Hangzhou’s Attractions Play Big Part In New Pfizer China Investment
This article was originally published in PharmAsia News
Executive Summary
The Hangzhou Economic Development Area has become a highly attractive spot for global pharmas to establish an expanded presence in China, as its integrated platforms, high quality talent pool and incentives help develop a powerhouse of high-end manufacturing. Pfizer’s $350m decision to join the industrial cluster for a new biotech center follows on from others including MSD, Lilly and Bayer.
SHANGHAI – China’s Hangzhou Economic Development Area (HEDA) has seen accelerating landing of overseas capital and investment projects in recent years, with the development of a new “medical port” that has attracted five of the top 10 global pharmaceutical giants, including most recently Pfizer Inc., which has just invested in a major new biosimilars center.
The Pfizer Global Biotechnology Center, a $350m investment deal signed with the local government in September last year, is located at the eastern high-tech industrial park in the area, an integrated biopharmaceutical industrial base for localized R&D and production (Also see "New $350m Site To Build Pfizer’s China Biosimilar Capacity" - Scrip, 28 Jun, 2016.).
Expected to be completed in 2018, the new center will have a total of six buildings to house R&D and production functions for innovative biologics and biosimilars, and additionally will provide testing services, Anthony Maddaluna, president of Pfizer Global Supply, told the press at the groundbreaking ceremony.
With the initial investment, the US company plans to introduce two monoclonal antibodies developed by Pfizer for the treatment of breast cancer, colorectal cancer and lung cancer, and expects to reach an annual output value of CNY2.6-4.7bn ($391-707m) in the first phase of development.
China Biologics Potential
In the future, Pfizer will increase its investment to $600-800m to bring further innovative monoclonal antibodies and vaccines into China at the site, company executives said at the ceremony.
"Producing high value-added and high-tech pharmaceutical products is the best solution that we believe to address the current global economic challenges,” Maddaluna said. “Local manufacturing can reduce the cost of logistics and other production costs, thereby we can lower the price to make the drugs affordable to more patients.”
Pfizer is currently the largest foreign biopharmaceutical company in China, and the biggest market share holder for anti-inflammatory and cardiovascular drugs in the country. However, “Biologics only account for 4% of the overall pharmaceutical market share in China, while the US figure is 22%. China has great market potential for biological and biosimilar products,” said Yingqun Wang, the Chinese project leader for the Pfizer Biotechnology Center.
China’s recent reforms and supportive policies also encouraged Pfizer to make the new investment. With the “Made in China 2025” program, the government is trying to give the manufacturing sector a major boost and develop the country into a powerhouse of high-end manufacturing.
John Young, Group President, Pfizer Essential Health, said in his opening speech that Pfizer hopes to take a place in the more standardized pharmaceutical industry in the future in China by exploiting opportunities now in the industrial upgrading program.
Hangzhou’s Pharma Attractions
Young noted that the choice of Hangzhou as the location of the new center was based on long term collaboration with the local government. In 2012, Pfizer and Hisun Pharmaceutical set up a joint venture, Hisun-Pfizer Pharmaceuticals Co. Ltd., to provide branded generic medicines for patients in China and global markets.
The registration facilities and production plants of the joint venture are located in Fuyang, Zhejiang province, while the management center and R&D center are located in Shanghai and Hangzhou.
Xiaobing Wu, country manager of Pfizer China, added that Pfizer was attracted to Hangzhou due to HEDA’s investment environment, favorable policies and supporting services, and it made the final choice here after looking at many other places.
“Hangzhou is a very vibrant place, with a large talent pool and modern hardware for research and industrialization,” Wu added.
Before Pfizer, big pharmas including Merck Sharp & Dohme Ltd., Abbott Laboratories Inc., Bayer AG and Eli Lilly & Co. had already set up a presence or made investments in HEDA. Now home to over 110 pharmaceutical companies, HEDA has reached an annual output value of CNY20bn, with an annual growth rate of 15%.
In 2013, under a nearly $120m investment, MSD opened a pharmaceutical manufacturing facility in HEDA, which is one of the most advanced and largest packaging facilities in China and the region for new chemical drugs.
Since 2001, the Eli Lilly Asia Fund has been investing in HEDA companies. Its portfolio includes Chinese Peptide Company for peptide reagents and intermediates development, Veritas Genetics for genetic screening and diagnostic products, and Just Biotherapeutics for new oncology and infectious disease drugs and biosimilars.
Multiple Incentives, Support
HEDA has been strongly pushing the concept of an “eastern talent port” for health care since 2012, by setting up a special fund of CNY300m to facilitate talent, and a technology innovation fund of CNY600m to encourage R&D and industrialization.
The management committee of HEDA has also set up a system of financial services including a CNY 500m entrepreneurship fund and CNY2bn in social capital to help start-up financing. In one year, HEDA has brought five well-known venture capital firms and 11 venture projects into the development zone, including HaiBang Venture.
Hangzhou boasts 33 institutions of higher learning, including the famous Zhejiang University, and has more than 30 key national laboratories and technological centers. Zhejiang Province has been building the Xiasha Higher Learning Garden in the HEDA, the largest project of its kind in the province that accommodates 15 science and engineering schools, as well as comprehensive colleges and universities home to 130,000 students.
Meanwhile, HEDA and Zhejiang University have jointly built up the Hangzhou Precision Medicine Research Center, and established the Hangzhou institute of Yangtze River Green Pharmaceutical Collaborative Innovation Center with the Zhejiang University of Technology, to provide technical support for the biopharmaceutical industry.
HEDA has also invested millions to build a public service platform for pharma firms, in line with international standards for testing, experiments, consultancy and application filings. By the end of 2015, it had established four public technical service platforms, including genetic engineering, pharmaceutical contract manufacturing, polypeptide development and personalized medicine.
From 2011 to 2015, companies based in HEDA obtained five new drug approvals, 11 clinical trial approvals and 83 patents.
“The combination effect of different research platforms will certainly promote the overall development of the industry, hence, pharma companies will be also driven forward,” Pfizer’s Wu predicted.
On the day of the Pfizer groundbreaking, next to the Pfizer center a biopharmaceutical incubator accelerator was also under construction. With a total area of 130,000 square meters, this project will be an integrated platform as business center, pilot base and industrial accelerator.
“The top five multinational pharmas now settled in the development zone will be leading the development of the area, and we will continue to strive to reach an annual production of CNY30bn by the end of [China’s] 13th Five-Year Plan,” a HEDA officer told the press at the event.