AstraZeneca Increases Push into China With New Joint Venture

AstraZeneca the drug maker is planning to ratchet up its already significant business in China through a joint venture in new drug development with a private equity fund that is state-backed.

Dizal Pharmaceutical, a standalone business, will be equally owned with the FIFF or Future Industry Investment Fund of China, which is owned in part by the China State Development and Investment Corporation, the two companies announced on Monday.

Through joining forces with a local company, AstraZeneca is looking to ride a new wave of regulatory reform in the pharmaceuticals sector in China and get the latest drugs to market quicker.

It joins together the desire of Beijing to see more drugs that are “discovered in China” as the country has targeted life sciences as another growth source.

The remit by FIIF in pharmaceuticals is to help promote local development of drugs and their manufacturing.

China is currently the second biggest drugs market in the world after just the U.S., with more cancer and diabetes cases than any other country, creating a huge opportunity for local as well as international companies.

Just recently, the Food and Drug Administration in China took steps to speed up the approval of new drugs, while funding agencies have moved faster to agree to payments for the innovative drugs, although with some tough negotiations when it comes to pricing.

The reforms triggered increased interest in China to be a center for developing drugs, reflected through a wave of licensing deals and initial public offerings with foreign pharmaceutical companies.

As far as the new joint venture, Dizal is to incorporate all technical and scientific capacity of the existing AstraZeneca Innovation Center China or ICC located in Shanghai, including the exclusive rights to three different drugs for pre-clinical development.

The CEO of Dizal will be the previous ICC head Xiaolin Zhang and all staff at ICC was invited to join the new business.

In exchange for the assets from AstraZeneca, FIIF is to provide the funding for developing and expertise in the establishing of strategic partnerships across China. No upfront payments are involved.

When the new drugs from Dizal reach the market, they will likely be given income from the joint venture in a form of a dividend, said the company spokesperson.

AstraZeneca considers China a bright spot as it continues to struggle with losses of patent protection on past medicines that were blockbusters and China new represents 15% of the company’s product sales.

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