Novo Nordisk has innovative prescription for expansion

The world’s largest insulin producer, Novo Nordisk A/S, said it would not pursue mergers and acquisitions (M&A) in China but would instead expand by strengthening its research and development (R&D) activity, building manufacturing facilities and enhancing education.


“A few multinational companies made acquisitions (in China) to get entry into the generic medication and (over-the-counter) business.


“Novo Nordisk is another kind of company. We want to concentrate on innovative new drugs,” Ronald Frank Christie, senior vice-president of Novo Nordisk and president of Novo Nordisk (China) Pharmaceuticals Co Ltd, said on Monday.


According to Lars Rebien Sorensen, president and chief executive officer of Novo Nordisk A/S, the Denmark-based company has made “substantial” investments in China in R&D, manufacturing and education.


He said the company will “continue to invest in the emerging market, also the fastest-growing market for Novo Nordisk”.


The drugmaker, which has focused on diabetes for more than 80 years, said last year it would invest more than $100 million to expand its R&D center in Beijing and double its R&D staff to 200 within five years.


The center in Beijing is Novo Nordisk’s largest such facility outside its headquarters in Copenhagen.


“We are not interested in bringing in generic (products). We are only interested in bringing new drugs to the market, to make a difference,” said Christie.


Novo Nordisk, which produces two-thirds of the insulin used in China, also announced in 2008 it would invest $400 million to build a manufacturing base in Tianjin, which is expected to go into full operation in 2012. That base would be the largest manufacturing facility for the company outside its home market of Denmark.


In addition to meeting local demand, the Tianjin base will also export products.


“We believe that the capacity of manufacturing (in Tianjin) will supply our demand at least for the next three or four years,” said Sorensen. “Perhaps, two years from now, we may have to consider further investment, but it’s too early to talk about that.”


Novo Nordisk has sought to provide consumer education and offer training to local doctors. In addition to constant community-training courses, it linked up with the Ministry of Health and Chinese academic institutes to hold international diabetes forums and train grassroots medical care practitioners.


Statistics from the Ministry of Health show that nearly 100 million Chinese have diabetes. The Chinese diabetes drug market will increase to more than $2.8 billion by 2015 from $642 million in 2009, the International Market Analysis Research and Consulting Group said in a report.


According to medical care research company IMS Health, Novo Nordisk, US-based Eli Lilly and Co and French drugmaker Sanofi AS hold about 90 percent of China’s insulin market.


Some international pharmaceutical companies, such as Swiss drugmaker Novartis AG and Novo Nordisk’s archrival Sanofi, were engaged in M&As with local companies in recent years.


“Different companies have different choices, given their different competitive edges.


“Innovation-focused drug producers in China may face the challenge of high prices compared with generic products and difficulties in getting their products on the nation’s essential drug list or into the medical insurance system,” said Guo Fanli, an analyst from the domestic research company China Investment Consulting.

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