Company: Pfizer ($PFE)
Investment: $145 million
Themes: Branded generics and joint ventures
Pfizer knows better than most about lucrative generic opportunities. In recent years it has seen generics manufacturers line up to chip away at its blockbuster empire, leading to patent losses knocking billions of dollars off sales in 2012. Now, Pfizer wants to claw back some of those lost sales by selling branded generics in China.
"Providing high-quality, accessible and affordable health care to people over a vast area and from broad socioeconomic levels has become a primary objective of Chinese healthcare reforms, which is aligned with Pfizer's mission to provide high-quality and affordable medicines," Xiaobing Wu, manager of Pfizer China, said in a press release.
Like AstraZeneca ($AZN), Pfizer hopes to capitalize on fears about substandard drugs by putting its name to a line of generics. And it has teamed up with local drugmaker Zhejiang Hisun Pharmaceutical to target the opportunity. Hisun-Pfizer Pharmaceuticals aims to employ 1,000 people by next month. Rapid expansion will continue in 2013, when the venture plans to hire an additional 500 people.
Pfizer has put forward 49% of the $295 million invested to get the venture off to a quick start. Chinese state-owned partner Hisun contributed the rest. Like many of its peers, Pfizer has joined with a local partner to ease its entry into the Chinese market. Pfizer also invested in Shanghai Pharma last year and has expressed an interest in inking more alliances.
For now though the focus is on making the Hisun joint venture work. But differences between the two businesses make this particularly complex. "These are two totally different companies--one state-owned, the other one a big multinational. We need to balance the foreign and local culture, practice and mindset. That's a pretty big challenge for us," Kevin Xiao, CEO of the joint venture, told Bloomberg in September. If Big Pharma is to make the joint venture model work in China, it must overcome such obstacles.
Hisun-Pfizer workforce to more than double in size