Novartis opens $1bn Chinese research centre

Novartis employees in Shanghai have a new $1 billion home.

The seven-building campus on the outskirts of Shanghai is accented by bamboo staircases and tree-lined courtyards.

The company said the 1,300-person facility will be its third major research centre, after Basel in Switzerland, and in Massachusetts.

In Ireland, Novartis employs about 1,500 people in Cork and Dublin, including a plant in Ringaskiddy.

Foreign drugmakers are investing in China because of surging demand for medicines as the incidence of chronic conditions like cancer, heart disease and diabetes rise.

The government has provided incentives to encourage more investment in innovation, while Chinese consumers are spending more on health care as their incomes rise.

“The commitment that Novartis is making in China is bigger than anybody else in the industry,” chief executive officer Joe Jimenez said.

“We expect Shanghai to ramp up relatively quickly” in terms of drug discovery, he said.

The Novartis research centre will further focus on diseases more prevalent in China, such as lung, liver and gastric cancer.

Having new medicines in those areas in coming years will help the Swiss company to secure a toehold in the world’s second-largest pharmaceutical market after the US.

Speaking more broadly about Novartis’s growth, Mr Jimenez sees potential in acquisitions around the globe — anywhere between $1bn to $5bn — for its four business units: Pharmaceuticals, oncology, eyecare and generics.

Such opportunities may arise amid the flurry of deal activity in the industry, as companies are forced to sell off assets to appease antitrust regulators, he said.

“If there were biosimilars, we could potentially acquire those to complement the pipeline in Sandoz,” Mr Jimenez added, saying that while he hasn’t seen biosimilar assets in China to acquire there “definitely are in other parts of Asia.”

Jimenez said the biggest advantage of the new Shanghai campus — which was announced in 2009 and includes a fitness centre and on-site restaurants — will be for recruiting.

He declined to comment on how many employees the company would add, saying it was correlated to the growth of its China business, which was increasing “nicely.”

Using the heart failure drug Entresto as an example, Mr Jimenez commented on the squeezing of drug prices in the US and China, saying that “as long as you’re innovative and not making me-too drugs, you’re going to be fine because those drugs will always be reimbursed.”

That forms the central strategy of Novartis in China, he added,