An increasing number of leading multinational pharmaceutical companies have strengthened their research and development (R&D) facilities in China, indicating a fundamental change of foreign investment -- from financial to intellectual.

"Since 1980s, all the world top 20 pharmaceutical companies have business operations in China including Pfizer, Novartis, Eli Lilly and Roche. After their initial investment in manufacturing, they're now investing more on drug research and development," Yu Mingde, executive chairman of the China Pharmaceutical Enterprises Management Association, told China Daily.

A couple of recent events back up Yu's remarks. Yesterday, Switzerland-based Novartis and Shanghai Institute of Materia Medica (SIMM) at the Chinese Academy of Sciences have signed an agreement to extend joint research to develop natural compounds herbs to 2007.

Last Saturday, the world-leading company, Roche, announced the opening of Roche R&D (China) Ltd at the Shanghai Zhangjiang Hi-Tech Park to help celebrate the 10th anniversary of Shanghai Roche Pharmaceutical Ltd.

Scheduled to be operational by the end of this year, Roche's drug innovation center is its 5th global pharmaceutical R&D facility in addition to such facilities in US and Europe. It is the first in Asia.

In the same park called "Drug Valley," neighboring the Roche R&D center is an Eli Lilly research library that opened earlier this year.

And senior officials of Pfizer said last Friday they have been evaluating the establishment of an R&D center in Shanghai.

"We have made great progress in our evaluations and will quickly make a conclusion," said Allan Gabor, Pfizer China's general manager.

Meanwhile, AstraZeneca started its East Asia Clinical Trial Center in Shanghai in April 2003. Novo Nordisk China relocated its R&D center to the Beijing Zhongguancun Life Science Park and doubled its size this August.

All this has shown that multinational companies have shifted their business strategies to knowledge investment.

China's advantages

As the rapidly growing Chinese market gains increasing importance for multinational pharmaceutical companies, high-quality talent and abundant resources as well as the improving legal environment are what lead to companies' new business intellectual investments.

Since the 1990s, a large number of overseas Chinese students and scientists have come back to China.

"China is a country with excellent resources and internationally trained biomedical scientists," remarked Jonathan Knowles, president of Roche Group Research, adding that Chinese chemists would join Roche's Shanghai research site.

China's huge population of 1.3 billion provides a wonderful base for the clinical trials of almost all new drugs.

In addition, Chinese medical institutes and universities have applied the good clinical processes which ensure the accuracy of clinical trial data -- one of the key factors in drug innovation.

Industrial insiders say pharmaceutical companies may save about 30 percent of typical clinical costs in China compared with Western countries.

"One of China's advantage in drug innovation is its natural herb resources and the record history of traditional Chinese medicine, which may greatly save time and costs in drug screening," said Shen Jingkang, deputy director SIMM.

During the three-year cooperation with Novartis, SIMM has isolated 1,828 natural compounds from herbs for treating a wide range of diseases including diabetes, tumors and central nervous system disorders. And another 1,500 new natural compounds are expected to be developed by 2007.

"The cooperation of SIMM and Novartis is the combination of world cut-of-age technologies and traditional Chinese medicines," said Wu Zhongze, a senior official with the Ministry of Science and Technology at the signing ceremony of the cooperation.

(China Daily November 4, 2004)