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November 8, 2010
Volume 88, Number 45
p. 9

Big Pharma Settles In China

Emerging Market: Western drugmakers buy local companies and build up R&D

Jean-François Tremblay

China’s increasingly Western eating habits—for example, dining at fast-food restaurants—are causing a rise in the incidence of diabetes. Newscom
China’s increasingly Western eating habits—for example, dining at fast-food restaurants—are causing a rise in the incidence of diabetes.
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Three international drug companies have announced strategic moves to strengthen their position in the booming Chinese health care market.

Sanofi-Aventis will spend $520 million to buy BMP Sunstone, a Chinese manufacturer of health care products such as children’s cough syrup and feminine hygiene products. Separately, the Swiss drug firm Nycomed will acquire a majority stake, reportedly worth $210 million, in Guangdong Techpool Bio-Pharma, a southern-China-based developer of biotech drugs. Meanwhile, Eli Lilly & Co. will establish a 100-scientist R&D lab in Shanghai to study diabetes in Chinese patients.

Sanofi CEO Christopher A. Viehbacher says that the Sunstone purchase will bring the firm “unique access to new, expanding distribution channels.” Whereas major foreign drug companies in China sell their products mostly in large cities, Sunstone has a particularly strong market presence in county hospitals and community clinics, Sanofi says.

The French drug giant hopes to boost its sales in the Chinese over-the-counter health care market. In January, it formed a joint venture to distribute vitamin and mineral supplements in China.

Nycomed’s acquisition of a 51% stake in Techpool will likewise expand the Swiss firm’s market reach in China. Techpool is unique because it develops and manufactures its own biotech drugs, particularly human-urine-based proteins such as ulinastatin, a trypsin inhibitor used to treat sepsis. The other major shareholder in Techpool is Shanghai Pharmaceutical.

“Techpool’s specialty franchise is highly complementary to Nycomed’s development strategy and will become a cornerstone of our expansion in emerging markets,” CEO Håkan Björklund says.

International drug companies enjoy bright prospects in China. Owing to well-publicized quality problems encountered by local pharmaceutical producers, many Chinese patients are willing to pay a premium for drugs sold in packages bearing the logo of an international brand, says Hardy W. Chan, executive vice president of, a Taiwanese producer of pharmaceutical ingredients that supplies many Western firms. ScinoPharm is itself aiming to improve its position in China by building manufacturing facilities in Changshu, a city near Shanghai.

Drug companies that do not position themselves strongly in China will come to regret it in a few years, Chan adds. But purchasing a Chinese firm can be a challenge, he warns. “We certainly haven’t seen the last acquisition made by a foreign drug company in China,” he says. “But the buyer may have difficulty adjusting to the business practices of the company it acquires.”

Chinese government officials look favorably upon international companies that conduct research in their country. Lilly’s new research center will aim to develop treatments for Chinese patients who suffer from diabetes, a disease that has grown to epidemic proportions in China in recent years. According to research published in March, 92 million Chinese people, or nearly 10% of the country’s adult population, have diabetes (N. Engl. J. Med. 2010, 362, 1090). This number is growing because Chinese people generally live long, are changing eating habits, and do not typically get enough exercise.

The molecular origins of diabetes in Asian and Western populations are different, which suggests a major focus of the center, according to David E. Moller, Lilly’s vice president of endocrine and cardiovascular research and clinical investigation. Lilly says its researchers in China will work closely with academic institutions and private research organizations.

Lilly’s plan also reflects the shift in drug research to China from developed countries. Last month, Lilly announced the closure of an R&D facility it operates in Singapore (C&EN, Oct. 25, page 9).

Chemical & Engineering News
ISSN 0009-2347
Copyright © 2011 American Chemical Society
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