A pharmacist displays Pfizer medicines. (Photo/Xinhua)
Two global pharmaceutical companies recently set up joint ventures with Chinese partners to access the mainland market, eyeing the great potential of the Chinese generic drug sector, the Shanghai-based Oriental Morning Post reports.
On Sept. 13, the world's largest drug company Pfizer and China's Zhejiang Hisun Pharmaceutical Co jointly set up a new company based in the city of Hangzhou.
With a registered capital of US$250 million, Hisun owns a 51% stake in the joint venture, while Pfizer owns 49%. The new company has factories in Fuyang, Zhejiang province and operations in Shanghai and Hangzhou.
A day earlier, the world's second-largest drug company Merck & Co and China's Simcere Pharmaceutical Group had announced the start of their joint venture's operations in Shanghai.
The Hisun-Pfizer joint venture said it would mainly focus on developing and producing drugs whose patents had expired, including generic drugs.
Pfizer had previously forecast that China would become the world's second-largest drug market in 2015, with generic drugs taking a 70% market share, according to the newspaper.
The deal comes at a time when Pfizer's sales are declining because of the expiration of several of its drug patents, including Lipitor, a drug that helps lower cholesterol, the patent on which expired at the end of 2011. Analysts said Pfizer's 50% annual decline in net profits during the fourth quarter last year was partly caused by the 24% decline in sales of Lipitor during that period.
Meanwhile, the joint venture would help Hisun realize its goal of moving to manufacturing drugs from manufacturing pharmaceutical ingredients and to expand its overseas market, the newspaper reported.
Wu Hufang, chief researcher with a Chinese-language website specializing in health issues, said most Chinese generic drugs for export were produced by foreign-invested manufacturers in China.
According to Wu Xiaobin, the country manager of Pfizer China, the lower quality of products and foreign countries' tough import standards were preventing domestic drug manufacturers from exporting freely. Wu expects Pfizer's participation in the joint venture to improve the situation and said Pfizer's global purchasing network will enable the export of generic drugs produced in China.
On the other hand, Merck's venture, which includes drug factories, was aimed at lowering costs and better penetrating the Chinese market, an industry insider told the newspaper.
Through Simcere's sales network, Merck's products could be distributed in China's second- and third-tier cities, the source said.