Merck and J&J invest in Chinese manufacturing
pharmafile | November 18, 2013 | News story | Manufacturing and Production |Â Â J&J, JJ, Merck, manufacturingÂ
Merck KGaA and Johnson & Johnson have both announced new manufacturing projects in China, suggesting investigations into corruption by the drug industry by the country’s government have not put a damper on foreign investment.
Merck is planning to build a new facility in Shanghai to make its diabetes treatment Glucophage (metformin), beta blocker Concor (bisoprolol) and hormone treatment Euthyrox (levothyroxine) which despite being mature products are still enjoying buoyant growth in emerging markets.
The €80 million ($108 million) investment will be made at the Nantong Economical Technological Development Area in Greater Shanghai and will help serve China’s “expanding healthcare needs in the areas of diabetes, cardiovascular diseases and thyroid disorders”, according to Belén Garijo, chief executive of Merck’s pharma division Merck Serono.
The new 40,000 sq. m. facility is due to come online in 2017 and could be expanded in size to 60,000 sq. m. if required, said Merck.
“This new facility will become Merck Serono’s second largest pharmaceutical manufacturing site in the world and will help ensure that our medicines will always be available to patients who rely on them,” said Allan Gabor, managing director of Merck Serono in China.
J&J meanwhile is reported to be planning to build a new biopharmaceutical production facility in Xi’an, Shaanxi province, where it operates a joint venture called Xi’an-Janssen Pharmaceutical, according to a report by the Xinhua news agency.
The 267,000 sq. m. facility will replace Xi’an Janssen’s existing plant in the High-tech Industries Development Zone and become the JV’s primary supply hub for the Asia-Pacific region.
Construction of the first phase of the project will start in April and the unit should start operations in 2016. Upon completion, the facility will produce up to billion tablets a day and could bring in sales of around 10 billion yuan ($1.64 billion) a year when operating at full capacity.
Despite several top-tier drugmakers being dragged into an investigation of bribery and corrupt practices as well as pricing of drugs in China – and signs that the country’s economic growth is softening – there is no indication that the pharma industry’s appetite for investing in the country is abating.
In June, Boehringer Ingelheim signed an agreement with Zhangjiang Biotech & Pharmaceutical Base Development Company to construct a €35 million biopharmaceutical facility, while Merck & Co opened a $120 million facility there in April.
Business Monitor International said in its latest report on the Chinese pharma market that it expects it to reach $85.9 billion this year, a rise of almost 20% on 2012, although its trajectory thereafter is less certain.
“Pricing issues, coupled with the government’s investigation into corruption claims, remain a key concern for companies and their investors,” it noted.
Phil Taylor
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