Sector News

AstraZeneca creates $1B Chinese fund, vows to double R&D team

November 7, 2019
Life sciences

AstraZeneca is stepping up its commitment to China, detailing plans to double the head count at its Shanghai R&D site and create a $1 billion investment fund.

The initiatives build on the rapid growth AstraZeneca has achieved in China in recent years.

At the China International Import Expo, AstraZeneca unveiled three ways in which it is set to tighten its ties to the country.

One of the initiatives is a healthcare industrial fund AstraZeneca is setting up with China International Capital Corporation. The fund, which has a target size of $1 billion, will support domestic companies including those based at the Wuxi International Life Science Innovation Campus AstraZeneca helped create as well as international drugmakers that want to set up shop in China.

AstraZeneca will make a “substantial investment” but be a minority partner in the fund, according to Reuters, and will offer advice on investments and support to the companies it bankrolls.

The second initiative will see AstraZeneca increase the head count at its Shanghai R&D center from around 450 to 1,000. AstraZeneca will primarily task researchers at the site with advancing medicines against diseases prevalent in China, although, in a shift in focus, Shanghai will now play a bigger role in global initiatives.

“Historically, until today, our Chinese team has been developing global products for the Chinese market. We want now the Chinese team to take the global leadership on some projects,” AstraZeneca CEO Pascal Soriot told Reuters.

The third initiative involves the creation of an artificial intelligence center in Shanghai. Locating the growing R&D team and AI center in Shanghai makes the city a focal point of AstraZeneca’s Chinese operations, but the company is also pushing into other parts of the country. AstraZeneca is setting up five regional headquarters in China.

AstraZeneca’s expansion contrasts with some of the moves made by its peers in recent years. Across 2016 and 2017, Eli Lilly, GlaxoSmithKline and Novartis closed Chinese research groups. The different path taken by AstraZeneca is in part a reflection of the commercial success it has achieved in China.

Last year, analysts at Jefferies identified AstraZeneca as the leading Western drugmaker in China, noting that the $3 billion in sales it made in the country in 2017 put it ahead of its peers. Since then, AstraZeneca has recorded a year of rapid growth in China, increasing sales by 25% on a constant currency basis to $3.8 billion.

AstraZeneca is on course to blow past that sales record in 2019. Over the first nine months of 2019, AstraZeneca’s Chinese sales totaled $3.7 billion, making it the company’s second biggest market after the U.S. China accounts for 21% of AstraZeneca’s sales. The stagnant European market makes up 18% of the business.

By Nick Paul Taylor

Source: Fierce Biotech

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