Editor’s note: The following article originates from coverage of the BioBay Investor Forum 2008, presented by ChinaBio® on August 27/28 in Suzhou. It was hosted by BioBay, the life science park in Suzhou. The article is reprinted with permission from Interfax China. Interfax China pharma news is located at www.interfax.cn/news/pharma.

Eastern China's Yangtze River Delta is expected to host the single largest cluster of contract research organizations (CRO) by the year 2015, according to an industry insider at the BioBay Investor Forum 2008 in Suzhou on Aug. 28.

"By 2015, China will be ahead of India in chemistry research and development even though India's drug manufacturing sector is stronger than China's. I think the largest cluster of CRO activities in the world will converge in the Yangtze River Delta, comprising Shanghai and Suzhou cities," said Kewen Jin, chief executive officer of Charles River Laboratories Preclinical Services-China (NYSE: CRL).

At present, most of China's leading CRO companies, including Wuxi PharmaTech Co. Ltd. (NYSE: WX), Sundia MediTech Co. Ltd., Shanghai Medicilon Inc. and ShangPharma Co. Ltd., are located in the Yangtze River Delta region. They provide CRO services, mainly in chemical drug R&D, to multinational pharmaceutical companies in China.

The Yangtze River Delta includes southern Jiangsu Province, northern Zhejiang Province as well as Shanghai. Last year, the region achieved a gross domestic product in excess of $2 trillion, contributing approximately 21 percent to the national economy's figure.

Meanwhile, since 2002, Shanghai's Zhangjiang High-tech Park has attracted seven of the world's largest pharmaceutical companies, namely Roche (OTC Pink Sheets: RHHBY), Novartis (NYSE: NVS), AstraZeneca (NYSE: AZN), GSK (NYSE: GSK), Eli Lilly (NYSE: LLY), Johnson & Johnson (NYSE: JNJ) and Pfizer (NYSE: PFE) to establish their R&D centers in the area. Another two major pharmaceutical giants, Abbott (NYSE: ABT) and Sanofi-Aventis (NYSE: SNY) will be setting up their R&D centers in Zhangjiang High-tech Park in October and November respectively this year.

"In another seven to eight years, the entire Yangtze River Delta, comprising cities including Shanghai, along with nearby Suzhou and Hangzhou, will also emerge to become the world's second largest R&D base for multinational drug companies, second only to the New York and New Jersey region in northeast United States," Jin said.

Declining R&D productivity in other countries, China's fast-growing economy and a vast talent pool are key reasons why multinational companies have set up R&D centers in China. By 2015, the majority of the world's top 20 pharmaceutical companies will have R&D centers in the Yangtze River Delta region, according to Jin.

Shanghai-based Charles River Laboratories Preclinical Services-China is a joint venture between Charles River Laboratories International Inc., one of the world's largest drug development service providers, and Shanghai BioExplorer Co. Ltd., a company engaged in pre-clinical CRO services.

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