AstraZeneca to spin off Shanghai R&D

Joining other Western drug companies that are scaling back their research commitment in China, AstraZeneca says it will turn its R&D center in Shanghai into a joint venture with a Chinese investor.

The new company, Dizal Pharmaceutical, will be a 50-50 venture with government-backed SDIC Fund Management. Dizal will inherit AstraZeneca’s R&D assets in China, including three drugs in preclinical development and the firm’s Shanghai R&D center, in which it has invested tens of millions of dollars since 2006.

Staffed with researchers now employed by AstraZeneca, the new firm will “accelerate the local discovery and development of innovative, affordable medicines for patients in China and around the world,” says AstraZeneca CEO Pascal Soriot.

AstraZeneca’s move comes on the heels of R&D downsizing decisions by other firms. In August, GlaxoSmithKline announced the end of its neuroscience research activities in China. Neuroscience was the main focus of GSK’s R&D center in Shanghai.

Then in September, Eli Lilly & Co. said it would close its Shanghai R&D center. The company had opened the 150-scientist facility, focused on diabetes research, in 2012. Lilly said it was downsizing in China as part of a global cost-cutting program that is eliminating 3,500 jobs.

Companies that reduce their research footprint in China do so because priorities or business reasons have changed, reckons Jianmin Fang, a professor of molecular medicine at Tongji University School of Life Science & Technology. But Fang also notes that conditions in China are now different than they were a few years ago when the companies invested.

While costs have increased and China is no longer a cheap place for drug companies to conduct research, the quality of services provided by contract research and manufacturing firms has risen, he says. “You can now research, develop, and even conduct clinical trials of new drugs in China without an R&D center,” he says.

Fang himself founded a contract manufacturer of cancer drugs, Mabplex, in northeast China. “The environment for research and innovation has actually improved in China,” he says.