Novartis Seeks to Make China One of Its Top Three Global Markets

Novartis (NYSE: NVS) of Switzerland will begin a five-year, $1 billion China initiative with two aims: the company will dramatically increase its investment in its China R&D facility, and it will seek to make China one its top three markets worldwide. The comments were made by Novartis’ CEO, Daniel Vasella, in an interview with The Wall Street Journal.

According to Vasella, the investment will increase the size of the company’s Shanghai R&D center from its current employee count of 160 to over 1,000 total staff members. At that size, China will rank with Novartis’ R&D facility in Cambridge, Massachusetts. Only the company’s home research facility in Basel, Switzerland will be larger.

Vasella said the pool of scientific talent, combined with increased IP protection, made the increase in the Shanghai R&D center a compelling proposition. He did not mention cost savings as a factor.

For Novartis, revenues in China have been growing at 30% over the past few years. At this rate, Vasella believes China will become one of its top three markets in five years.

Vasella made his comments in a visit to Beijing, where he made the official announcement. "I think it will be a signal of China's rising importance in the pharmaceutical industry," he said in a statement. "You have to ask yourself where do you need to be down the road, and clearly it is here."

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