Chinese drugmaker to build $60M API plant

In 2013, China surpassed the U.S. as the country with the greatest number of people with diabetes, about 114 million and growing. That is why companies like Novo Nordisk ($NVO), Sanofi ($SNY) and Eli Lilly ($LLY) have been manufacturing insulin products there for years and why Germany's Merck KGaA said last year it will build a plant there as well. But Chinese drugmakers also produce some of the country's insulin products, and one of them intends to build a new facility to make insulin APIs.

Tonghua Dongbao Pharmaceutical will invest 367.2 million yuan ($59.21 million) to build a new facility, Reuters reported, citing a Chinese text press release from the country. According to a translated copy of the release, the company, which already makes bulk insulin, needs the capacity to meet growing demand. The 44,000-square-meter facility is expected to take about 30 months to complete.

China's insulin market has been dominated by Western drugmakers, which have had an estimated 90% share. Sanofi, which has production there, said sales of diabetes products and heart drugs helped its China sales reach $1.8 billion in 2014, growing at 8.8%, almost twice the rate of its sales in the rest of the world. Novo has been producing insulin in the country since about 2002 and has expanded its capacity several times. Several years ago, Eli Lilly spent $350 million to expand its insulin cartridge manufacturing in China.

Last year, Merck KGaA said it would invest €80 million ($107.67 million) to build a plant in Shanghai that will focus on production of diabetes drugs Glucophage, Concor and Euthyrox. It will also make drugs for heart and thyroid conditions. It will be about 40,000 square meters and have room for a 20,000-square-meter expansion. The company expects to wrap up construction in 2016 and start commercial production in 2017. Merck said the new facility will be its second largest in the world.

But other Chinese companies have fought for more market share. In 2011, China's Zhuhai United Laboratories said it would invest ¥1 billion ($151.4 million) in a new insulin plant that would be the largest in China and which it hoped would allow it to grab 10% of the country's insulin market.

- here's the Reuters brief

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