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商业周刊 2005年12月19日

Lifesaver

Eli Lilly and Company's Gino Santini has a dream: One day China will be the major engine for his company's expansion.

The vice-president of the US pharmaceutical firm tells China Business Weekly that this dream will become reality not only because of the country's huge market potential China is likely to become the world's third largest market within the next 10 years but also because of the government's increasing emphasis on intellectual property rights (IPR) protection.

For firms like Eli Lilly and Company, IPR protection is key to their business expansion, Santini says. "Without sufficient IPR protection, our business will be exposed to huge risks."

To develop a new drug usually costs Lilly about US$1 billion, but counterfeiters do not need to spend a cent to gear up to the same market, he says.

When Lilly launched Cialis, an erectile dysfunction drug, on the Chinese market in May this year, some Chinese firms began selling "similar" drugs. The promise of a hefty profit is enough to lure companies into counterfeiting.

Even so, Santini says he is pleased with the progress China has made in IPR protection. The central government has also pledged to take further actions to fight counterfeiting.

"We are looking forward to seeing more progress," Santini adds.

Lilly arrived in China as long ago as 1918, when it opened its first overseas representative office in Shanghai, an important step towards globalization.

The company re-entered China in 1993, and now has a research centre in Shanghai and a pharmaceuticals manufacturing plant in Suzhou, East China's Jiangsu Province, employing 800 people.

Last year Lilly's global revenues stood at US$13.8 billion, but its China sales accounted for less than 1 per cent of that.

"The size of today's market is not a good indication of what we could do in the future," Santini says, he believes Lilly's China turnover is bound to increase.

China is a strategic market, because the country's economy is growing rapidly. As the economy grows, more and more people are able to access modern medicine.

"We expect the China business will double within the next five years," Santini says.

To achieve this, Lilly will increase investment in research and development (R&D) in China, through co-operation with domestic institutions, he says.

The company has 230 chemists in China working on the early stages of drug development the largest of its R&D teams overseas.

It has already launched many new products in China and the number of its products on the Chinese market doubled over the last three years. "We will launch more in the coming 5 to 10 years," Santini promises.

Lilly is one of the industry's leaders in R&D, the vice-president says the company regards R&D as the heart of the business and the soul of the enterprise.

Last year, Lilly spent 19 per cent of its sales, US$2.7 billion, on R&D - the industry average is about 15 per cent.

"Our strategy in China is the same as that across the world: to provide innovative products for patients who need them," Santini says.

Lilly's goal, he continues, is to become a loyal corporate citizen and the company is committed to providing answers to some of the world's most urgent medical needs.

"It is our philosophy to be a value-added healthcare partner in China investing for the long-term by providing answers that matter," he says.

Lilly have been working with the Chinese Government on physician and public health education programs. In August Lilly signed an agreement to transfer antibiotics manufacturing technology to Hisun Pharmaceutical Co Ltd, one of China's top pharmaceutical manufacturers.

The transfer of technology is part of Lilly's global commitment to the World Health Organization to address Multi-Drug Resistant Tuberculosis (MDR-TB). The co-operation will make Hisun the second company, after Lilly, able to produce Capreomycin, a key antibiotic developed by Lilly to combat Tuberculosis (TB).

The co-operation will increase the supply and potentially reduce the production costs of Capreomycin for patients in China and around the world, Santini says.

MDR-TB is a lethal form of Tuberculosis because of its resistance to commonly used medicines. Each year roughly 400,000 new cases of MDR-TB occur in more than 100 countries including China. The WHO estimates that the average MDR-TB patient infects up to 20 other people in his or her lifetime.

According to China's Ministry of Health, China has the second highest number of TB cases in the world, after India. It is estimated that more than one-third of the world's TB cases are in China, with 130,000 fatalities each year. In China, 40 per cent of TB patients are resistant to at least one drug, 10 per cent of whom will become MDR-TB patients.

Lilly developed and holds patents for Cycloserine and Capreomycin, two of the five key antibiotics for MDR-TB. Lilly is also involved in transferring manufacturing technology for anti-tuberculosis drugs to pharmaceutical companies in South Africa and India, the most severely MDR-TB affected country in the world.