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Tue, Nov 16, 2004 - Page 12 News List

Novartis turning to China for security, growth

SAFE RESEARCH With its scientists in the UK under threat from animal-rights activists, the ethics-free zone of China is looking increasingly appealing

THE GUARDIAN , BEIJING

Novartis, the Swiss pharmaceutical giant, has warned that its investments in Britain are at risk because animal rights campaigners are threatening the safety of its scientists.

Daniel Vasella, chairman of the group, said that the company would increasingly be focusing its research funds outside Europe, where growth is likely to be flat in the years ahead.

He was speaking in China after the signing of a pact with a Shanghai medical institution to identify the active ingredients in herbs and fungi used in traditional Chinese medicine.

In China -- where research costs are considerably cheaper and the ethical hurdles lower -- Novartis has about 800 patients undergoing clinical trials. In two to three years, the company expects that to rise to about 3,000.

Much of Novartis' future growth looks likely to take place in China, where Vasella said his company was one day likely to open its own research establishment.

The dynamism of Novartis investments in the far east contrasts starkly with the prospects for Europe. Vasella said biomedical research had declined in relative terms in Germany and France. In Britain, he said research standards remained very high, but the company's investment was threatened by anti-vivisection campaigners.

"The UK is the worst," he said. "It is scaring our people. If they become so scared that it becomes a major issue, we could come close to leaving."

Novartis has a ?40 million research establishment in Horsham, West Sussex, which was opened in 2001. Vasella said the staff there were being intimidated to a degree that made him wonder whether it was wise to remain. Of the 3,000 UK employees of Novartis, 500 are employed in research and development, 200 of them scientists.

The company spends ?50 million a year on research and development.

"We've had physical threats that have made me feel uncomfortable for our people," he said.

Even without the actions of animal rights groups, Novartis is likely to have focused more closely on China. In the past five years, the Swiss firm has seen its Chinese revenues grow by an average of 25 per cent per year. In the first nine months of this year, the pace accelerated to 40 percent with the introduction of four new drugs and the expansion of the sales network to increasingly prosperous second-tier cities outside Shanghai, Beijing and Guangzhou.

Novartis' latest venture was a tie-up last week with Shanghai Institute of Material Medical Research. In the next three years, the collaboration aims to identify 1,500 compounds from the natural ingredients in traditional Chinese medicines for possible synthetic reproduction in European laboratories.

According to Vasella, the Chinese government was a strong advocate of the shared research into traditional medicines, which he said was a first for a foreign pharmaceutical firm.

As the second biggest international drug company in China, Novartis has already proved the benefits of cooperation with a Chinese partner.

Its anti-malaria drug Coartem, jointly developed with Kunming Pharmaceuticals 10 years ago and produced on a nonprofit basis, has become a world leader.

In 2002, the drug was used to treat 100,000 cases of the disease. The request for next year is 60 million -- so many that the companies cannot grow the ingredients fast enough.

Vasella expects more successes for the Chinese biomedical industry as the domestic market grows, research standards improve and the government tightens laws on intellectual property protection.

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