Novartis Aims to Make China a Top Market

According to China Central TV, Novartis (NVS) produced 2.5 billion RMB ($342 million) of revenue in China during 2007, an increase of 20%. The company has been the fourth biggest supplier of medications to hospitals in the country. Although its China sales are still modest relative to its overall revenues, Novartis aims to make China one of its top 10 markets by 2010.

So far, Novartis has invested over $400 million in building facilities in China. Most spectacularly, it put $100 million into a Shanghai R&D center that is one of eight Novartis Centers for Biomedical Research worldwide. It also recently constructed a manufacturing and development center in Changshu. Novartis has 2,044 full-time China employees.

In March 2007, Novartis received approval from the SFDA for Sebivo (telbivudine), a treatment for chronic hepatitis B. Hepatitis B is the second leading cause of death in China, affecting some 100 million people. Sebivo was developed in a collaboration with Idenix (IDIX), though Novartis has sole marketing responsibilities in China.

Hepatitis B often leads to liver cancer, an example of a preventable infectious disease as a root cause of cancer. The new Shanghai R&D center, which employs 400 scientists, will explore this field further, looking at both Western and traditional Chinese medicines as sources for new drugs that could prevent cancer from occurring. In China, Novartis also collaborates with the Shanghai Institute of Materia Medica [SIMM], WuXi PharmaTech (WX), the Chinese University of Hong Kong National Institutes of Biological Sciences [NIBS], and the Kunming Institute of Botany. Novartis has already been able to mine traditional Chinese medicine to produce a treatment for malaria, called Coartem, made from sweet wormwood plants. That product is made in an enlarged plant near Beijing, where it is produced for the World Health Organization.

The recently built plant in Changshu, an $83 million endeavor, will produce and analyze drugs for leukemia, epilepsy, hypertension and other diseases. It combines a manufacturing facility with R&D labs for greater efficiency.

The only major setback for Novartis in China recently has been Zelnorm, a treatment for irritable bowel syndrome that was withdrawn because of side effects in early 2007. It was made in China, mostly for sale in the U.S. Its China revenues were small.

A few years ago, Novartis was investing in both China and India. However, when India refused to uphold the patent on Gleevec, the blockbuster cancer drug for Novartis, Novartis stopped further development of its infrastructure in India.

Disclosure: none.