Novartis to Drop USD 1 Billion on a China R&D Facility
Swiss drugmaker Novartis AG is investing $1 billion to build the largest pharmaceutical research plant in China, emphasising the importance of developing markets for future growth.
Novartis and other drugmakers are keen to tap into markets such as China as they face slowing growth and loss of exclusivity on key products, including the Swiss group’s top-selling blood pressure medicine Diovan. Novartis said it was also investing $250 million in a second research and development and manufacturing facility in Changshu. (Reuters)
This story interested me mostly in what the wire report didn’t cover. What I really want to know is:
1. What are they really going to do at that facility?
2. Where will it be located?
3. What kind of sweet deal will they get from the local government at that location (and how many State/national laws will those benefits violate)?
4. What is their IP management/control strategy with the new facility, particularly in light of the new Patent Law and the requirement that China innovations be patented here first?
5. For the Reuters staff: why is it that a huge investment in an R&D facility in a country automatically means that the investor is counting on that country’s market for future growth? In the case of China, it is undoubtedly true, but let’s face it, Novartis could have set up an R&D facility in a lot of other countries. Strange logic here — R&D is not the same thing as manufacturing.
6. I still remember everyone going crazy when GSK spent $100 million+ on its Suzhou facility (if memory serves me correctly). It wasn’t that long ago. Now we’re talking $1 billion for an R&D center? In addition to the gold-plated fixtures and diamond-encrusted foot pedals on the staff squat toilets, what else are they going to spend all that money on?
7. Where the hell is Changshu?
Hello Stan,
Could you elaborate a bit more on your point about IP, and the ne patent law?
Thanks
Yes, my comment on that was slightly incorrect actually. Under most of the drafts of the Patent Law amendments (which became effective this year), there was a requirement that companies in China must file for a PRC patent before filing abroad.
In the final version passed by the NPC, that provision was modified, removing the absolute requirement for a China-first filing. However, it is my understanding that a security clearance (handled by the SIPO, China’s Patent Office) will be put into place instead for companies wishing to file for foreign patent protection first. I’m assuming that foreign-invested enterprises are treated as domestic entities, as they are in most areas of Chinese law.
The real question of course is to what extent the government may interfere via this SIPO security clearance procedure. Will it just be a formality? How long will it take? In other words, will this have an adverse effect on foreign-invested R&D facilities in China?
Since China is loving all this investment in R&D for a variety of reasons, I doubt that much interference would be forthcoming. However, it is still a slight worry.
I am happy to see that we are on the same page.
Article 20 of the new patent law states that “any entity or individual may file an application in a foreign country for an invention-creation completed in China, subject to a prior security examination by the patent administration department under the State Council”. In other words, for any invention made on the Chinese territory, the third amendment removes the mandatory first filing application in China. Consequently, it allows applicants to apply abroad for foreign patents before filing a patent application in China. However, the patent authorities keep the right to review the applicant’s invention to protect the national security of the People’s Republic of China. As pointed out in article 71 of the new law, any applicant who fails to obtain a foreign filing license from China and still apply for a patent abroad will be subjected to disciplinary sanction and will loose any right to obtain further protection in China.
So, it is indeed an improvement. Most countries, if not all of them, have this “security clearance procedure”. Of course, China being….China, we have to be cautious (but not paranoid): we’ll see what the “implementing measures” will state (when published…) to understand a bit better how it is done in theory, and a few months more to know how it is really done!
By the way, not interested by a relocation to mysterious Changshu ?