CEO Pascal Soriot knows what’s at stake for AstraZeneca’s business. It is whether China, now the British drugmaker’s second-largest market, can sustain double-digit growth—and some investments that support the Chinese government’s goals are necessary.
In a slew of news coming out of Shanghai on Wednesday, AstraZeneca is teaming up with investment shop China International Capital Corporation to launch a $1 billion fund focused on healthcare, upgrading its Shanghai R&D operations to a global center, establishing a new artificial intelligence innovation center, and partnering up with Sun Pharma to market some oncology drugs in China.
“It doesn’t divert resources too massively but certainly we have to invest more in China,” Soriot said in an interview with Bloomberg. “If you look at the momentum we’ve experienced in the last few quarters, we have to continue fueling our growth in China.”
Soriot is among several top pharma execs who've renewed their commitment to China at the 2nd China International Import Expo, a top-priority project by the Chinese government to tout its openness to foreign ventures.
Roche sent its vice chairman, André Hoffmann, who hails from the company’s founding family. At the event, the Swiss drugmaker is showcasing its PD-L1 blockbuster Tecentriq, HER2 breast cancer antibody-drug conjugate Kadcyla and new flu drug Xofluza, all of which have not yet been approved in China.
By signing a strategic collaboration with Boao Lecheng, a medical tourism pilot zone in Hainan province, Roche could bring those drugs to Chinese patients earlier. Officially launched in March, the pilot program allows the importation of a small amount of unapproved foreign drugs upon application by patients or medical institutions.
“China plays a vital role for Roche globally,” Hoffman said, as quoted by Shanghai Daily. “With our strong pipeline, dedicated people and focus on sustainability, we are confident about our long-term growth prospects by bringing more innovative products in China to benefit more Chinese patients.”
As French President Emmanuel Macron witnessed the signing of contracts worth $15 billion with China at the expo, newly minted Sanofi CEO Paul Hudson also attended the event, praising China’s efforts to further improve its business environment for foreign enterprises. Sanofi plans to introduce about 30 new drugs and vaccines to China by 2025, he said.
GlaxoSmithKline CEO Emma Walmsley showed up at a parallel forum, where she stressed the importance of appealing to local customers’ needs.
“Although there is a relentless river of globalization, the reality is that customers are local, and we highlight the demands of local consumers,” she said, according to Shanghai Daily.
Western pharmas have recently adopted a routine of praising China’s progress in fostering an open business environment; after all, the cutting of red tape has allowed them to bring new products to the country faster. But perhaps no one is more deeply involved in China than AstraZeneca, which now counts about 20% of its revenue from the emerging market, even ahead of Europe.
“We’re really trying to support the policy of the Chinese government, we’re really trying to be a company that is in China for China, and in China for the world,” Soriot told Bloomberg. The company is now looking to export China innovations by funding domestically developed science as it imports other drugs—the reason why it signed with India’s Sun Pharma.
“We’re looking at companies around the world, in that instance, in India, but there may be others later, that have products that complement our portfolio and we can help them bring those products to the Chinese market,” he said.
AstraZeneca has established a reputation as a seasoned marketer in China, what with the successful launch of such drugs as lung cancer med Tagrisso. In its Sun Pharma deal, AstraZeneca will only take care of commercialization, while Sun will be responsible for development, regulatory filings and manufacturing. The pair didn’t disclose which drugs are included in the tie-up.
“We see a great potential to introduce our specialty and generics products in the growing China market, and this licensing agreement is another positive step in that direction,” Kal Sundaram, Sun’s director of corporate development, said in a statement (PDF).
While they are busy introducing newer, innovative drugs to China at unprecedented speed, foreign pharmas’ older medicines have come under pressure in a bulk procurement scheme that’s cutting some off-patent drugs’ prices through a bidding process. That’s one reason AstraZeneca has recently dialed back its China growth projections, from about 40% in the past third quarter to mid-teens in the mid-term future.
“What [the Chinese government can] do is really manage the speed to which they are doing this,” Soriot added. “Particularly the speed they’re introducing the pricing pressures on older products because the whole industry, local and global, has to adjust to this, and time is a little bit necessary.”