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Merck pledges $1.5bn for China expansion

Revels plans for a new drug discovery and development facility in Beijing

Merck & Co has joined the ranks of pharma companies setting up R&D locations in China, saying it will set up a drug discovery and development facility in Beijing as part of a $1.5bn investment programme in the country over the next five years.

The 47,000 sq.ft. facility will serve as the company's R&D headquarters in Asia and once the first phase of construction is completed in 2014 will employ around 600 staff. It will concentrate on drug discovery, translational research, clinical development, regulatory affairs and external scientific research programmes, according to Merck.

Peter Kim, president of Merck Research Laboratories, said the investment programme was part of the company's strategy of "building capabilities and relationships to succeed in fast growing geographic regions".

China is currently the third-largest pharmaceutical market in the world - tipped to grow to $60bn this year according to KPMG - and pharma companies are attracted by the size of its (aging and rapidly urbanising) population, as well as the immense spending power of the Chinese government. China is also tipped to overtake Japan as the world's second-largest market by 2015.

Merck is following a path trodden by the likes of Novartis, which set aside $1bn for investment in its R&D unit in Shanghai in 2009, as well as AstraZeneca, GlaxoSmithKline, Sanofi and Johnson & Johnson, which have been announcing incremental investments in their Chinese R&D capacity in the last couple of years.

"Merck conducts research in a broad range of therapeutic categories including cardiovascular disease and diabetes, which are becoming increasingly prevalent in China," said the company in a statement.

Many companies are layering R&D investment in China on top of existing manufacturing operations, and Merck (which operates as MSD outside North America) is no exception. Along with various other manufacturing facilities around the country, it started construction of a $172m pharmaceutical packaging facility in Hangzhou last year which is due to come online in 2012.

The company has also been forging business relationships with local companies, such as an alliance with Chongqing Zhifei Biological Products earlier this year to promote its vaccines in China.

6th December 2011

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