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Eli Lilly, Novell pour cash into
China R&D
BEIJING -
Multinational corporations are increasingly
realizing that China is not just a vast market or
even a production base - it is a critical locus
for research and development (R&D) functions
as well.
Several factors are driving this
trend: first, the China market has its own
peculiarities, and companies that want to succeed
in China long term must develop products and
services suitable for Chinese. Second, the country
has a very large cohort of top-quality scientists
and engineers who can perform product development
functions at lower cost than technicians
elsewhere. Third, the Chinese government is
actively trying to encourage companies to perform
more R&D in China as a way of transitioning
the Chinese economy to "quality over quantity",
and many multinationals therefore see R&D
localization as a step necessary to ensure their
long-term prospects in the country.
Virtually every business sector is
participating in this movement; lately, the vast
China R&D effort of Finnish cellular telephony
giant Nokia has received a lot of attention. Two
of the most recent corporate giants to advance
their China R&D plans are pharmaceutical giant
Eli Lilly & Company, and business software
specialist Novell.
Eli Lilly to boost
bio-pharmaceutical research
Eli Lilly &
Company, one of the world's leading pharmaceutical
companies, expects to double or triple its sales
revenues in China in five years by investing more
in R&D. China is expected to be among Lilly's
top 10 markets, although it now contributes only
1% of the company's global sales, Sidney Taurel,
chairman, president and chief executive officer of
Lilly, told China Daily. Lilly's global revenues
in 2004 stood at US$13.8 billion.
To
achieve its China goal, Lilly will boost its
R&D in the country, especially on biological
pharmaceuticals through cooperation with other
companies. Lilly's current R&D focuses mainly
on chemical pharmaceuticals, through cooperation
with its Chinese partner Shanghai ChemExplorer.
The pharmaceutical giant has 230 scientists
working in China, accounting for 20% of its total
number of scientists; the China-based R&D team
is is the US-based firm's largest R&D group
overseas.
According to Taurel, Lilly's
R&D in the country will target three most
common diseases among the Chinese: neuropathy,
diabetes and cancer. In addition, it will set up
10 training centers in China for doctors and
nurses treating diabetes patients, he added. The
company launched nine new medicines in China
during the past year and a half, and the number of
its products in the local market has doubled
during the past three years.
Lilly's
continuous investment in R&D in China is also
backed by the country's patent protection system,
which has made significant progress during the
past two decades, said Taurel. "We are very
encouraged by the input of the government ... in
improving the system, and we are hoping to see
more progress," he said. Lilly, like many other
foreign pharmaceutical firms with patented
products, is facing challenges from Chinese
companies making generic products due to imperfect
rules concerning medicine patents in China, noted
Taurel. Usually, a generic drug company can
challenge a patented medicine only when it can
provide sufficient, new information about the
patent, but in China, there is no such rule and
thus "any patent can be challenged", he said. "But
we trust that (improvement in the situation) will
happen, and we will continue with our investment
in R&D."
Lilly globally spends
approximately 20% of its revenues on developing
new drugs, higher than the industry's average of
15%. Thanks to the constant investment in
pharmaceutical innovations, Lilly is "very unique
in that we do not have the problem of patent
expiration until 2011," and thus the company will
be able to maintain a higher growth than the
industry average, said Taurel.
In
comparison, nearly half of the patented medicines
developed by the world's major pharmaceutical
companies are facing challenges from patent
expiration, mostly before 2007. Local generic
pharmaceutical firms can legally produce these
medicines after the patents expire. Lilly has
recently agreed to transfer its antibiotics
manufacturing technology to leading Chinese
company Hisun Pharmaceutical Co Ltd. The move is
part of Lilly's US$70-million global initiative to
address multi-drug resistant tuberculosis, in
partnership with the World Health Organization.
Novell to set up R&D center in
Beijing
Novell, a leading global provider
of infrastructure software and services, will step
up investment in China by the end of the year.
"The investment includes setting up a research and
development (R&D) center, opening new regional
branches, developing a local technology support
center, and strengthening ties with local
partners," said Jack Messman, the chairman and CEO
of Novell in Beijing recently.
The Novell
R&D center in Beijing, to open in 2006, has
been conceived as part of the company's global
R&D infrastructure. The center will focus on
Linux desktop research and development, Linux
internationalization and localization, and
high-performance Linux.
"Novell is
increasing its investment in China because we
believe we can have an enormous positive impact on
economic growth in the region," Messman said.
Novell will continue to focus on establishing
strategic alliances with local system integrators,
distributors, and software vendors to create a
vibrant network around Novell's Linux offerings in
China. Novell will also work closely with local
telecommunications vendors to develop Linux
applications.
Novell signed an agreement
with its local partner China Standard Software
Company (CS2C) on August 16, announcing that they
would cooperate to develop both Linux server and
Linux desktop offerings for the Chinese market.
"As one of China's most competitive software
companies, we are committed to the
commercialization of Linux and open source
solutions," said Guo XianChen, vice-chairman of
CS2C. "We have a rich tradition of providing
world-class Linux and open standard-based
solutions to Chinese users. The cooperation
between Novell and CS2C will further drive the
development of the Linux industry in China to our
mutual advantage. We are looking forward to great
results from our cooperation with Novell," Guo
said.
Besides the alliance with CS2C,
Novell will co-operate and build a partnership
with Huawei Technologies and Asiainfo Holdings in
the country in the future. "Together with our
Chinese partners, we are dedicated to promoting
the development of Linux and open source in the
local market, as well as accelerating the Chinese
software industry more broadly," Rhonda O'Donnell,
the chairman of Novell Asia-Pacific said. As part
of its investment plan, Novell will establish a
local Technical Support center in Shenzhen in the
near future to support its growing customer base
in China.
Novell will also, in conjunction
with CS2C, launch a local testing center in
Beijing to provide testing and education licensing
services for Chinese hardware and software
vendors. Novell also plans to strengthen its local
team and coverage in the Chinese market by
expanding its office presence.
(Asia
Pulse/XIC) |
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