Home » City specials » Chengdu
The science of wooing drug multinationals
By Ding Yining |
January 29, 2013, Tuesday
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Print Edition
Print Edition
EDITOR'S note:
Chengdu, capital of China's southwestern Sichuan Province, is a city going places. In June it will host the prestigious Fortune Global Forum, acknowledgement of Chengdu's growing reputation as a major business center. Much of this success can be attributed to the city's dynamic "can-do" attitude, helping create an environment where industry can prosper and where leading multinationals are choosing to set up headquarters.
The city of Chengdu is poised to take advantage of the rapid development of China's life sciences and health industry, which is expected to become the world's second-largest market in the sector by 2015.
The capital of Sichuan Province in southwestern China is assisting biopharmaceutical makers with start-up assistance, tax incentives and subsidies. It is also trying to woo multinational drug companies to set up regional headquarters there.
"Biopharmaceuticals is set to become a leading industry of the western region, developed in Chengdu on national standards," said Huang Wei, director of the biopharmaceutical industry promotion administrative office at the city's High-Tech Development Zone.
The value of the biopharmaceutical industry in the city is estimated to top 90 billion yuan (US$14 billion) last year, Ding Xiaobin, deputy director of Chengdu's Science and Technology Bureau, told local media.
The High-Tech Development Zone, a key site in the development of the city's biomedical sector, was set up 10 years ago. Now 264 biopharmaceutical companies are located there.
Special office
Unlike information technology and software companies, where manufacturing comprises a large proportion of operational costs, pharmaceutical firms spend the bulk of their money on research and development.
Chengdu set up a special department - biopharmaceutical industry promotion administrative office - in 2011 to promote development of the industry. Last year, it established an 80 million yuan government-backed venture capital investment fund targeted at biopharmaceutical start-up firms.
The city is already home to nearly 400 biomedical companies, whose activities span modern applications for traditional Chinese medicine to synthetic drug making.
Chengdu offers industry players an excellent industry environment, relatively mature local industry chain and lower living costs than cities like Shanghai and Beijing.
"The shift of multinationals to the western region not only brings capital, but also talent and management expertise," Huang said.
Multinational firms are increasingly taking the view that Chengdu is the hottest place to be as China opens the resources and consumer spending power of its vast interior.
US contract research company Quintiles recently entered into collaboration with West China Hospital and also located its western headquarters in Chengdu.
In December, 2012, pharmaceutical company Roche opened the West China Management Center in Chengdu, its first full-function regional headquarters, to boost its presence and sales in the west.
"Western China now contributes around 11 percent of Roche's sales in China, and we expect that to grow much more quickly than more developed regions in the country," said Luke Miels, regional head of Roche Pharmaceuticals Asia-Pacific.
Roche is seeking to seize the initiative amid a general shortage of medical services and relatively low accessibility to innovative drugs in the western region. It has also joined up with local hospitals and medical institutions to help raise their laboratory testing techniques.
"Roche's key strategy areas include raising patient awareness and increasing the accessibility of Roche's pharmaceutical products, as well as collaborating with charity programs and government institutions," said Penny Wan, general manager of Roche Pharmaceuticals China.
Technology innovation
Its regional headquarters currently has around 400 staff and is expected to hire 100 people in the next 18 months.
Partnerships involving companies, local research institutions and government departments are certainly growing, said the High-Tech Development Zone's Huang.
"We are putting more focus on technology innovation, and we'll stick to that policy."
As a result, entrepreneurship is flourishing.
Li Jin, who graduated from Sichuan University 20 years ago, spotted the potential for China's pharmaceutical industry when he visited Shanghai in 2005 on behalf of British drug giant AstraZeneca.
Li decided to go into the industry on his own, setting up HitGen Ltd in Chengdu.
"I chose to locate in the Chengdu High-Tech Development Zone because government authorities were very supportive and the city's overall business environment is conducive to a start-up firm," he said.
The zone provides subsidies for its rent and lab facilities.
Li's company, which started with an investment of US$15 million, is now running screening programs for at least 10 target compounds and has formed partnerships with several overseas and local companies. Its ultimate target is to set up a library with 1 billion compounds used for screening and selection of lead compounds that play a key role in development of new drugs.
"The city has a vast talent pool and a solid base for research infrastructure and organization," Li said.
Tianhe Biological Medicine Science Park, a special area inside the High-Tech Development Zone, has attracted service providers, including hospitals and university institutions.
It will eventually host 700 to 800 organizations, creating a platform open to companies seeking outsourcing services, not only in Sichuan but throughout the vast western region.
Chengdu, capital of China's southwestern Sichuan Province, is a city going places. In June it will host the prestigious Fortune Global Forum, acknowledgement of Chengdu's growing reputation as a major business center. Much of this success can be attributed to the city's dynamic "can-do" attitude, helping create an environment where industry can prosper and where leading multinationals are choosing to set up headquarters.
The city of Chengdu is poised to take advantage of the rapid development of China's life sciences and health industry, which is expected to become the world's second-largest market in the sector by 2015.
The capital of Sichuan Province in southwestern China is assisting biopharmaceutical makers with start-up assistance, tax incentives and subsidies. It is also trying to woo multinational drug companies to set up regional headquarters there.
"Biopharmaceuticals is set to become a leading industry of the western region, developed in Chengdu on national standards," said Huang Wei, director of the biopharmaceutical industry promotion administrative office at the city's High-Tech Development Zone.
The value of the biopharmaceutical industry in the city is estimated to top 90 billion yuan (US$14 billion) last year, Ding Xiaobin, deputy director of Chengdu's Science and Technology Bureau, told local media.
The High-Tech Development Zone, a key site in the development of the city's biomedical sector, was set up 10 years ago. Now 264 biopharmaceutical companies are located there.
Special office
Unlike information technology and software companies, where manufacturing comprises a large proportion of operational costs, pharmaceutical firms spend the bulk of their money on research and development.
Chengdu set up a special department - biopharmaceutical industry promotion administrative office - in 2011 to promote development of the industry. Last year, it established an 80 million yuan government-backed venture capital investment fund targeted at biopharmaceutical start-up firms.
The city is already home to nearly 400 biomedical companies, whose activities span modern applications for traditional Chinese medicine to synthetic drug making.
Chengdu offers industry players an excellent industry environment, relatively mature local industry chain and lower living costs than cities like Shanghai and Beijing.
"The shift of multinationals to the western region not only brings capital, but also talent and management expertise," Huang said.
Multinational firms are increasingly taking the view that Chengdu is the hottest place to be as China opens the resources and consumer spending power of its vast interior.
US contract research company Quintiles recently entered into collaboration with West China Hospital and also located its western headquarters in Chengdu.
In December, 2012, pharmaceutical company Roche opened the West China Management Center in Chengdu, its first full-function regional headquarters, to boost its presence and sales in the west.
"Western China now contributes around 11 percent of Roche's sales in China, and we expect that to grow much more quickly than more developed regions in the country," said Luke Miels, regional head of Roche Pharmaceuticals Asia-Pacific.
Roche is seeking to seize the initiative amid a general shortage of medical services and relatively low accessibility to innovative drugs in the western region. It has also joined up with local hospitals and medical institutions to help raise their laboratory testing techniques.
"Roche's key strategy areas include raising patient awareness and increasing the accessibility of Roche's pharmaceutical products, as well as collaborating with charity programs and government institutions," said Penny Wan, general manager of Roche Pharmaceuticals China.
Technology innovation
Its regional headquarters currently has around 400 staff and is expected to hire 100 people in the next 18 months.
Partnerships involving companies, local research institutions and government departments are certainly growing, said the High-Tech Development Zone's Huang.
"We are putting more focus on technology innovation, and we'll stick to that policy."
As a result, entrepreneurship is flourishing.
Li Jin, who graduated from Sichuan University 20 years ago, spotted the potential for China's pharmaceutical industry when he visited Shanghai in 2005 on behalf of British drug giant AstraZeneca.
Li decided to go into the industry on his own, setting up HitGen Ltd in Chengdu.
"I chose to locate in the Chengdu High-Tech Development Zone because government authorities were very supportive and the city's overall business environment is conducive to a start-up firm," he said.
The zone provides subsidies for its rent and lab facilities.
Li's company, which started with an investment of US$15 million, is now running screening programs for at least 10 target compounds and has formed partnerships with several overseas and local companies. Its ultimate target is to set up a library with 1 billion compounds used for screening and selection of lead compounds that play a key role in development of new drugs.
"The city has a vast talent pool and a solid base for research infrastructure and organization," Li said.
Tianhe Biological Medicine Science Park, a special area inside the High-Tech Development Zone, has attracted service providers, including hospitals and university institutions.
It will eventually host 700 to 800 organizations, creating a platform open to companies seeking outsourcing services, not only in Sichuan but throughout the vast western region.
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