By Nick Taylor
The largest Big Pharma investments in China are about much more than just numbers; they tell the story of the fight over the biggest game in town. Each million-dollar headline marks the latest salvo in a struggle to take control of a market that could make or break Big Pharma players.
With traditional strongholds in a seemingly prolonged slump, the drug industry is betting big on emerging markets. And China makes other emerging opportunities look like chicken feed. Take the diabetes market in China, which Datamonitor predicts will swell to $2.1 billion by 2019. That's the sort of dollar figure that catches the eye, and a handful of Big Pharma firms are now fighting it out to take control of the market.
Sanofi ($SNY), Eli Lilly ($LLY) and Merck ($MRK) are the challengers. Each is spending big to eat away at market share held by Novo Nordisk ($NVO) and Bayer. And in this hypercompetitive, high-stakes market, small advantages can drive big sales. Everyone is jostling for position. Sanofi strengthens ties to the government by offering diabetes training; Novo retaliates by promising more local education, research and manufacturing. Almost half of the investments in this feature--which is an overview of 10 companies active in China, not a definitive list--are focused on diabetes. All figures are taken from company communications.
The investments give companies access to a growing pool of affordable yet skilled drug researchers. But dollars spent in China build more than just infrastructure; they cement relationships. With China widening its healthcare coverage, Big Pharma is keen to secure an audience with budget holders. And committing big bucks to China will do companies no harm when market-access talks get under way.
Even with billions of dollars behind them, companies are enlisting outside help to crack China. And the new set of pressures and opportunities facing Big Pharma--globally and in China--are leading to unusual alliances. Pfizer, for example, has shacked up with a state-owned drugmaker to sell the products that have hurt it most, generics. It faces competition from AstraZeneca ($AZN) and Eli Lilly, which have invested in local partners to capture a slice of the branded generics market too.
Others have allied to target vaccines, notably GlaxoSmithKline ($GSK), which showed one possible endgame for successful joint ventures when it bought out its partner for $39 million. Collaboration is taking place in R&D too. Eli Lilly was an early mover--giving Chinese CRO ShangPharma a shot in the arm back in 2002--and has continued to work with local partners. But the game has evolved, with AstraZeneca and Merck Serono among those pushing new ways of investing in and working with CROs in China.
This myriad of approaches to investing in China masks two common goals: Make China an engine room for drug discovery, development and manufacturing; and capture a bigger slice of the ballooning market. With growth and innovation faltering in other markets, Big Pharma is heavily invested in hitting these two objectives.
Failure in China is simply not an option.