Novartis has upped the ante in China. Today, the Swiss drugmaker said it was buying an 85 percent chunk of the Chinese vaccines maker Zhejiang Tianyuan for $125 million. And that's just one-tenth of what Novartis is planning to spend on beefing up R&D in the country.
Together, the moves signal just how serious Novartis is about grabbing its share of China's powerhouse drug market. "China is the most important future market," CEO Daniel Vasella (photo) told the Swiss newspaper Blick (as quoted by Reuters). "For a global company like Novartis the motto can only be--be there, from the start and with full power."
Yes, the $1.25 billion earmarked for China-based research is an investment in new drug development. But it's also a key stepping stone to sales growth there. The Chinese government and Chinese doctors tend to look more kindly upon drugs made by companies with a big domestic presence. And the local market--already growing quickly--is on the verge of exploding as officials roll out healthcare reform.
Already, Novartis has seen 30 percent growth in its Chinese sales, Vasella told the Wall Street Journal. Just think how much more it might expand with a big-time R&D base there. Not to mention a strong domestic vaccines partner. There's just one hitch: Practically every other Big Pharma has the same idea.