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China more positive about pharma than many in west - Schwan

World News | March 06, 2012


Kevin Grogan

China more positive about pharma than many in west - Schwan

Roche's chief executive has hailed China as a growth driver for future healthcare innovation and praised the positive way the sector is viewed there by politicians compared to Europe.

Speaking at the Swiss major's annual general meeting in Basel, Severin Schwan noted that last year, drugs sales in China advanced 35%, making Roche the fifth-largest global pharmaceuticals company operating in the country; it is the number one supplier of in vitro diagnostics.

With its population of 1.3 billion and growing domestic demand for innovative new medicines as well as generics, "China is of course an enormous market", Dr Schwan said, "but it is much more than that". The country "is also well-equipped to be an innovator in any number of sectors, including the research-based pharmaceutical industry".

China, leader in research expenditure

He went on to say that "already China is a leader in terms of research expenditure", noting that a few years ago, microbiologists and medical researchers had to leave for the USA or Europe. Today, "many of these same scientists are returning to China because conditions there are now often superior to those abroad", with better equipped laboratories and more funding.

To get an idea of "the magnitude of change', Dr Schwan pointed out that "there are over 90,000 people working in the life sciences in metropolitan Shanghai, more than in a quintessential biotech hub like the San Francisco Bay Area (with 72,000)".

He went on to state that the life sciences industry is seen in China "not only as a vital factor in improving public health, but also as an engine of innovation that can create highly skilled jobs and contribute to a high-value added economy". By contrast, he said, "when I talk to politicians in the West, particularly here in Europe, I often have the feeling that we are viewed solely as a cost factor, not as part of the solution to important problems". Dr Schwan acknowledged that "there is no question our industry needs to contribute to controlling healthcare costs, but Europe’s future depends on its having innovation-friendly industrial and health policies.

The CEO noted that eight years ago, Roche became the first foreign pharma player to open a research centre in Shanghai and the first company to establish "a complete pharmaceuticals value chain in China, spanning everything from R&D to production, marketing and distribution". He argues that "our early commitment to doing business in China has been well worth it", with sales last year reaching 1.40 billion Swiss francs.

Last year alone, Roche hired 1,000 new employees in China, increasing its workforce there to 4,200, and that figure should double over the next few years, Dr Schwan said. He concluded by claiming that the firm is "ideally equipped to make full use of the opportunities this fascinating country has to offer".

Roche has other options if Illumina bid fails

Also at the AGM, Roche chairman Franz Humer spoke about the hostile $5.70 billion bid for US gene specialist Illumina and suggested his firm may look elsewhere if no deal is reached.

Roche extended its offer last month but refused to budge on the $44.50 per share offer. Illumina has dismissed the bid as "grossly inadequate in multiple respects" and "opportunistic".

Dr Humer told shareholders that the offer is fair and it remains Roche's preference to enter into a negotiated deal. "It would strengthen our diagnostics division because gene sequencing will be a key technology going forward," he said and both companies "would benefit from a rapid merger".

However, the chairman noted that "this is an area where we have other options should the transaction fail over price". Nevertheless, most analysts believe Roche will stay interested and raise its bid.

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