China luring Indian drug companies to set up greenfield operations in that country | Giving out lucrative incentives
After the US, China is considered as the second largest pharmaceutical market in the world. And now China is in a mood to surpass US and become the largest pharmaceutical market in the world.
Recent reports suggested that China is luring Indian drug companies to set up greenfield operations in that country. And for this it has made up few strategical schemes. People who are aware of the schemes told that the local government has decided on a spectrum of incentives like tax benefits and ready availability of resources like infrastructure and manpower at competitive costs. This will initiate and roll out the red carpet for the Indiam companies.
Last week, top level delegates from the People’s government of Hainan province visited Mumbai and met representatives from the Indian pharmaceutical industry like Sun Pharma and Centaur to brief them about the sops to rope in investments. The incentives proposed by the Chinese side apply to manufacturing as well as research organisations. The government at Hainan is doling out series of incentives for accelerating industrial development. Industrial incentives include tax subsidy, equipment cost and logistics subsidy
. The government representatives also provides some policies like personnel income subsidy, Housing allowance, education environment and etc.“We recognise the efforts taken by the Indian drug industry on the innovation side and providing affordable medicines. We would like to see Indian companies bring their experience in innovation and manufacturing in the Chinese market,” Liu Cigui, governor, People’s government of Hainan Province told representatives from the local industry.
Hainan has built a hub at Hainan named Haikou National Hi-tech Industrial Development Zone, a multi-industry development area that houses a medicine valley industrial park for pharmaceutical research units. The size of the Chinese market crossed $100 billion two years ago and is growing in double digits. It has seen brisk investments from most global drug makers but in contrast, the Indian drug industry has achieved limited success in exploring opportunities there.
Some of the largest drug makers like Cipla had entered into alliances with local partners Biomab but in 2015 it decided to pull out of its joint venture, mainly focused on sourcing biosimilars. India’s largest drug maker Sun Pharma has a sizable presence in China, mostly inherited as part of the acquisition of Ranbaxy.
Others like Lupin had from time to time spoken about ramping up its presence in China but not much action is seen on ground. According to industry estimates, the Chinese pharmaceutical market is set to double to $200 billion by 2020 and the push from the government may continue to attract commensurate investments from US and European drug giants. Earlier this month, Novartis opened a research centre in Shanghai with an investment of $1 billion.
With two other R&D centres – one in Cambridge and the other at its Basel, Switzerland headquarters, Shanghai will be the third main hub for drug research for the company.
