"Novartis is making a strategic investment in Russia for long term growth," said chief executive Joseph Jimenez.
"The ongoing partnership with Russia enables us to expand our commercial presence in a key emerging market," he added.
The Swiss pharmaceutical giant said its investment would also include research and development and collaboration with Russian universities and private companies, as well as possible licensing of its compounds.
Novartis said it had signed a memorandum of understanding with St Petersburg "confirming its intent to build a new full-scale pharmaceutical manufacturing plant," with construction due to start in 2011.
"This investment is part of an overall $500 million (379 million euros) commitment in local infrastructure and collaborative healthcare initiatives planned over a five-year period," the company added.