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GBI ( is China’s leader in pharmaceutical and biotechnology information and consulting services. GBI provides in-depth analysis and insights that enable investors to stay ahead of China’s pharmaceutical, biotechnology and healthcare industries. Our information offerings... More
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  • The driving forces behind growth of MNC R&D centers in China  0 comments
    Mar 24, 2011 4:47 AM

    Posted by Vivian Ni, GBI Analyst


    Over the past decade, over 15 multinational companies (MNCs) have set up their pharmaceutical/clinical R&D centers in China, a number of which continues to increase as more and more MNCs of all sizes enter the Chinese market. Among the most recent activities in the pharma R&D facility area are those of Bayer Healthcare and Pfizer. Bayer, currently with four key R&D locations including the U.S, Germany (2) and China, recently announced plans to expand its Beijing drug R&D center from its current staff of 130-140 to 300 over the next several years. (Comments from Bayer executives revealed that the company believes China will pass the US and Japan as Bayer’s largest market). As for Pfizer, the company has announced its intention to move its entire antibacterial R&D center from Groton, Connecticut to Shanghai.


    Johnson & Johnson, Eli Lilly, Novartis, Pfizer, Roche and AstraZeneca have set up Shanghai-based R&D centers in 2009, 2008, 2006, 2005, 2004 and 2002, respectively. (Pfizer has another center in Wuhan established 2010). GlaxoSmithKline (NYSE:GSK) holds R&D bases primarily focused on OTC and CNS drugs in Shanghai (2007) and Tianjin (2003), respectively. Like Bayer, Novo Nordisk has plans to expand its Beijing R&D facility with an investment totaling USD 100 million for a five-year period (2010-2015). Novartis of course had its media-grabbing 2009 announcement that it would commit USD 1 billion to the company’s China R&D efforts.


    So what’s fueling this rising trend of MNC drug research bases and activities in China? There is no doubt that a (still) comparatively lower cost base and the rapidly rising pool of scientific talent strongly add to the attraction of China as an R&D base. More important, however, is China’s rapid growth as a pharmaceutical market and predicted position as the world’s second largest by the next decade. With such an attractive prize, many R&D investments are politically motivated. With new national and regional pricing and reimbursement lists, expansion of government health insurance and community healthcare, and increased oversight of hospitals, tendering, and prescribing- it is clear that China’s healthcare sector will remain a highly regulated one, and issues of market access will be critical for any company seeking to enjoy the fruits of China’s expanding pharmaceutical market. This is certainly no secret. In response to questions regarding the shift of the company’s antibiotics R&D center to Shanghai, an ex-Pfizer executive indicated that in addition to cost advantages and a growing scientific talent pool, an added benefit to shifting activities to Shanghai is the possibility of being viewed favorably by Chinese regulators. If China’s pharmaceutical market lives up to its promise, it is likely that R&D investments will continue for some time to come. 

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