Novartis to Establish R&D Shop in China

November 25th, 2009 | Sources: Wall Street Journal

Swiss pharmaceutical giant Novartis announced last week that it will invest $1 billion into an R&D facility in Shanghai, China.

theworldaccordingtoChinaChina’s remarkable economic growth is driving the decision, according to Chief Executive Daniel Vasella.

Company strategists predict China could vault into the top 3 national markets for the company’s products as soon as 2014.

The prediction is based on Novartis’ astounding 30% growth in revenues from China in each of the last several years.

That trend is likely to accelerate now that Chinese officials have decided to overhaul the nation’s health care system, most notably by rebuilding moribund facilities in rural areas and expanding health insurance to 90% of China’s citizens by 2011.

Novartis’ investment will be spread over 5 years. It will boost the headcount in the company’s Shanghai R&D facility from 160 to 1,000, making it more or less equal in size to the company’s A-number one research shop in Cambridge, Massachusetts. The  company’s HQ in Basel remains the largest facility overall.

“I think it will be a signal of China’s rising importance in the pharmaceutical industry,” Vasella told the Wall Street Journal during a recent sojourn to Beijing. “You have to ask yourself, where do you need to be down the road, and clearly it is here.”

Vasella added that his decision was made possible because of the newfound plethora of scientific talent in China. He brushed off concerns about the country’s notoriously lax protections of intellectual property.

Novartis’ move into China is at least the third by a large pharmaceutical company in recent years. Roche opened a research lab there in 2004, and a clinical trial center in 2007.  In 2006, AZ opened a research center in Shanghai. It is building another one in Zhangjiang.


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