Bayer Schering Pharma's plan to build a 100 million-euro R&D centre in Beijing marks the company's first major foray into China and is intended as a base camp for further expansion in the fast-growing Asian market.
China has been a hot location for pharmaceutical companies for some years, initially as a location for pharmaceutical production but increasingly for clinical and other R&D functions as well.
For Bayer Schering, China is the third country it has chosen to site an R&D hub in – after existing sites in Germany (at Berlin and Wuppertal) and in the USA (Berkeley). Merck, Lilly and Johnson & Johnson are among other big pharma companies that have gone down the route of globalising their R&D.
A report published last year by the Ewing Marion Kauffman Foundation gives an indication of the emergence of countries such as India and China as global hubs for pharmaceutical R&D.
This found that in 2006, 5.5% of all global pharmaceutical patent applications named one or more inventor from India, and 8.4% naming one or more in China. That represented a fourfold increase over 1995.
The Foundation said that the trend indicates that: "Indian and Chinese scientists are rapidly developing the ability to innovate and create their own intellectual property as a result of the movement of R&D to their countries."
Bayer also announced that it is in "advanced discussions" with Tsinghua University to set up a strategic partnership to discover new disease-related targets in its core areas of research, which are women's healthcare, cardiology, oncology and diagnostic imaging.
If the deal comes off Bayer will be the first multinational company in China to enter into a partnership "with such a respected and renowned Chinese university", the company said.
China is the third largest market worldwide for the Bayer group, said the firm in a statement, adding that it wants to systematically add Asian patients into the clinical trials of new medicines in order to make sure new drugs are properly tested in these populations.
The aim is to "break the tradition of 'US and EU first'," said Bayer Schering's chief medical officer Kemal Malik. "Our goal is to build a world class organisation here in Beijing that will lead drug development not only for China but also for other Asian countries," he added.
According to IMS Health, Bayer is the number one healthcare company in China and the growth rate in China was around 43% in 2007.