[Ip-health] GSK invests in China -- notwithstanding industry concerns over IP rules

[robert weissman]

In case anyone needs it, here is further evidence that domestic
intellectual property regimes in developing countries have very little
if any correlation with, or connection to, brand-name pharmaceutical
companies' investment location decisions.

Today, the Financial Times reports on a decision by GlaxoSmithKline to
invest $100 million in pharmaceutical R&D in China. Not in production,
but in R&D. "Within five to ten years we will be moving from 'made in
China' to 'discovered in China'," the company's chair of R&D told the
Financial Times. The FT reports that the GSK move follows similar R&D
investment decisions by Roche, Novartis, AstraZeneca, NovoNordisk and
Sanofi-Aventis.

This story comes two days after USTR issued a Congressionally mandated
report on Chinese compliance with WTO obligations. USTR alleges a host
of IP transgressions by China -- and the United States has filed a case
against China at the WTO, arguing that nonenforcement of IP rules
violates WTO rules -- and details as well some specific
pharmaceutical-related concerns.

Somehow, Big Pharma isn't letting these enforcement concerns interfere
with its investment decisions.

That is because, the enormous propaganda by Pharma and its allies
notwithstanding, the industry undertakes R&D with an eye to the global
market. New drugs invented in China are going to be sold primarily in
the rich countries, just like new drugs invented in New Jersey. Whether
China offers all of the monopoly protections Pharma craves is not
relevant to the decision about where a company will locate R&D
facilities (or production facilities, for that matter).

A link to the USTR report is available here:

http://www.ustr.gov/Document_Library/Press_Releases/2007/December/USTR_Rele=
ases_2007_Report_to_Congress_on_Chinas_WTO_Compliance.html

Here is the key pharmaceuticals-related excerpt (page 81)

In the pharmaceuticals sector, the United States continues to have a
range of concerns. The United States has urged China to provide greater
protection against unfair commercial use of undisclosed test and other
data submitted by foreign pharmaceuticals companies seeking marketing
approval for their products. The United States has also encouraged China
to undertake a more robust system of patent linkage and to consider the
adoption of a system of patent term restoration. In addition, built-in
delays in China=92s marketing approval system for pharmaceuticals continue
to create incentives for counterfeiting, as does China=92s inadequate
regulatory oversight of the production of active pharmaceutical
ingredients by domestic chemical manufacturers. In 2007, as in prior
years, the United States sought to address all of these issues as part
of its broader effort to work with China to improve China=92s regulatory
regime for the pharmaceuticals sector.

The Financial Times story follows below.

Robert Weissman
Essential Action
rob@essential.org

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http://www.ft.com/cms/s/0/53ba9ea4-a91d-11dc-ad9e-0000779fd2ac.html?nclick_=
check=3D1

GSK to spend $100m on R&D in China

By Andrew Jack in London

Published: December 13 2007 02:00 | Last updated: December 13 2007 02:00

GlaxoSmithKline, the UK-based pharmaceutical company, plans to channel
$100m by the end of next year into a neuroscience research centre in
China which will become pivotal to its global drug development.

Ahead of GSK's first presentation focused on its emerging neuroscience
pipeline drugs which takes place today, Moncef Slaoui, the chairman of
research and development, has said the company will build a centre in
Shanghai responsible for all the company's work on neurodegenerative
diseases.

These include Alzheimer's, Parkinson's disease and multiple sclerosis.

"For us, China is not about outsourcing and cheap labour," he told the
Financial Times.

"We don't want to give them the crumbs. It's about different science. We
will link our fate to their fate. Within five to ten years we will be
moving from 'made in China' to 'discovered in China'."

The investment by GSK marks the latest move by a large western
pharmaceutical company into the country not just for low-cost
manufacturing, clinical trials and the growing sale of medicines, but
also to tap into its fast-expanding scientific research base.

Roche, Novartis, AstraZeneca, NovoNordisk and Sanofi-Aventis are all
investing in research and development in China, with the majority
concentrated in Shanghai.

The GSK decision comes after six months of research around the world,
co-ordinated by Mr Slaoui and designed to identify "the next seedbed for
future discoveries".

He said that "qualitatively and numerically, China came out on top",
especially in oncology and neurology.

His evaluation was based on the fact that there are an estimated 63,000
holders of scientific doctorates in China, including 35,000 who trained
in the west and have returned in recent years to their home country, as
well as on publications in journals such as Science, Cell and Neuron.

GSK has a centre in the Pudong district of Shanghai, which will be moved
to provide the basis for the new centre. It aims to hire 1,000
scientists within six years, making it a leading part of the group's
expanding Centre of Excellence for Drug Discovery for neuroscience,
itself one of four therapy areas on which Mr Slaoui plans to concentrate.

Neuroscience centres will continue to operate in Harlow in the UK for
neuroplasticity to treat pain, cognition and epilepsy; and in Verona,
Italy, for psychiatry, covering depression and anxiety.

In a research note yesterday, HSBC maintained its GSK rating as
"underweight", estimating the company would be able to provide positive
data on half of its 12 neuroscience experimental drugs in early stage
proof of principle trials.

Copyright The Financial Times Limited 2007