Bloomberg News

Glaxo to Hire Hundreds in China as Reforms Widen Drug Access

March 05, 2012

GlaxoSmithKline Plc (GSK) is adding new products in China and hiring “a few hundred” more salespeople to promote them, betting that health-care reforms will widen access to drugs and make up for state-mandated price cuts.

The drugmaker will expand its sales force of 4,000 in China this year after hiring more than 700 people in 2011, Chief Executive Officer Andrew Witty said today in Beijing.

Glaxo of London is in talks with China’s government to introduce cervical cancer and rotavirus vaccines after winning approval to sell three new drugs last year, including prostate treatment Avodart and Volibris for hypertension, Witty said. The country, which ranks as the world’s fastest-growing market for medicines, is expanding the list of subsidized drugs and centralizing purchases to cut prices and improve access for its 1.3 billion people.

“Nobody likes prices cuts,” Witty said in an interview. “But in the overarching context, this is a growing marketplace and the government’s initiatives are not just to reduce prices but also to increase access.”

Glaxo is “very open” to acquisitions to boost its foothold in China, Witty said, after the company bought Nanjing MeiRui Pharma Co. for about $70 million in cash in December 2010. The Chinese company’s products include a treatment for enlarged prostate and overactive bladder syndrome.

Prices Overheated

“Of course M&A is part of the agenda for China,” he said. “One of the reasons we’ve done less M&A in the last 18 months is because we think valuations are overheated. Certainly that can be true in China, but it’s less true in China than some other places, like India for example.”

Drug spending in China is forecast to grow at a compound annual rate of 19 percent to 22 percent in the five years to 2015, reaching as much as $125 billion, according to an IMS Health Inc. (RX) report published in May 2011. That’s the fastest growth rate globally, according to the Danbury, Connecticut- based researcher.

China makes up 3 percent of the drugmaker’s sales, ahead of Germany and Italy, and is “rapidly coming up the ranks,” Witty said. The U.S. is the largest single market for Glaxo, accounting for 29 percent of revenue.

“China is clearly one of our top two or three priorities as a corporation,” said Witty, who has served as an adviser to the southern Chinese province of Guangzhou.

Glaxo shares rose 1 percent to 1,404 pence in London trading.

Local Research

One goal for the company in the next five to seven years is the introduction of “high-technology” vaccines, such as those aimed at preventing cancers, according to Witty.

Glaxo has also made a push to conduct more research locally, hiring 450 researchers in Shanghai to identify new drug targets, including some derived from traditional Chinese medicine. Despite the government’s current focus on cutting drug prices, Witty said he expects the company will benefit from those investments.

“I’m confident we’re going to see that,” Witty said. “Every dialogue I’ve had with the Chinese government, there’s a really strong awareness and interest in continued access to innovation, and a strong understanding about reward for innovation.”

To contact Bloomberg News staff for this story: Daryl Loo in Beijing at dloo7@bloomberg.net; Stephen Engle in Beijing at sengle1@bloomberg.net

To contact the editor responsible for this story: Lena Lee at llee42@bloomberg.net


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