UPDATE 2-Merck & Co to invest $1.5 bln for R&D in China

Tue Dec 6, 2011 6:43am EST

* Beijing facility to employ 600 scientists

* R&D to extend from drug discovery to clinical trials

* Looking for partnerships with biotechs, academic labs

By Don Durfee

BEIJING, Dec 6 (Reuters) - Merck & Co Inc will establish a new Asian R&D headquarters in Beijing and commit $1.5 billion to research and development in China over the next five years.

The No. 2 U.S. drugmaker will eventually employ 600 scientists at its facility, Peter Kim, president of Merck Research Laboratories, told reporters in Beijing on Tuesday, making Merck the latest foreign pharmaceutical company to bolster its presence in China.

"We have plans to invest in research and development at all stages of vaccine discovery and development, starting with basic early discovery all the way through clinical programmes," said Kim.

"We see opportunities to include China in our worldwide clinical trials for our drugs and vaccines."

Aiming to take advantage of China's lower costs and supply of scientists, global drug makers, including Pfizer, Abbott and Novartis, have made big investments in Chinese R&D operations in recent years.

Merck, known as MSD outside the U.S. and Canada, will also team up with biotech companies and academic institutions to develop new drugs, said Kim.

Beijing is home to several of China's top universities as well as the country's food and drug regulator, whose approval is needed for medications to be sold in the country.

The medicines and vaccines developed in Beijing would not be targeted at China or Asia, said Kim, but at a global market, without saying which diseases the centre would focus on.

"(What) we will be looking to do in China, as we do throughout the world, is identify opportunities to develop drugs to treat diseases that would be applicable globally," said Kim.

In an interview with Reuters in late 2010, the company said it expected emerging markets to make up a bigger part of total revenue in the coming years because of an explosion in chronic non-communicable diseases such as diabetes and hypertension.

It said seven countries -- Brazil, China, India, Mexico, Russia, South Korea and Turkey -- were especially important.

In addition to research, Merck plans to use its new facility to help it bring existing drugs to the Chinese market, said Kim.

The company plans to launch new products in China, including medicines for diabetes, infectious diseases and women's health, said Michel Vounatsos, head of MSD in China, without giving a timeframe.

"We have many new products to be launched in China, which is why we are optimistic about our long term prospects," he said.

By the end of 2010, emerging markets were responsible for about 18 percent of Merck's overall global business and that figure was estimated to grow to 25 percent by 2013, the company said.

The United States is Merck's largest market, generating between 40 and 45 percent of revenue.

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