Eli Lilly has own strategy to extend its reach in China - CEO
By Lizzy Li
Shanghai. March 28. INTERFAX-CHINA - Eli Lilly, the U.S. drug company that brought the world Prozac, will continue to expand it presence in the Chinese drug market by growing on a number of fronts.
Last year alone, the company launched five new products, exhibiting annual market growth of 28 percent. The estimated number of Chinese consumers of Eli Lilly products in 2005 stands at around 2.5 million, Sidney Taurel, board chairman and chief executive officer of Eli Lilly, told Interfax at the sideline of Marketing, Innovation and Business Growth conference held by China Europe International Business School in Shanghai Wednesday.
"We hope we will have 15 million people taking our drugs in 2015," Taurel said, adding that the market should expect more products from the company in the next few years.
Taurel also gave insight into what sets the company apart from the pack and its strategies, both in research and development and in business, for future growth.
Most other multinational pharmaceutical companies seem intent on establishing their own R & D centers in China, in order to take advantage of local cost advantages. In comparison, Eli Lilly has chosen instead to collaborate with local drug discovery and development companies as well as local CROs (contract research organization), allowing it to share the risks inherent in R & D.
"Development is very risky. If [our partners] achieve positive results, we pay them on the basis of their success. That's how we share the risk,"
Taurel said. "But we also share the rewards. We pay them on the basis of milestones. When the drug is launched on the market, they get the royalties on the sales of the drug."
Last September, Eli Lilly signed a strategic agreement with Hutchison Medipharma, the R & D-focused subsidiary of Hutchison China MediTech, on pre-clinical collaboration in the discovery and development of pharmaceutical compounds focused on cancers and inflammation.
In addition, the company has a number of important ongoing collaborations with research companies or institutions. "Our partners include BioExplorer, PharmExplorer, who are doing pharmaceutical and biology development services," Taurel said. "We also leverage our venture capital fund, Lilly Venture Asia, with its investment in Bioveda [a venture capital fund focused on the Chinese life sciences sector] and now we are looking at some other direct investments, so we expect to have more investments in the next few months.
Collaboration may be the cornerstone of Eli Lilly's growth plans, but when pressed on the company's strategy in tackling the under-regulated Chinese pharmaceutical distribution sector, Taurel expressed his concern about ethical business conduct, hinting that the future may see more sales force expansion for Eli Lilly. "At this stage, we are more interested in growing organically," he said.
According to Taurel, the company employs around 850 sales representatives in China at that moment, but for an expanding company with ambitious plans, that may not be enough. "To achieve our [2015] target, we will have to recruit more sales representatives."
However, Taurel hailed the recent integration of the State Food and Drug Administration into the Ministry of Health. "We believe that is good, as in every country, typically, regulatory authorities for pharmaceutical and medical instruments are subordinated to the MoH. Their goals are the same and the convergence of the two administrations will improve coordination."
