Covance Advances on its Shanghai Lab
Interestingly, Covance said its increased presence in China was due to the higher level of pharmaceutical activity there. Usually, companies invest in China because of some combination of low costs or interest in the countryâ€™s growing market for drugs. Because China is expected to be the fifth largest market in the world by 2010 â€“ just three years away â€“ Covance felt the need to be a part of this vital area of pharmaceutical enterprise, to be close to the action. Covance is a $4.5 billion contract research organization with revenues of $1.5 billion annually.
During the last week, we noted that big pharma was choosing to build new facilities in China rather than India (see story). Then Novartis (NVS), which just last year announced its intention to make major investments in both countries, reneged on its commitment to India (see story). The cause underlying both stories was poor patent protection in India. For Novartis, the decision was made after the company lost a patent infringement suit against a generic version of leukemia drug Gleevec.
Also in the news last week, Beijing Med-Pharm (BJGP) raised $31 million that will allow the company to continue its acquisitive ways (see story), China Shenghuo (KUN) reported much improved Q2 results (see story), Optimer Pharma (OPTR) entered talks with C&O Pharma (of Taiwan, Hong Kong and China) to discuss future collaborations (see story), and China decided to allow its citizens the right to invest in Hong Kong-listed stocks (see story). The change may have the effect of making Hong Kong a more-preferred exchange for biomedical enterprises that are planning their IPOs.