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New pharma powers growing in the East
01-23-2008
by Chris Anderson  |  Email the author
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It is hardly breaking news that the pharmaceutical and biotech industries are looking to Asia as a part of their strategy to keep costs in check. In the past month alone, there were a handful of news items coming out of China that illustrate the biotech industry in that country is no longer that future entity, the "wait until they really get going" promise.
 
Exhibit one is the recent announcement by GlaxoSmithKline that the company intends to invest as much as $100 million in a new R&D facility in China as it looks to expand its neuroscience portfolio. GSK has been increasingly active in China over the past ten years and in the past two years has commenced more than 30 clinical trials in the country.
 
By the time the new R&D facility is completed and running at capacity of roughly 1,000 workers, GSK will employ more than 3,500 in China, a number that should only continue to grow in the next decade.
 
But don't take it from me. In May, when GSK hired its head of the new R&D center in Shanghai, Moncef Slaoui, chairman, GSK R&D had this to say: "We are entering an exciting period of expansion for our R&D organization as it builds on the strength of the superb science now being conducted in China. We intend to be part of a future in which the phrase 'discovered in China' is heard as often as 'made in China' is heard today."
 
Pretty heady statement, that, but by no means is GSK alone in staking out its spot in China. Pick a major pharmaceutical company out of a hat and google the company name with "China R&D" and you will see that in the past five years alone these companies have made commitments totaling in the billions of dollars to establish new facilities.
 
While big pharma has been busy in China, a number of home-grown companies have also begun to make waves on the world stage.
 
WuXi's recent acquisition of AppTec illustrates just how much clout these new Chinese biotech behemoths have and also suggests how much more they may have in the future. WuXi ponied up $151 million to acquire the Minnesota-based company and with it got something vital: a cGMP approved facility. While not necessarily a huge deal, it does underscore a couple of points. First, Chinese biotech companies are generating a boatload of cash from their operations and public financing and can be expected to deploy that cash not just within China, but globally. Second, WuXi (and I'm sure others in the future) are not content to be considered strictly a Chinese outsourcing company. They are intent on increasing their presence globally, to seek out expertise, wherever it exists on the globe, to provide broader outsourcing options to client companies.
 
Likewise, another company in Shanghai, Medicilon, recently entered into a joint venture with Michigan-based MPI Research with the goal of opening a GLP facility next year.
 
Chun-Lin Chen, who will serve as CEO of the new company Medicilion-MPI Preclinical Research LLP, says that money is flowing into Shanghai at breakneck speed and that in order for his company to have a fighting chance it had to get going now. Further, opening a GLP facility in China with funding and initial program management from a long-time U.S.-based GLP CRO was the key to adding yet another layer to its overall operations. MPI, for its part, has long had interest in gaining a toehold in China and according to information released by the company detailing its venture with Medicilon, it searched for a partner of suitable quality for three years before settling on Medicilon.
 
It's apparent, then, that Chinese CROs will have a growing impact not only on the broader pharmaceutical industry but will have an impact in terms of buyouts and partnerships with CROs right here in our own backyard.

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