- Looking to capitalize on China's growing pharmaceutical ecosystem, Novartis has decided to end drug discovery at its Shanghai R&D hub and shift resources toward early development and commercial activities.
- First reported by FierceBiotech, the restructuring will eliminate about 150 early discovery jobs in the near-term but add 340 development and commercial roles by 2023. According to Fierce, Novartis does not intend to stop drug discovery at any of its other research sites, which span from California to Massachusetts to Basel, Switzerland.
- "The new direction for Novartis in China is driven by the maturation of the Chinese life sciences sector and regulatory system, the emerging impressive innovation potential of entrepreneurial biomedicine in China and our own need to rebalance drug development and discovery," Jay Bradner, president of the Novartis Institutes for BioMedical Research, told Fierce.
China's pharmaceutical market is the second largest in the world, hitting around $130 billion in value last year by McKinsey & Co. estimates. The market appears primed for further growth too, as the Chinese government and foreign venture capital continue pumping billions of dollars into the country's biotech sector.
Already, some of those investments have started to pay off. BeiGene — which has backing from Hillhouse Capital, Fidelity Management & Research Company, and T. Rowe Price & Associates — this month became the first Beijing-headquarted company to gain U.S. approval for a drug.
Sensing the immense commercial opportunity, big pharma has also been pouring money into China. Amgen just spent $2.7 billion to take a 21% stake in BeiGene, while AstraZeneca recently announced it would double its research headcount in China by creating a global R&D center in Shanghai.
Novartis opened its Shanghai hub, known as China Novartis Institutes for BioMedical Research, in 2016 as part of a $1 billion plan to build a stronger foothold in a market executives envisioned as key to future growth. In 2018, China was the main driver for the 10% growth Novartis saw in Emerging Growth Markets sales, which reached $8.6 billion for the year.
"China is a big part of Novartis future growth plans and we expect that in the coming years the Chinese market will be one of our top three markets," Novartis said in a statement provided to BioPharma Dive.
Novartis noted too that the company intends to file 50 new drug applications in the country by 2023, and expects to invest in local venture capital firms to ultimately forge partnerships with early stage Chinese biotechs.
The decision to reshape CNIBR, which employs more than 1,000 people, so soon after its launch reflects just how quickly drug research and regulations are evolving in China, as well as the need for more help developing prospective therapies, according to Bradner.
"We have observed some truly catalytic events in the last few years," he told Fierce. "The Chinese government’s commitment to regulatory reform has improved access to medicines but also opens new opportunities for first-in-human and first-in-class innovative medicines to reach Chinese patients faster."