Swiss pharmaceutical major Novartis is to create a new strategic biomedical R&D centre in Shanghai, China, with an investment valued at $100 million, in a move that underscores the willingness of Western drugmakers to invest in the country.

The money has been earmarked for the two-part design and construction of the facility, with scientists initially working in a 5 000-square-metre start-up unit expected to open in May 2007 followed by the construction of a permanent 38 000-square-metre facility, housing around 400 scientists, beginning in July next year.

Initially, R&D activities will focus on addressing urgent medical needs in China and Asia, particularly infectious causes of cancer endemic in the region, and the investment is a confirmation of the company's commitment to conduct leading-edge research in China. It will also enable further expansion of its strong network of existing R&D alliances in China, says Novartis.

China is already vying with India as a centre for the low-cost production of drugs, and latterly big pharma is also looking at tapping into the country’s science base to help address the fact that their R&D costs are spiralling at a time when a huge number of big-selling drugs are going off-patent.

Much of the concern about intellectual property issues in China – which have held back R&D investments in the past - have been allayed by its record since acceding to the World Trade Organisation in 2001, but still only around one in five of the top drugmakers have R&D investment plans in the region, according to figures from Ernst & Young.

AstraZeneca set aside $100 million for a project aimed at boosting its clinical R&D capabilities in China earlier this year, while other companies who have made big investments in the region include Roche, which opened a drug discovery centre in 2004 and followed it up the following year with a $150 million facility serving its diagnostics business, and Pfizer which recently opened a clinical research facility in Shanghai.

Commenting on the decision, Daniel Vasella, Novartis’ chief executive, said: "the level of scientific expertise in China is rising rapidly. At the same time, the healthcare needs of the Chinese are growing, primarily the result of urbanisation, lifestyle changes and associated chronic diseases."

“The Shanghai centre will allow us to combine modern drug discovery approaches with those of traditional Chinese medicine that have been used to treat patients in China for thousands of years,” added Vasella.

The new site will also include an integrated exploratory development centre that will collaborate with local research and academic establishments to further develop the concept of mechanism-based medicine.

"Our activities in the new R&D centre will go far beyond conducting early clinical trials by expanding drug discovery with translational medicine principles enhanced with safety investigations, biomarker detection and bio-analytics as well as gene expression profiling," said Jean Jacques Garaud, global head of exploratory development at Novartis Pharma in Switzerland.

Novartis and its predecessor companies have been active in China since 1938 when Ciba opened its office in Shanghai, initially entering the country as a provider of dyestuff and later expanding into the pharmaceuticals sector through steady investments, the firm noted.

It currently ranks as the fourth largest pharmaceutical company in the Chinese hospital market with a compound annual sales growth rate of over 30% during the last five years. In February this year, Novartis started work on a $83 million development and production plant in Changshu, Jiangsu Province, which is expected to open in mid-2007.