Novartis, hardly the stodgiest member of the Big Pharma pack, has made good on promises to expand its research and development business in China. Last week the company announced plans to build a $100 million biomedical research center in Shanghai’s Zhangjiang Hi-Tech Park that will employ some 400 research scientists. (The company and its predecessors have operated dye, chemical, and pharmaceutical factories in China since 1938.)
Novartis joins fellow multinational drug companies Novo Nordisk, Roche, Eli Lilly, Pfizer, and AstraZeneca — all of which either have research facilities in China or have announced plans to invest in operations there.
Lax Chinese patent laws have understandably kept Big Pharma from making any big plays in what could be one of the world’s largest drug markets. However, the quality and the relative bargain-basement price of the country’s scientific talent apparently have finally tipped the scales. Additionally, though many Chinese still utilize traditional homeopathic remedies, Novartis sees an increased need for products specifically aimed at the country’s health care needs. According to Novartis CEO Dr. Daniel Vasella, research at the Shanghai facility will “combine modern drug discovery approaches with those of traditional Chinese medicine that have been used to treat patients in China for thousands of years.” These include the study of the infectious causes of cancer, such as the link between Hepatits B and liver cancer. Other research will focus on developing mechanism-based therapies (a tactic that attempts to identify how drugs work in order to streamline the R&D process) with Chinese universities and research centers.
Novartis’ revenues in China slipped about 5% last year, so it’s easy to understand why the company is looking to find new and innovative ways to make money in that market. The company claims the move into China won’t initially be a cost-saving effort. Most of the leading scientists staffing the facility will come from Novartis’ existing team of Chinese expats (including Dr. En Li, formerly based at the company’s Boston facility), in order to train native scientists in the finer points of working for a multinational corporation.
However, the Wall Street Journal points out that the salary of a Chinese scientist working in Shanghai is about $25,000 per year, as compared to the $250,000 salaries pulled down by research chemists in the US. (registration required)
If this investment pays off for Novartis, industry analysts predict that China could become “the next India” for outsourced pharmaceutical research and development.
Comments
Michael Hammond Says:
August 11th, 2007 at 1:38 pm
So called extensive “studies” are done on all drugs produced by the pharmaceutical industry yet not a day goes by that we don’t read about a drug that was vetted and studied and approved by the FDA and sold to millions of people for years that has to be pulled from the market because it was found to be more deleterious than efficacious. This is the drug cycle and the pharmaceutical guys know it and they will make money with it and be ready with the next “wonder drug” when the current one runs its cycle.
How can this be? Pharmaceuticals are a trillions a year business. The economy of the US depends on their production as well as the investment portfolios of many politicians.
I hope that Novartis isnt able to infect the Chineese with this business plan.
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