China Business

Nov 12, 2005

Foreign pharma firms building R&D operations

SHANGHAI - Pfizer Pharmaceutical Ltd of the United States inaugurated a research and development center in Shanghai recently, one indication of the recent change in investment focus of the world's pharmaceutical companies from simple industrial investment in China to conducting research and development (R&D) in the country.

Besides Pfizer, many foreign pharmaceutical giants have recently expressed the intention of building similar R&D institutions in China. All signs indicate that China is gradually becoming a new base for world pharmaceutical R&D. Why does China stand high

in these pharmaceutical giants' favor as a new medicine R&D center? An important reason is that the Chinese pharmaceutical sector has obtained considerable strength.

China now has acquired five necessary prerequisites for becoming a pharmaceutical R&D center: First, the government pays great attention to pharmaceutical R&D; second, the country has made huge progress in intellectual property protection; third, the pharmaceutical R&D infrastructure is basically perfect; fourth, the pharmaceutical industry pattern is fairly rational; and fifth, the country possesses many well qualified researchers.

An official in charge of Pfizer said that when launching the China R&D center, the company had undertaken pilot R&D for one and a half years without any major problems, and it found that the human resources, government support, and other "software" and "hardware" conditions in China were beyond its expectations. Thus, the company decided to invest US$25 million to build such a high-grade R&D center in the next five years.

Due to similar considerations, Europe's largest pharmaceutical enterprise Sanofi-Aventis Group, Switzerland's Roche and Britain's GlaxoSmithKline have stated one after another that they will set up R&D centers in China.

China has been regarded as a large medicine market for many years, and has not nearly reached its full potential, industry analysts estimate. Some forecasts say that China will rise to be the world's fifth largest pharmaceuticals market before 2010. For transnational pharmaceutical enterprises, simple trading has become inadequate to increase market share in China, as the country's own R&D strength has improved gradually over the past few years, and entering the Chinese market also means joining hands with Chinese enterprises.

(Asia Pulse/XIC)

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