(Corrects company name and RIC to Merck KGaA in para
1, deletes reference to Merck in para 6)
* China market could by world's second-biggest by 2016
* Healthcare spending forecast to hit $1 trillion by 2020
* Major drug companies investigated on pricing, corruption
* International firms can't afford to stay out of
SHANGHAI, Nov 15 German drugmaker Merck KGaA
has invested 80 million euros ($107.67 million) in a
manufacturing plant in China, the company said on Friday,
underlining the importance of the market for global drug firms.
The Shanghai-based facility will come online in 2017,
producing drugs to treat China's fast growing number of
diabetics as well as cardiovascular and thyroid disorders,
Merck's biopharmaceutical unit said.
Spending in the country's healthcare sector is forecast to
nearly triple to $1 trillion by 2020 from $357 billion in 2011,
according to McKinsey, which has prompted many firms to invest
in Chinese facilities and set up joint-ventures with local
The investment comes as international drug companies have
come under pressure in China this year with authorities clamping
down on the high price premiums many of them enjoy and a number
of drugmakers have been caught up in corruption allegations.
British drugmaker GlaxoSmithKline is under
investigation over allegations it funnelled up to 3 billion yuan
($492.43 million) to travel agencies to facilitate bribes to
doctors and officials to boost its drug sales.
Large international drugmakers Novartis AG,
AstraZeneca Plc, Sanofi, Eli Lilly & Co
and Bayer AG have also been questioned by
Chinese officials this year.
Drugmakers have seen their sales suffer in the wake of the
probes, with many Chinese doctors refusing to see drug
representatives for fear of being caught up in the widening
GSK's third-quarter China sales fell 61 percent, while
Sanofi lowered its 2013 profit guidance on China weakness.
Industry insiders said that despite any roadbumps,
international drug firms would be unlikely to turn their back on
China, which is set to be the second-biggest drugs market behind
the United States by 2016, according to IMS Health.
"In 10 years it's conceivable that China will become the
largest pharmaceutical market in the world," said Benjamin Bai,
Shanghai-based partner at law firm Allen & Overy. "Do you think
(drug firms) can afford to get out of China? No, even if it's
difficult, they will find a way to adapt."
($1 = 6.0922 Chinese yuan)
($1 = 0.7430 euros)
(Reporting by Adam Jourdan)