GSK targets China

06 March 2012

BEIJING: GlaxoSmithKline, the pharma giant, is ramping up its activity in China, with a particular emphasis on innovation and targeting promising local companies.

The British multinational launched offerings like Avodart, which helps treat prostate conditions, and Volaris, for pulmonary hypertension, in the country last year after receiving approval from the authorities.

GSK is now involved in similar discussions regarding products such as those for cervical cancer and rotavirus vaccines, as the Chinese government raises the number of drugs it subsidises and streamlines the purchase process in a bid to force down costs.

"Nobody likes prices cuts," Andrew Witty, chief executive of GSK, told Bloomberg. "But in the overarching context, this is a growing marketplace and the government's initiatives are not just to reduce prices but also to increase access."

In the expectation that the market will become more liberalised, the UK-headquartered corporation intends to employ a "few hundred" extra sales staff, having boosted teams by 700 in 2011, taking the total to some 4,000.

Having bought the Nanjing MeiRui Pharma Company in late 2010 for approximately $70m, GSK is also "very open" to making further such as a means of enhancing its local ambitions, Witty suggested.

"Of course M&A is part of the agenda for China," he said. "One of the reasons we've done less M&A in the last 18 months is because we think valuations are overheated. Certainly that can be true in China, but it's less true in China than some other places, like India for example."

According to figures from IMS Health, the research firm, has predicted that pharma expenditure in China will rise by around 20% per year to 2015, attaining a value of $125bn overall.

Currently, GSK derives 3% of its revenues from China, which is "rapidly coming up the ranks", Witty argued. The US leads on 29%, while China has already leapfrogged Germany and Italy.

"China is clearly one of our top two or three priorities as a corporation," Witty said.

Innovation is another key focus for GlaxoSmithKline, and it has employed 450 researchers in Shanghai to develop new brands, including those using traditional Chinese medicines.

"Every dialogue I've had with the Chinese government, there's a really strong awareness and interest in continued access to innovation, and a strong understanding about reward for innovation," Witty said. "I'm confident we're going to see that."

Data sourced from Bloomberg; additional content by Warc staff