Novo Nordisk Plans Massive Investment in China R&D Center

| About: Novo Nordisk (NVO)

Novo Nordisk (NYSE: NVO) said it will commit up to $100 million to expand its Beijing R&D center. As much as $40 million of that will go to build new labs for diabetes research. The company plans to have the new labs finished late next year and occupy them in 2012. Most of this information is added detail to the company’s September announcement that it would expand its Beijing R&D operation (see story).

Novo Nordisk also said it will add 200 new jobs by 2015. Previously, the company expected to double its work force from 100 to 200 researchers.

Novo Nordisk says the growth will make its center the largest wholly-owned foreign R&D operation in China. The first multinational pharma to open a China R&D facility, Novo Nordisk established its first China R&D center in 1997 and opened a facility in Beijing’s Zhongguancun Life Science Park in 2002. It will become the company’s largest R&D facility outside of its native Denmark.

Previously, Novo Nordisk’s Beijing center was working on molecular biology, protein chemistry and cell biology.

Novo Nordisk is known for its diabetes products. According to IMS Health, Novo Nordisk held a 35% share of the China diabetes market between April 2009 and March 2010. Bayer (OTCPK:BAYRY) came in second with a 15% share, and Sanofi-Aventis (NYSE: SNY) took third spot with 8%.

The market for diabetes drugs in China is huge. Almost 100 million of its inhabitants suffer from the disease, and even though many of them are not receiving adequate treatment, the cost for diabetes healthcare is estimated to already exceed $25 billion. That figure will grow significantly as healthcare reform is implemented throughout China.

Two weeks ago, Lilly (NYSE: LLY) announced it was building a diabetes research center in Shanghai (see story). The move was a huge departure in the company’s China strategy, which had been based on partnerships rather than a brick-and-mortar, in-house R&D operation. Lilly’s China center will begin with a staff of 100 researchers.

Novo Nordisk is still waiting for China approval for Victoza, a once-daily glucagon-like peptide-1 (GLP-1) analog that treats diabetes 2. The drug reacts when blood sugar levels are high, stimulating the pancreas to release insulin.

Novo Nordisk has two production plants in China, both of them in Tianjin. A new facility, representing a $410 million investment, began construction in 2008.

Disclosure: none.