May 03, 2011
Big Pharma: China Market Too Big to Ignore
Global Trend
The start of 2011 has seen some significant deal activity involving big pharma in China.
It has long been recognized that while big pharma has many challenges ahead in terms of growing and maintaining revenues and profitability in mature markets, the opportunities represented by China are too big to ignore.
Over the past few years, numerous companies including GlaxoSmithKline, Merck & Co., Inc., Novartis, Pfizer, and sanofi-aventis have made numerous inroads into China through partnering and M&A transactions. In addition, the companies have made significant investments in establishing their own R&D functions in the region.
Most recently, Takeda has agreed with China Medical City in Taizhou to make a significant investment to build R&D, manufacturing, and marketing facilities in China (see below for details).
Pfizer has recently signed two deals with a China focus: the first with Shanghai Pharmaceutical for the distribution and marketing of Pfizer products in China; the second with Daiichi Sankyo for the co-promotion of Daiichi Sankyo’s olmersartan medoxomil in China.
Table 1: Big pharma partnering deals in China – 2011
| Date | Parties | Stage | Therapy Area | Value US$m | Subject |
| 20/04/2011 | Pfizer, Shanghai Pharmaceutical | Marketed | n/d | Distribution and marketing agreement for products | |
| 04/04/2011 | Daiichi Sankyo, Pfizer | Marketed | Hypertension | n/d | Co-promotion agreement for olmesartan medoxomil |
| 31/03/2011 | Astellas, Cardeus Pharmaceuticals | Phase I, Phase II, Preclinical | Angina | n/d | Development, licensing and manufacturing agreement for YM758, ASP6537 and one other compound |
| 30/03/2011 | Dainippon Sumitomo Pharma, Intercept Pharmaceuticals | Phase I, Phase II | Cirrhosis, Liver disease | 315 | Development and licensing agreement for obeticholic acid (INT-747) |
| 23/03/2011 | Takeda Pharmaceutical | n/d | Contract service agreement to build new facility in China |
Source: Current Agreements, April 2011
Deal activity has not been limited to partnering alone. In the first three months of 2011, there have been two significant M&A acquisitions in China by big pharma.
First, Merck KGaA has acquired Beijing Skywing Technology, a leading provider of cell culture media products and bioreactors for the Chinese biopharmaceutical industry. The acquisition allows Merck to quickly establish a presence in this market segment in China.
Second, Novartis has acquired an 85% stake in Zhejiang Tianyuan Bio-Pharmaceutical, a vaccines company. Again, this provides a big pharma company with significant presence in a rapidly growing market segment in China.
Table 2: Big pharma M&A deals in China – 2011
| Date | Parties | Value US$m | Subject |
| 22/03/2011 | Novartis, Zhejiang Tianyuan Bio-Pharmaceutical | n/d | Acquisition agreement for 85% stake in Zhejiang Tianyuan Bio-Pharmaceutical |
| 05/01/2011 | Beijing Skywing Technology, Merck KGaA | 18.3 | Acquisition agreement for Beijing Skywing Technology |
Source: Current Agreements, April 2011
We anticipate that the number of partnering and M&A deals with a China focus will continue throughout 2011 and beyond as big pharma seeks to establish a strong presence in the rapidly growing and lucrative market. We also anticipate significant consolidation in the Chinese market as regional players seek to consolidate a position of critical mass in order to compete with western companies as well as to establish R&D capabilities of their own.
