Pharma Strategy

Novartis has unveiled investments in China that are intended to help it capitalize on a population with increasing access to health care. The Swiss firm will sink $1 billion over the next five years into bolstering its R&D activities in China and will buy a majority stake in a Chinese vaccines company.

Much of the R&D investment will go to the Novartis Institute for BioMedical Research in Shanghai (CNIBR). Focused on basic research into diseases that impact China, the institute will eventually house R&D in analytics and biomarkers, pharmacology, chemistry, proteomics and genomics, imaging, and protein production. The company expects to increase the number of associate-level scientists to roughly 1,000 from 160 today. To accommodate the added labs and manpower, CNIBR will move from Shanghai's Zhangjiang Hi-Tech Park to a new campus in the city.

Separately, Novartis signed a deal under which it will pay $125 million for an 85% stake in Zhenjiang Tianyuan Bio-Pharmaceutical, a privately owned vaccines company with sales of roughly $25 million last year. Although a major vaccines player worldwide, Novartis currently has a limited presence in China.

China has become an attractive market for drug companies experiencing stagnant sales in the U.S. and Europe. According to market research firm IMS Health, China will be the third-largest pharmaceutical market by 2011, up from number six today.

Roche, AstraZeneca, and GlaxoSmithKline have all established a significant R&D presence in China. Novartis launched its push in 2006, when it began planning CNIBR and broke ground on a technical center in Changshu. The company has since invested $250 million in the Changshu site.