000 patients accompanied by a random clinical study. Only then will the project team be able to register the software and begin distributing it. Brain Target aims to distribute first in Russia and then worldwide.
Reducing the cost of treatment Only about 50,000 surgeries on brain tumors are performed in Russia every year. In China 350,000 surgeries are
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23andMe stopped offering clients tests that checked for predispositions to diseases and today focuses instead on tests that will help people trace their ancestors via genealogical research. Its founder, Wojcicki, said that the decision will inhibit the company’s development.“You can already see what the Genomics Institute in Beijing is doing,” Wojcicki said in an interview with the medical portal Medscape. “Saudi Arabia announced plans to genotype 100,000 people…The rest of the world is moving forward aggressively with this, but we are somewhat stuck.”
Hi-tech equipment, high prices While Russians who do genetic testing primarily do so for health reasons, some are willing to spend the money to figure out who their ancestors might have been. One Russian politician recently took a haplogroup genealogy DNA test that linked him to a variety of famous people. “We found out that he had common ancestors with Napoleon, Einstein and Hitler,”said Valery Ilinsky, Director of Genotek.“He was proud of it and told other politicians that Napoleon was his relative.” According to Oftalmik’s Ivanova, all the necessary equipment for proper genome decoding is available in Russia. The supercomputer Lomonosov, for example, one of the 100 largest such computers in the world, performs genetic sequencing and is in service at the biotechnology cluster of Moscow State University. Despite the availability of technology and equipment, Russian genetic testing clients still pay more on average than people in other countries. Whereas in the U.S. a client can pay $100-$200 for a test, in Russia, such tests cost $600-$800. ■VICTORIA ZAVYALOVA JOURNALIST
performed annually, while in the United States, the number is about 100,000 and 25,000 in Canada. There is a reason for the limited use of the procedure in Russia. In this country, neurosurgeons operate on patients according to a federal quota. Some operations are paid for privately, although few patients can afford them. In Moscow, for example, such a surgery can cost from 900,000 to 4.5 million rubles (approximately $25,000 to $125,000). For most Russians, this fee is far from affordable. A significantly higher number of cancer patients are in need of help and might benefit from this new software. The Brain Target team is currently looking for funding to finalize the software component and to transform the prototype into a final version of the product. They are seeking 5 million rubles (approximately $139,000).The program has already been used to study roughly 50 patients. In all of those cases, Brain Target successfully identified the remnants of cancerous tumors. The program has 100 percent sensitivity and hemostatic agent specificity and shows a very high potential for consistent results. ■SOPHIA TERESHKOVA JOURNALIST
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WHAT DOES THE FUTURE HOLD FOR RUSSIAN BIOTECH? EXPERT
ogether with information technology and nanotechnology, biotechnology is one of the most important and fastest-growing segments of the world economy. It is estimated that the world biotech market will reach $2 trillion by 2025. By developing biotech today, countries are laying the foundation for their longterm economic growth. But whereas Russian scientists have made famous and widely recognized accomplishments in IT and nanotech, biotech has only recently become a focus of attention for the Russian authorities. In April 2012, the government approved a comprehensive biotech development strategy for the period until 2020 called BIO2020, which consolidates the resources of a plethora of government structures to tackle the challenge of speeding up Russian biotech development. The government is striving to make the Russian bioeconomy worth 1 percent of GDP in 2020 and at least 3 percent by 2030.
EBOLA EPIDEMIC: FEARS AND REALITY MIKHAIL SHCHELKANOV DOCTOR
oday’s Ebola epidemic has reached an unprecedented scale for four main reasons. The first is the natural concentration of the Zaire ebolavirus (the formal designation of Ebola) in West Africa, at the crossroads of Guinea, Liberia and Sierra Leone. The second is a lack of reliable information about the circulation of Ebola in those places, both in those countries and in the broader global community until the beginning of 2014. The third is the complex socioeconomic environment in West African countries and the fourth is the plethora of local customs that facilitate the spread of communicable viruses. To determine the likelihood that these factors could come into play in Europe and Russia, one must take a closer look at the conditions that caused Ebola to take hold in West Africa and how these conditions compare to those in Russia and Europe. There are three main types of Ebola outbreaks. The first is the forest type, when whole forest villages are infected with the virus and die. In these situations, fruit bats, which are natural transmitters of the Zaire ebolavirus, infect monkeys or other wild animals, and these newly infected animals are
CO N V E RT I N G M O N O LO G U E I N TO D I A LO G U E Russia Direct is a forum for experts and senior decision-makers from Russia and abroad to discuss, debate and understand the issues in geopolitical relations from a sophisticated vantage point.
October Monthly Memo: Response to Sanctions
As the West prepared to announce a new round of sanctions against Russia aimed squarely at the financial sector, Russian lawmakers were not sitting idly by. In this issue of the RD Monthly memo, find out what steps Russia is preparing to undertake in order to protect its economy and financial sector. How realistic are these initiatives? Discover what they mean for both ordinary Russian citizens and foreign players in the market.
hunted by locals, who bring the bush meat back to the village to eat. The fruit bats themselves are also a popular dish in the region. In the end, Ebola infects the entire settlement. In conditions of overcrowding and a lack of proper treatment, mortality can reach 90 percent. The second type of Ebola epidemic is rural. The behavior of the fruit bat changed when tropical fruit plantations began to spread right up to the edges of forests. The bats began to feast on fruit not in the forest, but on plantations. The plantations attracted a higher concentration of people and, as a result, the risk of infection skyrocketed. It is likely that patient zero — the person from whom the current epidemic originated — came from near a plantation. As far as we know, in this outbreak, Ebola patient zero was a two-year-old boy who died on Dec. 6, 2013. After this, the infection began to spread and took on the characteristics of the city type of Ebola epidemic. This type of outbreak occurs when the virus is transferred through direct contact with the biological fluids of sick people. Unlike other diseases, such as the flu, Ebola is not transmitted by airborne droplets, which generally makes it harder to spread — but this is where the particular conditions of life in West Africa come into play. Much of the population of West Africa is very poor and this fact is reflected in living conditions in the rapidly-growing cities. They are covered
in trash heaps, including in the main street of Conakry, the capital of Guinea. Sewage flows along nearly all large streets, where trash is also discarded and people bathe. The health care system in the region is in its infancy, and there is simply no sanitary and epidemiological control. Even before the Ebola epidemic, child mortality was 118 per 1,000, and adult mortality is also extremely high.
Even if Ebola were introduced in Russia, it would only arise in sporadic cases, which would be discovered quickly. Another contributing factor to the spread of Ebola is local funeral customs. In the region, when a person is being buried, all of his or her relatives wash and hug the body. Naturally, everyone involved in the ceremony could be exposed to infection, because the virus is transmitted via direct contact with bodily fluids. The pull of these traditions is very strong, and illiteracy and a general lack of education doesn’t help doctors who want to spread information about how to stay safe from the disease. It is easier for people to believe in established traditions — for example, that the deceased should be kissed before burial — than to accept that they could be infected with a deadly virus by doing so.
A threat to Europe? It would be impossible for the disease to spread in the United States, Europe and Russia on the scale that it did in West Africa. For one thing, these countries have solid systems for monitoring the evolution of epidemics, so even if the conditions for nurturing Ebola existed in Russia and Europe, they would be under constant control. Additionally, the socioeconomic situation in Russia and other developed countries is completely different from that of West Africa. Finally, Russia historically has an excellent system for ensuring biological security. For this reason, theoretically a similar situation could not arise in Russia. Even if Ebola were introduced in the country, it would only arise in sporadic cases, which would be discovered quickly and localized in the shortest possible time. But it should be clearly understood that the precautionary measures currently being implemented at airports — such as taking temperatures and surveying passengers — are necessary yet insufficient to completely rule out the emergence of the virus in Russia and other countries. It is possible that an infected person could get through even the most thorough checks at airports. These checks will do nothing to stop the classic case of an imported virus, in which an infected person in the incubation period, without any clinical symptoms, crosses the border and gets sick in a new country. But Russia has on average 100 to 200 cases of imported viral infections every year, and none of them have had epidemic consequences. The same will be the case with Ebola. Mikhail Shchelkanov is the head of the laboratory ofVirus Ecology at the Ivanovsky Institute ofVirology. This summer, he helped fight Ebola in Guinea.
Major corporations have yet to become notable players in the biotech segment of the market, so the government dominates it. In November 2012, the Russian government created a working group on biotech development chaired by Deputy Prime Minister Arkady Dvorkovich. However, Russia cannot develop the bioeconomy without the active participation of large industrial corporations, and very little has been done in Russia in this field. The leading public and private corporations have yet to become notable players in the biotech segment of the market; therefore, the government dominates it. As part of the state program Pharma 2020, in 2013 the Russian Industry and Trade Ministry established a scientific and technical council to identify biotech development priorities in Russia and to allocate grants to support breakthrough research.Today Russia manufactures biotech products in small batches. The country lacks a system for scaling up scientific biotech developments for the purpose of industrial output, as well as other elements of the bioeconomy needed to translate scientific discoveries into commercial products. Russia is planning to construct some 10 factories to produce biotech biogenerics by 2020, with total investment estimated at about 10 billion rubles. In its current state, however, Russian biotech is falling behind in terms of
FORMING EFFECTIVE COMPETITIVE MARKETS FOR INNOVATION CONTINUED FROM PAGE 1
Russia is also weak in market experience (#111 globally with a special weakness in “credit”) and innovation links (#126), a metric that primarily refers to“university-industry research collaboration”and“state of cluster development.” In addition, there are some discrepancies between the outside view of Russia’s innovations and perceptions within Russia. While some concerns (such as collaboration between universities and business) were recognized within Russia and targeted through policy steps, other institutional weaknesses — such as low availability of credit — are not part of the general discussion of the subject domestically.
What role should the state play in developing innovation? The role of the government in developing innovation is another question that the Global Innovation Index, or GII, addresses. To what extent should the state be engaged in dealing with innovation within Russia? The authors of the GII methodology answer this question easily: “Probably the state is doing too much.” Generally, the character of the GII metrics implies the classic vision of “private enterprise, driven by market forces.” Any weaknesses in Russia’s performance when
it comes to innovation might come not from the lack of “state” efforts, but rather, from the deficiencies in private enterprise and the institutions designed to support it. The Global Innovation Index is ambivalent about whether extensive state control (which usually comes handin-hand with protectionism) works for innovation. Some countries that are commonly viewed as examples of coordinated state guidance over private initiative do traditionally score high on innovation — Singapore (#7), Republic of Korea (#16), China (#29), Malaysia (#33) or the United Arab Emirates (#36). On the other hand, some other classic cases of protectionism and state regulation — such as India (#76) and Argentina (#70) — are not so impressive. Yet, there is a pressing need for Russia to have the answer — as it is essential for the evaluation of the effect of the sanctions and formulating the appropriate policy to overcome their consequences.
Intuiting the next steps for Russia’s innovation sector An increasingly popular view within Russia holds that any sanctions that limit the presence of major multinational firms and thereby decrease the level of competition on the Russian market may turn out to be beneficial
for Russia’s innovation capabilities. These sanctions would stimulate the development of local“substitute”technologies, leading to a shift in capital flows as investors place their money in local companies. The frequent accompaniment to this idea is that it will be the state that will constitute the market for innovation and technology. It is only the state sector that is wide and deep enough to prevent any unnecessary turbulence, the thinking goes. The idea of the wastefulness of market competition seems to be strongly internalized here. Why spend resources on the parallel development of essentially the same thing? But does the example of the successful Asian economies, all with a strong government role, tell a different story about the role of competition? All of them — Japan in the 1960s, South Korea in the 1980s, China in the 1990s and Vietnam in the 2000s — were deliberately seeking participation in competitive global markets. They were exporting cars, consumer electronics or textiles and selecting the target countries on the basis of market size, not the ease of entrance. In contrast, India, Argentina and Brazil adhered to the idea of focusing on the protected domestic markets in order to nurture their local industries. The policy did work in a few specific
cases, but not for the economy in general. In the current context of the big decisions that need to be taken on the issues of economic policy, Russia’s leaders should be careful with the temptation to view the thinning competition as a blessing, and the state as the effective substitute to the market. Such an approach will definitely not improve Russia’s standing in the ratings on innovation. What is more important, real-world innovation capability may also suffer. The time to enter the“open market” from under the protectionist umbrella always comes, sooner or later, and this move can turn out to be disappointing for a nurtured company that did not have a chance to check the attractiveness of its innovations against the global competition. In the challenging new international situation for Russian business, the state should avoid playing the role of a mega-buyer or mega-contractor. Instead, it should focus on creating effective competitive markets for innovation. Domestically, it requires stimulating the general economic effectiveness of any business operations. Innovation flourishes when it becomes part of everyday business, not an isolated stream of activity. It remains to be seen if external economic pressure can be the tool to achieve this.
Russian scientists have made significant contributions to global developments in biotechnologies. way of Russian biotech development are the lag in the country’s research and tech production base, low demand for biotech developments, high barriers for biotech products to enter the world market, insufficient investment, and the risk that Russia will turn into a source of raw materials for world biotech leaders. Yet these problems existed before the United States and its allies imposed economic sanctions against Russia in the spring of 2014 in connection with the Ukraine crisis. The long-term consequences of the sanctions will undoubtedly be negative. Cross-border ties between scientists and research centers are being severed, and cooperation in joint research is becoming less effective. As a result, Russia will be forced to pursue a “national model” for the biotech economy. In light of how quickly biotech is developing and how intense competition is for entering the market for innovative products, this strategy serves as collateral against inevitable losses in the future. But isolation isn’t the answer. Russia needs to remain an open economy and a part of the global liberalized trade system. Scientific contact needs to be developed with international partners, and intellectual property rights need to be protected. The government needs to support both basic and applied research. Big business needs to become a key player in bringing biotech achievements to market. If these challenges are met, Russia will be able to occupy a distinguished position in the modern global economy, in which biotechnology will be a key element. Stanislav Tkachenko is a professor in the School of International Relations at St. Petersburg State University.
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November Monthly Memo: The G20 Summit
production volumes and speed in comparison with the global leaders. Nevertheless, Russian scientists have made significant contributions to global developments in biotech. Russia has developed monoclonal antibodies, vaccines against several dangerous infections, long-acting drugs and genetically engineered strains that produce amino acids and vitamins. Russian scientists’ work on an Ebola vaccine has successfully undergone preclinical trials and is ready for use. Additionally, over the past two decades, Russia has formed several recognized schools to develop HIV vaccines. The DNA-4 vaccine is undergoing the second phase of clinical testing. The key problems standing in the
In anticipation of the G20 summit in Brisbane, Australia, this RD monthly memo examines the potential of the G20 to transform into a more influential global governance body. With Russia still on board, what might be the prospects for the bloc to address current challenges and meet the interests of its member states? Some wonder if we need such an institution today and what factors might prevent the bloc from realizing its potential.
RUSSIA BEYOND THE HEADLINES A global media project sponsored by Rossiyskaya Gazeta www.rbth.com
REAL ALE REVOLUTION BREWING IN RUSSIA Local craft beer enthusiasts are taking matters into their own hands, creating flavorful pale lagers in small batches. innovative lagers were a big hit when the company built a bar near the hotels for foreign journalists at the Sochi Olympics. Moscow remains something of a black hole. It’s not yet quite clear why craft beer has yet to conquer the capital, but Moscow’s smattering of craft beer shops and its fashionable bars, such as the brightly colored downtown hipster den Entuziast, tend to stock bottles of St. Petersburg and Yekaterinburg brew, if they offer any independent Russian beer at all. Yet even there, things are changing. The bar at the popular concert venue 16 Tonn, modeled on an English pub with wood panelling and stained glass, has a window offering drinkers a view of the fermentation tanks of its in-house brewery. One thing brings all of Russia’s craft brewers together, though — a revolutionary spirit. “We wanted our craft beer to become a part of a lifestyle for creative and nonconformist young people in Russia — like it was with foods, music, movies, clothes and gadgets,” AF Brew’s Filippov said. “We took a lot from the American craft brewing tradition, and we still lean toward American brewing style and innovations — beer styles, ingredients, label designs. At the same time, we realize that we operate in Russia and the majority of our customers are Russians; many things that took decades to develop everywhere else may only take years here.” The fruits of the revolution don’t come cheap. After journeying almost 900 miles (1448 kilometers) by road fromYekaterinburg to Moscow, a bottle of Jaws’ signature American Pale Ale costs 160 rubles ($4) in a shop, rising to some $6.30 in a bar. That price difference has opened a gap for Russia’s brewing establishment, which like the old guard in any revolution, is trying to exploit the trend. St. Petersburg’s vast Baltika company makes nearly half the beer sold in Russia, most of it the industrial lagers that craft brewers oppose. Multinational brewing giant Carlsberg completed a buyout of Baltika’s shares in 2012, about the same time that AF Brew’s insurgents were getting started on the other side
For each frantic metropolis, there is a peaceful village For each Siberian winter, there is a Black Sea summer
FOR EACH OF YOU, THERE IS A RUSSIA OF YOUR CHOICE
Despite their differences, one thing brings all of Russia’s craft brewers together — a revolutionary spirit.
of town. Now, however, even Baltika is discovering a bit of craft spirit. In March, it launched two beers branded “Brewer’s Collection,” one a tasty, citrus-flavored“California light,” the other a somewhat insipid “Viennese”-branded lager. Retailing at around $1.50 in supermarkets, they may not be craft, but at least they show a major brewer providing its custom-
day, they are increasingly aware of how good beer is made. And advertisers are taking notice and finding ways to target them. If beer enthusiasts are now part of the Russian mainstream, where does that leave the revolutionaries? Nikita Filippov has the answer. “We must keep rolling 24/7 and keep coming out with new beers, crazy flavors, unusual ingredients, collaborations and events every day,” he said. “And that’s what we do.”
ers with beer varieties they may not be able to afford otherwise. On anecdotal evidence gathered from Moscow fridges, they’re pretty popular. Unlike Baltika’s typical mass-market lagers, the beers in the new collection sport labels that explain hops, malt and fermentation. While many Russian beer-drinkers may not be able to afford experimental craft brews every
■JAMES ELLINGWORTH JOURNALIST
Zhigulevskoye: The Austrian-Mexican Roots of Russia’s Most-Popular Beer For nearly a century, the most popular beer in Russia has been Zhigulevskoye, which was first brewed in Samara, a city on the Volga. Despite its mass availability and Soviet image, this beverage is directly related to the Mexican brands Dos Equis and Negra Modelo, which are popular the world over. Samara’s Zhigulevskoye brewery was opened in 1880 by Alfred Josef Marie Ritter von Vacano, an Austrian nobleman of HungarianGerman origin. Von Vacano proved to be an outstanding brewer and brilliant businessman. After a few years, the small, halfdilapidated brewery that had fallen into his hands became the top factory in Russia. The business boasted its own power station and electric refrigerators, which were still rare at the time; railroad and river transport; and strict
hygiene standards. As befit an Austrian, beneath all his pragmatism, the immigrant businessman was sentimental and romantic: He named his brainchild after the Zhiguli hills — a picturesque Volga site connected with Stenka Razin, a sort of Russian Robin Hood. The plant brewed several types of beer, but the local Vienna lager enjoyed particular popularity; this is a variety of beer that is now nearly forgotten in Europe.Vienna lager resembles the well-known Pilsner lager, but
is more stable and has a richer color, ranging from amber to red, and a strong hop bitterness. Toward the end of the century, vonVacano’s beer was not only being served in all the best restaurants in the wealthy Volga region, but it was also being exported. The beer’s superb taste came from the high quality of the raw materials, strict production standards and the famous Volga water, which is celebrated for its taste. Fortunately, the Soviet authorities could not destroy the life’s
Craft beer — is it a creative, flavorful option to the bland beer produced by faceless corporations or the overpriced preserve of bearded hipsters? Whatever reaction those two words prompt in one’s mind, there’s one link almost certainly not thought of — Russia. Yet exotic hops and citrusy pale ales have now spread from the experimental brewers of Colorado and the fashionable crowd in Brooklyn all the way to Russia’s sprawling cities and snowy steppes. Frosty relations between the Russian and U.S. governments are not stopping inspiration from the United States reaching such Russian brewers as Nikita Filippov, one of a trio of friends behind AF Brew, a two-year-old startup producing fiercely hoppy India pale ales in St. Petersburg. “Originally, it was just an extension of our beer-drinking and beer-traveling hobbies,” Filippov said, a reaction to the locally made “tasteless, industrial pale lagers” packing the shelves of Russian supermarkets. Think Miller Lite with Cyrillic script on the label. “Our first-ever slogan was ‘We’re brewing beer that nobody brews, and if nobody likes it, we are the ones who will enjoy it,’” said Filippov. “We seriously thought that we would drink the first 500-liter batch of Ingria IPA in case the whole idea failed.” Obviously, that didn’t happen. AF Brew — the initials stand for AntiFactory in opposition to the industrial beer giants — is now firmly established among the vanguard of Russian craft brewers. St. Petersburg, historically Russia’s window on Europe, saw the first flourishes of Russian craft brewing around a decade ago, but now exciting, welltraveled young brewers are setting up shop around the country and collaborating creatively with foreign stars of craft brewing. St. Petersburg was Russia’s czaristera capital, but the industrial Urals city of Yekaterinburg became its antithesis when the revolution came — this was where the royal family was shot dead. Now, solidly working-classYekaterinburg is a craft beer center, too. Local brewer Jaws, based near a Soviet-era nuclear power plant, has spent the past five years producing flavorful American-influenced beers, with label designs drawn from Hawaiian surf culture. Even the brewery’s name is borrowed from a powerful wave off Maui. Other up-and-coming Russian brewers include LaBEERint, from the central city of Kaluga; and Martin, based in a village in southern Russia, whose
True Zhigulevskoye is available at only a few select restaurants in Moscow.
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work of the Austrian, who had received Russian citizenship at the turn of the century, even if they destroyed the man himself. The Bolsheviks seized the factory from vonVacano and expelled him from the Soviet Union, but they kept the factory’s culture. In the early 1930s, Anastas Mikoyan, Stalin’s minister of food production, visited the brewery, approved of the beer’s taste and the work of the “Viennese man,” but ordered that the beer’s “bourgeois” name be changed. The decision was a quick one: rename the beer after the factory. Thus the acclaimed “Zhigulevskoye” was born. Soon the Zhigulevskoye recipe became the standard for the entire country. Beer with this name was brewed in the Soviet Union in more than 700 locations. Several hundred breweries throughout the former Soviet Union continue to make it today, but there is only one true Zhigulevskoye — the one that is produced at the Zhigulevskoye brewery in Samara. Genuine Zhigulevskoye cannot be transported in bottles — it is a “live,” unpasteurized beer. So where does Mexico enter the story? When von Vacano fled from Russia to Austria, a few Austrian brewers were escaping Europe’s famine and going to Mexico, where they started to locally produce Vienna lager — the subsequently renowned Dos Equis and Negra Moledo. ■DMITRY SUKHODOLSKY JOURNALIST
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Published on Oct 28, 2014