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Like other drugmakers eyeing the 1.3 billion potential customers in China, GlaxoSmithKine is keeping a close watch on a nation where many people still do not have basic healthcare services.

 

In attempts to keep prices low and also stay competitive, the world's second largest pharmaceutical giant is evaluating the establishment of a stand-alone research and development (R&D) center in China, devoted entirely to discovering innovative drugs and healthcare solutions.

 

"For us, it is more than just doing business in China, it is about being part of the healthcare solutions to China," said Jean-Pierre Garnier, chief executive officer of UK-based GlaxoSmithKline.

 

Details on investment, location and timeline for the center have not been released, but Garnier said he hopes it would open "very soon."

 

GlaxoSmithKline, which established its first production plant in China 22 years ago, has small R&D units in Beijing, Shanghai and Tianjin and spends 17 percent of its sales on international R&D every year.

 

Last year, GlaxoSmithKline China saw double-digit growth in revenue.

 

Garnier told China Daily that GlaxoSmithKline's aim in the world's most populous country is to build a "full-fledging" business.

 

"We almost have a full-fledging business in China and the last step that remains is a stand-alone research and development (R&D) center," said Garnier.

 

The huge patient pool, coupled with emerging disease trends like cardiovascular, diabetes and cancer, makes China an increasingly important strategic location for innovative medicine development.

 

The determination of the Chinese Government to provide healthcare services to urban communities by 2010 and basic cooperative healthcare to people in rural regions in 2008 is expected to bring explosive demand for medical services.

 

China, with a huge potential for medicine development and an abundant scientist pool, has already attracted global pharmaceutical giants who are investing in R&D. US giant Pfizer opened its R&D center in Shanghai in October and US$25 million was expected to be invested into the center.

 

The Swiss firm Novartis announced in February it would build a medicine material base in Suzhou city, near Shanghai, which involves an investment of US$83 million and includes an R&D center.

 

While GlaxoSmithKline already uses China as a manufacturing hub to produce medicine, its new proposed center will allow the pharmaceutical giant to delve into new products.

 

GlaxoSmithKline just released a vaccine for hepatitis B called Engerix B, which is said to help cut back on national healthcare spending. Its drug Seretide, the second-best selling medicine for asthma in China, is expected to become the No 1 product in the country.

 

In the face of the avian flu epidemic, GlaxoSmithKline and its Swiss peer Roche produced the only two marketed anti-viral medicines effective against the disease. The two companies are busy handling huge international demands.

 

Garnier originally wanted to contract with a Chinese company to make the drug, but he said most of the Chinese potential partners do not have adequate technologies in manufacturing the vaccine.

 

At the cost of transferring some of his firm's technologies, Garnier said he plans to give licenses for the anti-viral drug Relenza to other foreign pharmaceutical companies to help stem the bird flu.

 

GlaxoSmithKline also hopes to develop its Chinese branch into an export base for the company to increase its competitiveness with the low costs in China. Due to the regulations of the Chinese Government on exports of medicines, GlaxoSmithKline does not export any drugs, but as the regulations are lifting, Garnier believes it will soon link in his company's supply chain in the global market.

 

GlaxoSmith Kline employs 28,000 people and has five subsidies in the country.

 

Garnier said his company is comprised and run by small teams to reduce bureaucracy, stimulate people's enthusiasm and facilitate communications and co-operation between the top management and the centers, which is said to be the most efficient and productive among pharmaceutical companies.

 

(China Daily March 10, 2006)