Novartis CEO plans to keep China R&D ops in-house

While Charles River's $1.6 billion deal to buy WuXi PharmaTech may have put the spotlight on China's growing role on the global contract research stage, Novartis' new CEO insists the pharma giant plans to handle most of its own R&D work in China in-house.

"It should be a strategy owned by Novartis and directed by Novartis," says Joe Jimenez, who is pushing ahead with plans to invest a billion dollars in a Shanghai R&D complex that will employ around 500 scientists--all on the company's payroll. Wuxi is one of the largest CROs in China, which has been steadily increasing the amount of research work that it does for Big Pharma companies, notes the Wall Street Journal.

"Many of our competitors are starting to seriously outsource research and development," Jimenez tells the WSJ. But Novartis is keeping its R&D budget at around 20 percent of pharma sales, and most of that money will continue to fund its own research operations.

WuXi AppTec CEO Ge Li has made big inroads with two of Novartis' biggest competitors. Merck and Pfizer drug research contracts supplied the CRO with a quarter of its revenue. And Ge Li has said that if the company's chemists can double the R&D success rate from 0.1 percent to 0.2 percent, the company can cut its average cost of developing a new drug--now $1.3 billion--in half.

- here's the story from the Wall Street Journal (sub. req.)