Beyond the 'low-cost' tag

All these ventures, along with announcements, such as the ones by GSK and Eli Lilly to double revenue in emerging markets by 2015, point in the direction of an accelerated interest in investing huge amounts of money into China. Despite issues of language and cultural barriers, the country has succeeded in not just attracting investments from foreign companies, but also encouraged them to expand their capabilities in China.

One of the advantages of doing business in countries such as China and India remains the cost. According to IMAP Pharmaceuticals and Biotech Industry Global Report-2011, China has become the third largest market for pharmaceutical sales and is expected to grow at a pace of 20 percent annually. In recent years, however, pharma and biotech companies are increasingly looking beyond the cost arbitrage into the other perks offered by these countries. In China, a rising number of trained Chinese individuals returning from the West is proving to be a valuable asset to multinationals looking to start new ventures. Dr Wenyong Wang, MD, Merchant and Investment Banking, Burill, elaborated on this phenomena. "A large number of Chinese people who are have pursued higher education in the West and have been trained at large pharma companies in the US or Europe are coming back to home. This phenomena, popularly termed as sea turtles coming back home, is the reason for the availability of abundant good and experienced talent force found in China," he says.

The Chinese government is also playing a pivotal role by providing the right environment for these companies to invest. Favorable government policies, along with incremental government funding for state-sponsored projects, is serving as a catalyst for the local biotech industry. This has also led to enhanced collaborations between research universities and the industry resulting in an overall beneficial ecosystem for research and development.

In addition to forming their own operations , there has also been a rise in the number of collaborations between local biotechs in China and MNCs. Dr Hasit Joshipuria, VP, South Asia, and MD,GSK India, said most of GSK's vaccine ventures in China are through joint ventures. One of the examples is the exclusive cooperation agreement with Neptunus Interlong Bio-Technique (NIBT) for the co-development of influenza vaccines for Greater China in 2008.