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Mar 7, 2012

Roche CEO Sings China’s Praises Noting Country's Interest in the Industry

  • Roche CEO, Severin Schwan, offered some public praise for China during the pharma giant’s annual meeting, for reasons that go beyond it having the world’s largest population and much cheaper manufacturing than Europe or the U.S.

    "China is of course an enormous market” given its population of 1.3 billion and its growing demand for innovative new medicines, Schwan said during the company’s annual general meeting as reported by Pharma Times. But China “is much more than that. It is also well equipped to be an innovator in any number of sectors including the research-based pharmaceutical industry.”

    Schwan’s enthusiasm for China is understandable given Roche’s results there. The company finished 2011 with a 35% year-over-year leap in sales, while diagnostics sales jumped by 27%. Numbers like these propelled Roche’s overall 15% growth in its Asia-Pacific region, the company’s fastest-growing region; Latin America was number two at 14%.

    Roche attributed its China growth to rising sales of several drugs. Notable among these were three anticancer medicines: MabThera/Rituxan, for which non-Hodgkin lymphoma (NHL) indications drove sales; Xeloda for colorectal, stomach, and breast cancer; and Tarceva for non-small-cell lung cancer, which also marked the only Chinese regulatory approval recorded by Roche for 2011.

    A fourth cancer medicine, Avastin, received “a very good market response in China since the medicine’s launch for colorectal cancer in October 2010,” Roche said in a press release despite an overall 7% sales decline from 2010 for the drug. Avastin still remained Roche’s second-best selling drug last year, with CHF 5.3 billion (about $5.8 billion) in sales.

    Exactly how much China racked up in sales has not been disclosed to investors, as Roche lumped Chinese sales for those and other drugs in an “International” category. The company did say, however, that Xeloda sales zoomed 24% over 2010.

    Roche is China’s fifth-largest pharmaceutical company, with more than 40 pharma and diagnostics facilities in Shanghai and Hong Kong, employing 4,200 people. About 1,000 of these staffers were hired just in the past year alone, Schwan said, adding: “We expect our headcount in China to more than double over the next few years.” Shanghai operations include Roche’s R&D Centre, a drug discovery facility established in 2004 at Zhangjiang Hi-Tech Park as the first research center opened by a foreign-based pharma giant.

    The Roche CEO is a member of an advisory council to the mayor of Shanghai, so it wasn’t too surprising that he delivered an upbeat assessment on what it’s like for big pharma to do business in China. “I can tell you from personal experience that the life sciences industry is seen in China as an important factor in addressing the major challenges facing the country. Not only as a vital factor in improving public health but also as an engine of innovation that can create highly skilled jobs and contribute to a high-value added economy.

    “By contrast, when I talk to politicians in the West, particularly here in Europe, I often have the feeling that we are viewed solely as a cost factor not as part of the solution to important problems,” he added. “There is no question that our industry needs to contribute to controlling healthcare costs. But Europe’s future depends on it having innovation-friendly industrial and health policies.”

    That’s a not-so-subtle slap at Germany and other nations that have scrambled to cut drug costs for their state-run healthcare systems in recent years. As of January, for example, Germany has tightened the criteria for accepting new medicines, insisting that drug makers prove to the country’s Institute for Quality and Efficiency in Health Care (IQWiG) that their new drugs can deliver both better cost effectiveness and clinical effectiveness than currently available medicines. Greece has slashed its spending on medicines from €5.6 billion ($7.3 billion) in 2010 to €$4.1 billion ($5.4 billion) last year and expects to shell out €3.1 billion ($4.1 billion) this year.

    Roche’s presence in Shanghai dates back to the opening of its first Chinese office there in 1926, a generation before the People’s Republic was established. Today, Schwan noted, Roche and all other life sci companies employ a total 90,000 people in Shanghai, more than the entire workforce of the largest U.S. biopharma cluster, the San Francisco Bay Area, which he pegged at 72,000.

    “Sustainable success requires a long-term perspective and forward-looking investments. Our early commitment to doing business in China has been well worth it,” Schwan declared. “Roche is ideally equipped to make full use of the opportunities this fascinating country has to offer.”

    --
    To read the story from Pharma Times, click here.


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