Ukraine wants to build a missile market like it did with drones, top tech official says

• Ukraine is investing heavily in developing missiles, a senior official told Business Insider.
• The goal is to eventually create a market for missiles similar to what Ukraine did with drones.
• Ukraine's drone production has become so robust that it offers a catalogue of options online.

Ukraine is investing heavily in the development of powerful missiles, aiming to build a market for the weapons the way it has done with drones, a senior government official told Business Insider.

Mykhailo Fedorov, the first deputy prime minister of Ukraine and its minister of digital transformation, said that Kyiv is "actively building the missile market," pumping millions of dollars into different initiatives.

"We are acting as an angel or venture investor in our country through Brave1," the Ukrainian government-backed innovation driver, Fedorov said, speaking through a translator in an interview this week. "We are granting hundreds of millions of hryvnias for different missile programs."

Ukraine's defense industry has been extremely focused on mass-producing drone technology, which is viewed as a cost-effective tool for reconnaissance and strike missions that can be rapidly distributed to front-line units.

But Ukraine is increasingly setting its sights on building an arsenal of long-range weapons that can strike deep inside Russia and hit air bases, oil refineries, and other targets once thought to be out of reach. Missiles have emerged as a key area of focus for Kyiv.

Brave1, a defense accelerator launched in 2023 that supports the development and testing of Ukrainian-made weapon systems, confirmed earlier this year that it had begun providing grants for domestic missile programs.

Fedorov said there are now multiple Ukrainian companies in various stages of development working on missiles.

"Some of them are working toward a proof of concept," he explained, adding that "we hope that, ultimately, what happened to drones is going to happen to missiles, which is we're going to create a market, we're going to create diversity, which is going to translate into tangible capacity on the battlefield."

Ukraine has been steadily increasing its drone production throughout the war. In 2024, for instance, Kyiv cranked out 2.2 million of various types, and officials sought to double that figure to 4.5 million this year. It's an industry worth billions of dollars.

The widespread production and urgent need to deliver drones to front-line forces have led to decentralized procurement, with drones being purchased for the war through a wide range of different channels. Ukraine has attempted to streamline this process. One example, the Brave1 Market, acts as an Amazon-style online platform where military units can purchase weapons directly from manufacturers.

The Brave1 Market has an extensive catalogue, and drones are listed with their range, cost, and other details.

Whether the missile market that Fedorov described ends up resembling this setup is unclear, but the idea suggests that Ukraine is trying to replicate past innovations with new weaponry.

A growing missile arsenal

Ukraine fields several domestically produced missiles that have been used in combat. Like the country's arsenal of long-range drones, they are seen as a way to give Kyiv a deep-strike capability without having to rely on Western-provided weapons.

Perhaps the best-known is the R-360 Neptune, a subsonic cruise missile developed by Ukrainian weapons manufacturer Luch Design Bureau. The weapon was initially designed as an anti-ship missile based on the Soviet-era Kh-35.

The Neptune has received significant upgrades and modifications over the course of the war, including extended range, a larger warhead, and the ability to strike land targets. It has been used in high-profile attacks against Russian warships, air defenses, and oil facilities.

More recently, Ukraine unveiled the new FP-5 Flamingo cruise missile made by the local company Fire Point. Officials said it has a 1,800-mile range, a much farther reach than any Western weapon Kyiv has received, and has been used to strike targets in Russia.

Beyond cruise missiles, Ukraine is also developing ballistic missiles and hybrid drone-missiles. President Volodymyr Zelenskyy said earlier this month that Kyiv intends to begin mass-producing several variants.

As more sophisticated technology, missiles are typically more challenging to develop than drones, and scaling up production tends to require greater effort and resources. The Neptune and Flamingo, for instance, are powered in flight by turbofan jet engines; by contrast, most Ukrainian drones rely on propellers.

The developmental requirements and costs for missiles — the Flamingo is reported to be close to $1.1 million per unit, while one Liutyi strike drone is estimated to be $200,000, with many other drones costing far less — may stand in the way of building a market as large as Ukraine's drone catalogue.

However, Ukraine continues to emphasize its missile development as a key component of its long-range strike capabilities.

"We increasingly use not only Ukrainian drones but also our own missiles. They perform very well," Zelenskyy said this month, adding that he is "grateful" to the country's manufacturers.