Pharmaceutical companies and medical equipment makers will face restrictions in Russia if they fail to develop local production and transfer technology, Russian Prime Minister Vladimir Putin said on Wednesday.

The Russian government plans to invest 120 billion rubles ($3.8 billion) before 2020 in the pharmaceutical industry, which it sees as one of the priority sectors in Putin's drive to restore the country's industrial might.

"The simple way is to show that there will be restrictions for them in the Russian market if they do not launch production and transfer technology," Putin said during a cabinet meeting on the sector, in remarks posted on the government's website.

Putin noted the situation in the drug sector was similar to the car industry, where Russia had forced leading global firms to set up production through a combination of higher import duties and consumer incentives.

The government has leverage over the pharmaceuticals sector through subsidized purchases of drugs for low-income citizens, state-funded purchases of medical equipment for hospitals and import duties.

Some of the leading global drugmakers are already set to invest over $1 billion into Russian manufacturing, trying to win the status of local producers and sidestep a tougher government stance on imported medicines.

Putin also accused foreign firms of exaggerating health benefits when marketing their imported products in Russia.

"Foreign producers with the help of some of our celebrities are pushing their products, saying that without them everyone will die. We just need to get over it," Putin said.

Russia is expected to see double-digit percentage growth in its pharmaceutical market in 2010, according to industry analysts, against a projected 4-6% for the global industry.

Several global companies have recently announced plans to start producing in Russia, including Nycomed and Novo Nordisk. AstraZeneca and Novartis have said they are considering such a move.