Bayer will spend $138M to expand its Beijing plant

Bayer HealthCare CEO Olivier Brandicourt

China's President Xi Jinping was in Germany last week, and Bayer HealthCare presented him with a gift of sorts in honor of the visit. The German drugmaker announced it will invest €100 million to expand packaging and logistics at its plant in Beijing.

"This investment will make Beijing the largest pharmaceuticals packaging site in Bayer HealthCare's global production network," Olivier Brandicourt, CEO of Bayer HealthCare, said in a statement.

The $138 million expansion includes high-speed packaging lines and a logistics area for automated material handling, as well as analytical labs. The additional capacity will help it produce the cardiovascular and antidiabetes meds it makes there.

Bayer gets more than 30% of its revenues from emerging markets, and China is one of the largest. The company has been in the country since the 1930s and has invested heavily there with an R&D facility in Beijing, more than 7,000 employees and production sites in Guangzhou, Chengdu and Qidong, as well as in Beijing. The drugmaker announced in February that it was buying Chinese Dihon Pharmaceutical Group, a maker of over-the-counter drugs with a number of plants throughout the country.

Lots of other drugmakers now see China as a key market and are building up their production capacity in the country as well. Johnson & Johnson's ($JNJ) Janssen unit and Merck KGaA both announced plans in November to build facilities there. Janssen will start construction this year on a 267,000-square-meter plant in Xi'an to replace an existing plant built in 1985. It will spend between $200 million and $300 million. Merck will invest about €80 million ($107.67 million) to build a 40,000-square-meter plant in Shanghai that will focus on production of diabetes drugs.

But not everyone is enamored with the country's potential. Actavis ($ACT) recently sold out its operations in China so it could focus on markets that CEO Paul Bisaro thinks are less risky and have greater growth potential. That news came after GlaxoSmithKline ($GSK) and a host of other Western drugmakers found themselves the focus of a probe there into using bribes to generate business.

- read the release

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