From The EconomistÔºö A big Western company moves into China, but not for the usual reasons
When large Western firms set up shop in China, it is generally because they plan to take advantage of low-cost manufacturing of goods that contain the minimum possible amount of intellectual property that might be stolen. But that is not the case for Novartis, the world’s fourth-largest pharmaceutical company, which announced plans this week to invest $100m in a new research facility in Shanghai. Its motives are different and rather unusual.
At the moment most cutting-edge pharmaceutical research is carried out in western Europe, America, Israel and Japan, all of which have highly educated populations and strong intellectual-property laws. Other countries, including China, must content themselves with the less sophisticated back-end work of product development rather than basic research. Indeed, confidence in China’s domestic drugs industry is so low that the government is reluctant to approve clinical trials of anything not being used abroad. Novartis, however, hopes its new facility in Shanghai will eventually become one of its three big research hubs, alongside Cambridge, Massachusetts, and Basel in Switzerland”and ahead of its other facilities in Vienna, London, La Jolla, New Jersey, Tokyo and Singapore. [Full Text]