Merck KGaA to boost R&D presence in China with $223 million investment

Article | 23 November 2009

German drug major Merck KGaA is the latest in a string of multinationals to view China as a good base for acquisition and research investment, today announcing it plans to strengthen the  global R&D capabilities of its Merck Serono division by establishing a global R&D center in Beijing, China. Merck is planning to invest more than 150 million euros ($222.8 million) and create more than 200 new qualified jobs over the next four years to set up the China R&D center and conduct R&D activities in China.

Merck’s move follows the news earlier this month that Swiss major Novartis plans to invest $1 billion in an R&D institute in Shanghai (The Pharma Letter November 3), as well as earlier commitments to the country’s pharmaceutical sector from the likes of AstraZeneca, GlaxoSmithKline, Eli Lilly and Roche.

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“The creation of the China R&D center marks a new milestone in Merck Serono’s commitment to China, where there is a rising demand for more health care options,” said Elmar Schnee, executive board member with responsibility for the Pharmaceuticals business sector. “We are committed to investing in areas that can help China to address some of its public health needs that currently are not met,” he added.

“China is a country with talented scientists and high-quality research,” added Bernhard Kirschbaum, executive vice president, R&D for Merck Serono., adding: “We will recruit more R&D talent in China and build a world-class organization in China that will extend our global R&D expertise and capabilities.”

The China R&D organization will become one of the key R&D hubs for Merck Serono worldwide, adding to the firm’s main bases so far in Germany, Switzerland and the USA.

The China team will lead drug development for China and other Asian countries, for local clinical trials as well as for the participation in global studies. The team also will ensure the management of collaborations with research institutions in China and continue to look for partnerships with local academic institutions and companies. Research activities conducted in the China R&D center will mainly focus on biomarker research including pharmacogenomics and bioanalytics activities.

Merck Serono already has some research collaborations in China and plans to further develop its collaboration network and build its R&D strategy on more innovation opportunities by tapping into the Chinese scientific expertise.

China already Merck’s second largest market in Asia

Excluding Japan, China is the largest market for Merck in the Asia-Pacific region, followed by India. But it is still quite small, accounting for just 5% of global sales. The company, however, is confident that Chinese sales would grow in the next few years.

IMS Health predicted China's drug market to expand at about 22% annually over the next five years. This is expected to make China the world's third largest pharmaceutical market by 2013 next to the USA and Japan, valued at $68-$78 billion. Now, it ranks the sixth, with a market size of $24.5 billion.