Eli Lilly and Co. and Public Companies and Drug discovery and Health Care & Life Sciences and Health Care & Insurance and Life Science & Biotech

Seeking growth, Lilly dumps Singapore for China

November 3, 2010

Singapore's out and China's in for Eli Lilly and Co.'s effort to grow sales internationally.

After recently deciding to close a research center in Singapore, the Indianapolis-based drugmaker has decided to open a diabetes research center in China in the second half of 2011, further ramping up its presence in what is now the world’s second-largest economy.

Lilly said last month it would close its 130-person Singapore center by year-end in order to cut costs.

But China’s growth is irresistible for Lilly—especially the growth in diabetes. The chronic disease affects roughly 90 million Chinese people—a number expected to grow rapidly as China’s population ages and becomes wealthier.

Lilly currently makes insulins and other medicines to help diabetics control their blood-sugar levels. But the basis of diabetes among Asian populations is different than among European populations, forcing Lilly to look for new therapies better suited to the Chinese.

Directing the center’s team of 100 scientists and support staff will be Bei Betty Zhang, a native of Shanghai and a graduate of the Indiana University School of Medicine, who serves as vice president of research for Lilly Research Laboratories in China.

Since the late 1990s, Lilly has invested nearly $300 million in China, including the launch of its Lilly Asian Ventures fund, which has invested $40 million into six biopharmaceutical companies in China.

Lilly also has a long-standing relationship with ShangPharma, which devotes 200 research scientists to working on Lilly projects, according to the China Bio Today website.

Lilly itself employs 2,800 people in China—more than double last year's figure.

Lilly has focused its efforts in emerging markets on six key countries: Brazil, China, India, Mexico, Russia and Turkey. The company doesn’t disclose total sales in those markets, but it says it has doubled revenue in the past five years and expects to double it again by the end of 2014.

China represents about 40 percent of that growth potential, according to an August presentation by Jacques Tapiero, president of Lilly’s emerging-markets business unit.

“Needless to say that we must win in China,” Tapiero said. In October, Lilly officials touted their international growth, particularly in China and Japan, as a trend that will help offset looming revenue loss from its drugs losing patent protection in the United States and Europe over the next three years.

When Lilly opened its Singapore center in 2002, it was still wary of intellectual-property law in China. But in the past five years, the company has aggressively expanded in China.

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