chineseherbs.jpgNovartis plans to build a biomedical R&D centre in China in a move that shows how Chinese research is coming in from the cold for western pharma companies.

Novartis claims that the new facility, to be built in Shanghai's Zhangjiang Hi-Tech Park, is the first of its kind in China. It will focus initially on the infectious causes of cancer endemic in China and Asia.

It will also work to combine western technology and drug discovery approaches with those of traditional Chinese medicine.

Daniel Vasella, chairman and CEO of Novartis, said:

The Shanghai centre will allow us to combine modern drug discovery approaches with those of traditional Chinese medicine that have been used to treat patients in China for thousands of years.”

Novartis' Shanghai facility will focus primarily develop new drugs for the Chinese market. But it will also become an integral part of the firm's global R&D network.

Earlier this year, rival AstraZeneca announced plans for a similar R&D centre in China — see this EngagingChina story.

Western pharma firms want to move beyond just manufacturing in China and tap into the country's growing appeals as a low-cost research base and a new market for drugs. Vasella said:

The level of scientific expertise in China is rising rapidly. At the same time, the healthcare needs of the Chinese are growing, primarily the result of urbanisation, lifestyle changes and associated chronic diseases.”

Novartis currently ranks as the fourth largest pharmaceutical company in the Chinese hospital market with a compound annual sales growth rate of over 30% during the last five years. It is now constructing an $83m development and production plant in Changshu, Jiangsu province, which is expected to open in mid-2007.

Although China is not yet among Novartis' top ten markets, it is expected to be by 2010. By that time, China's annual drug sales are expected to nearly double, to $25bn, according to Boston Consultancy, an independent consulting group.

More on the AstraZeneca announcement in this BusinessWeek article.

Its not just pharma companies that see China as a new source of competitively-priced researchers. Last week, engineering giant Siemens unveiled a new research centre in China to focus on new environmental, energy, healthcare and automation technologies.

Elsewhere on the pharma front:

  • Hutchison China MediTech, a London-listed play on traditional Chinese medicine, has signed an R&D agreement (pdf) with consumer giant Procter & Gamble to discover and develop new active ingredients from traditional Chinese medicine and botanical sources for possible use in beauty care products. More in this Financial Times article.