Wyeth threatens to move to India
Kandy Wong in Hainan
United States pharmaceutical and health-care firm Wyeth said if the central government failed to speed up the regulatory procedures for approving new drugs, the company would consider shifting its Asian base to India.
Wyeth plans to expand its Asian drugs research operation this year - doubling the number of researchers to 2,400 - with China accounting for nearly 30 per cent.
Sherry Ku, Wyeth's senior director in China, said on the sidelines of a pharmaceutical conference in Hainan that the company had not drawn up a timetable for shifting to India but, if the mainland regulatory environment did not improve, such a move would be no surprise.
She was reluctant to disclose the exact amount of the company's investment, saying only that Wyeth had poured billions of yuan into the mainland in the past 16 years.
Wyeth China has two branches - Wyeth Pharmaceutical Co set up in 1991 and Shanghai Wyeth Nutritional Co established in 1995 - with a total investment of US$53.9 million.
According to company data, approval for new drug sales and research in the US, Britain, Japan, Korea, Hong Kong and Singapore takes about a month, while approval in the mainland takes up to nine months. In India, it takes between two weeks and three months.
Peter Siris, the managing director of US-based Guerilla Capital Management, said the main problem for the mainland pharmaceutical industry was low profitability due to the regulations governing the launch of new drugs.
Mainland companies that had listed in the US and Hong Kong were trading at single-digit price-earnings ratios while some of their global rivals were trading at 20 to 30 times, Mr Siris said. 'Consumers are still not confident about new Chinese drugs as many copies come onto the market quickly after a new product goes on sale,' he said.
The National Development and Reform Commission has enforced price reductions on new drugs 22 times since 2004 to help those in need of treatment.
However, Yu Mingde, a deputy director of China Pharmaceutical Enterprises Management Association, urged the government to halt the price-cutting policy as it reduced the drugmakers' profitability, directly affecting research and development work on new drugs.
According to association figures, of the country's top five drug companies, Tianjin Pharmaceutical Group suffered a net loss of 37 per cent, while Shanghai Pharmaceutical Group and Guangzhou Pharmaceutical Group suffered losses of 9.9 per cent and 16 per cent, respectively. The other leading drugmakers are China National Medicines Corp and Northern Pharmacy in Heilongjiang.