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Lilly Sees Big Opportunity in China

publication date: Apr 1, 2011
author/source: Richard Daverman, PhD
John Lechlieter, CEO of Lilly (NYSE: LLY), said China currently accounts for just 2% of the company’s revenues, a figure that equates to about $230 million. But he believes the opportunities in China are great as the country becomes the second largest market for pharmaceuticals in the world. For that reason, Lilly is investing heavily in China.

According to Lechleiter, there are around 3000 pharmaceutical firms in China, none of whom currently hold more than a 2% share of the market. Multinational pharmas claim just 30% of China’s drug revenues, he said.

Lechleiter made his comments in a CNBC interview (see video clip), following a month-long visit to China. The trip gave him time, said Lechleiter, to visit China’s smaller cities, including new hospitals that have been built since China committed $125 billion to increasing healthcare coverage. He expects China’s progress in implementing healthcare reforms will be a “step-wise” process.

Lechleiter reported that Lilly has recently been granted SFDA approval for its osteoporosis drug Forteo. That is just one success for the company, which has plans to introduce 12 new drugs to the China market by the end of 2015.

As proof of Lilly’s commitment to China, Lechleiter mentioned the company’s Shanghai diabetes research center (see story). Announced in November 2010, the center will employ 100 researchers when it opens later this year.

In his review of China activities, Lechleiter did not mention Lilly’s commitment to research partnerships with innovative China companies. For several years before the R&D center announcement, Lilly declared it was following the partnership path rather than building a large in-house R&D operation in China. Lilly has established a China venture capital fund, which has dispensed $40 million at last recounting (see story), and it is working with Hutchison MediPharma on drugs that treat cancer and inflammatory diseases (see story).

Editor's Note:  Lechleiter also said that his month's stay in China has proven it is possible to run a Fortune 500 company from there.  Is this a prediction of the future?  Who will be first?  Greg Scott, Executive Editor


See our other articles on Lilly.

Disclosure: none.

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