Dive Brief:

• Sanofi will invest roughly $75 million dollars to stand up a R&D operations hub in Chengdu, China, furthering its presence in a country which ranks as the second largest market for medicines in the world. 
• Once up and running, the center will serve to help manage Sanofi's global clinical trials across all of the pharma's major therapeutic areas — a move in line with the Chinese government's recent efforts to lower historical hurdles to clinical development in the Asian country. 
• The French drugmaker, which already employs 9,500 people across its 11 regional offices and three production sites in China, said it plans to hire 300 local R&D specialists over the next two years to staff the new center.

Dive Insight:

Sanofi counts itself as the fifth largest pharmaceutical company by sales in China. But the drugmaker clearly sees an opportunity to expand and appears to be counting on the country playing a larger role in how it conducts clinical studies. 

"Our goal is to link China's innovative achievements with the global ecosystem and develop innovative drugs in China that could benefit patients around the world," said Zhang Ji, global head of Sanofi R&D operations, in a July statement. 

Particularly notable in that statement is Ji's emphasis on developing novel drugs in China which Sanofi could bring to markets globally. That isn't how drug development has typically worked in the country, which is a major global producer of the raw ingredients that make up many medicines, but not known as a source of innovative treatments. 

There are signs that dynamic is changing, and Chinese regulators have pushed through reforms which aim to speed in-country clinical development and boost protections for intellectual property. 

If the reforms have the intended effect, more multinational drugmakers might find it attractive to involve China more directly in their clinical development. Already, the country ranks behind only the U.S. in total annual spending on medicines, according to Iqvia. But there's tremendous room for growth: by per capita drug spending, China is still predicted to trail the likes of Poland and Colombia in 2022. 

It's not all expansion for global drugmakers, however. Others, such as GlaxoSmithKline and Eli Lilly, have trimmed or restructured some of their operations in China. 

Chengdu, a provincial capital in the southwest of China, is already home to two local Sanofi sites. The new center, however, will tie Sanofi's operations in the city to facilities in France and the United States as the main hubs of the company's clinical development network.

Sanofi does not appear to be focusing the Chengdu center on any one therapeutic area, listing all of its major disease focuses as areas in which the site may be involved. Chengdu will specialize, though, on digital and big data analysis, Sanofi said. 

While China remains a smaller market for Sanofi, its importance to the pharma is growing.

In 2017, revenues from sales of drugs in China earned Sanofi more than €2.2 billion (about $2.5 billion)— roughly one fifth of the figure the pharma pulled in from the U.S.

Sales over the first three months of 2018, by comparison, jumped 14% year over year to nearly €641 million. Extrapolated over a full year, that growth would put Sanofi on pace to earn closer to €2.5 billion in the country this year.