Multinational pharmaceutical companies accelerate their strategic layout in China's pharmaceutical industry chain

France’s largest pharmaceutical group Sanofi-Aventis acquired China’s growing O TC pharmaceutical company Sunstone Pharmaceuticals for US$500 million; Swiss pharmaceutical conglomerate Nycoming, which has never acquired a local pharmaceutical company in China, invested in one go US$210 million in controlling Chinese innovative drug company Guangdong Tianpu Biochemical; Swiss pharmaceutical giant Novartis invested US$1 billion to build a Shanghai R&D center; Eli Lilly and Company announced a strategic investment in a diabetes R&D center in Shanghai.
     There are recent signs that multinational pharmaceutical companies are shifting from the original prescription drug sales to a strategic layout of the entire pharmaceutical industry chain.
Fundamental research and development
     On November 2, the American pharmaceutical giant Eli Lilly announced in Shanghai its plan to strategically invest in a diabetes research and development center. This newly established R&D center will conduct basic research on hypoglycemic drugs based on the specificity of China and Asian Funds, with a view to providing support for Eli Lilly's diabetes drugs to enter the more basic market in China. On the same day, Novartis of Switzerland also announced that it will invest US$1 billion in China in the construction of the Shanghai R&D center in the next five years.
     In an interview with reporters, Yan Lunbo, president of Eli Lilly Global Laboratories, said that for medicines that enjoy patent protection, after the patent expires and loses protection, they will lose market exclusivity. As a pharmaceutical company, this cycle must be controlled. Therefore, Eli Lilly's investment strategy in China places great emphasis on innovation, and this ability to innovate is actually the core of Eli Lilly's strategy.
     At present, among the top 20 multinational pharmaceutical companies in the world, most of the headquarters in China and the Asia-Pacific region have settled in China. Roche, GlaxoSmithKline, Eli Lilly, AstraZeneca, Johnson & Johnson have all established in China R & D Center.
     A global emerging market president of a multinational company told Narada reporters that for the entire multinational company, emerging markets have great opportunities, and the Chinese market is especially the most important. In the past five years, the business scale of multinational pharmaceutical companies investing in China has basically doubled. In order to maintain the above performance, multinational pharmaceutical companies that have established R&D centers in China have increased their basic R&D investment in China in recent years.
Strategically acquire local growth pharmaceutical companies
     The reporter noticed that in addition to additional R&D investment, this year, multinational pharmaceutical companies' M&A investments in China have become more proactive and radical.
     On October 28th, US time, French pharmaceutical giant Sanofi-Aventis completed the largest ever acquisition of a local OTC pharmaceutical company in China, acquiring Chinese pharmaceutical manufacturer and distributor Meihua for US$520.6 million Sunstone Group Corporation.
     The scale of this acquisition is three times that of Bayer's acquisition of OTC products such as Dongsheng Technology's "White and Black" two years ago. It is also enough to trigger the sensitive nerve of Chinese local general medicine companies after Bayer. In addition, Sanofi's acquisition of Hangzhou Minsheng Pharmaceutical was also approved by the Ministry of Commerce of China.
     Public information shows that the predecessor of Meihua Sunstone Company is Beijing Meihua Pharmaceutical Co., Ltd., which was mainly engaged in the sales of imported medicines. After the acquisition of O TC pharmaceutical manufacturer China Sunstone Company in 2007, it has a large number of mainly in second and third tier cities. And the varieties sold in the rural grassroots market, the company has now landed on Nasdaq, and dozens of varieties of drugs have entered the National Essential Drug List and the National Medical Insurance List. Meihua Sunstone's sales in 2009 were approximately US$147 million, of which 60% came from OTC products, among which "Haowa" is the largest domestic brand for children with colds and coughs.
     In addition, the Swiss pharmaceutical company Nycomed recently held the world's most important human urine protein biopharmaceutical company-Guangdong Tianpu Biochemical and Pharmaceutical Co., Ltd., also demonstrating the strategy of a foreign growth company.
     Analysts are generally optimistic about Nycomed’s move. They believe that although Guangdong Tianpu’s operating income in 2009 was only about 450 million yuan, the net profit of its products was quite high, and it was used to treat acute pancreatitis and chronic recurrent pancreatitis. Products such as Ulinastatin, which is used as a rescue aid for acute circulatory failure, and Ureklin, which is used to treat mild to moderate acute thrombotic cerebral infarction, have very amazing market potential.
 Local pharmaceutical companies urgently need to accelerate technological progress
     According to a senior researcher from Sinopharm Group, multinational companies are currently investing in the entire value chain in China's entire medical field, including research and development, production, logistics and other major sub-fields. Through strategic cooperation with China's local growth pharmaceutical companies, foreign investment is extending its reach to third-tier cities and the broader rural market that were otherwise inaccessible.
     The reporter learned from the China Chamber of Commerce for Import and Export of Medicines and Health Products, which is planning to release the “Report on the Safety Situation of China’s Pharmaceutical Industry”, that China has fully fulfilled its original commitments made by joining the World Trade Organization. Foreign capital has retained reasonable restrictions, and my country's pharmaceutical market has actually been completely opened to foreign capital.
     Xu Ming, director of the General Department of the Chamber of Commerce, told reporters from Nandu that the entry of foreign capital into China is a game. Whether it involves industrial security or not, it needs to be analyzed from the perspective of industrial competitiveness.
     "If a multinational pharmaceutical company invests in a Chinese pharmaceutical company, if its share is not controlled, not only will it not involve industrial safety issues, but it will also be beneficial to the competitiveness of China's local pharmaceutical company, because foreign equity participation in the process of Chinese pharmaceutical companies The technological spillover of China will benefit the technological progress of China’s pharmaceutical industry.” Xu Ming said.
     Xu Ming believes that in the past few years, China's pharmaceutical industry has developed so fast, and foreign investment has played a very positive role. More and more multinational pharmaceutical companies have moved their R&D centers to China and increased their R&D investment in China, indicating that multinational pharmaceutical companies have transferred their core business to China. Domestic pharmaceutical companies must strengthen independent innovation while considering "marketing for technology".