Already a Bloomberg.com user?
Sign in with the same account.
Johnson & Johnson
Johnson & Johnson (JNJ) is “very serious” about acquiring assets in China to treat conditions such as mental disease and cancer, to help it match or outpace growth in the country’s pharmaceuticals market, an executive said.
The company is interested in buying Chinese companies or products in mental health, oncology, immunology, vaccines and over-the-counter drugs where the world’s largest health-care products company wants to build its portfolio, Thad Huston, president of J&J’s Xian-Janssen Pharmaceutical Ltd. unit, said.
“We want to find the right deals, companies that share the same values as Johnson & Johnson, and that provide innovative products,” Huston said in an interview in Beijing yesterday. “We’re not interested in doing a generic or traditional Chinese medicine acquisition 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. report published in May 2011. That’s the fastest growth rate globally, according to the Danbury, Connecticut- based researcher.
“Our aspiration is to grow at or above market rate” of 17 percent annually, said Huston. Xian-Janssen also wants to come up with new products through research and development tie-ups locally, including with China’s Tsinghua University and Beijing- based drugs research startup BeiGene Ltd., he said.
J&J plans to introduce two to three new drugs to China every year, and this March started selling Invega Sustenna, a monthly injection to treat schizophrenia. Chinese social stigma due to families’ embarrassment about mental illnesses means most patients do not get treated, Huston said.
About 170 million people in China are afflicted by some form of mental illness, with more than 16 million suffering severe mental health conditions, China Daily reported yesterday, citing 2009 data from China’s National Center for Mental Health. About 20,000 psychiatrists serve China’s 1.3 billion population, one-fourth of the international level, China Daily said, citing the Health Ministry.
“There is a Chinese saying that ’what’s in the family should stay in the family’, and so problems aren’t really discussed,” said Huston, who moved to Beijing to manage Xian- Janssen in September 2010. “When you have over 10 million patients and about 13 percent get treatment consistently, there is a huge need and it’s where we can make a huge difference.”
The company works with local media, and patient groups to run educational programs and projects to improve rural access to treatments. It also partners the Ministry of Health to raise doctors’ awareness, and is making a strong push for the drug to be reimbursable by public health insurance, Huston said.
China’s efforts to cut drug prices to bring down health- care costs also mean Western drug companies can no longer rely on just hiring more sales representatives to grow in the country, Huston said.
Pharmaceutical companies hired thousands of sales representatives in recent years in a bid to expand sales in China, and this growth “is probably not a sustainable model partly due to the pricing pressure,” he said.
“Price cuts affect everyone and it has slowed our growth (JNJ). But we’ve been very focused on bringing in more innovative products, and as the portfolio shifts, we think we can get back to even more stronger levels of growth despite the pricing challenges,” Huston said.
To contact Bloomberg News staff for this story: Daryl Loo in Beijing at firstname.lastname@example.org
To contact the editor responsible for this story: Jason Gale at email@example.com