beyondbrics

For all the news of growth slowdowns, drug companies still love EMs.

Merck, the US pharmaceutical giant, announced on Tuesday it is building a $1.5bn R&D facility in Beijing. The move follows comments on Monday from Miles White, Abbott chief executive, that companies need to “ride the wave of [EM] growth“.

Speaking at the Financial Times Global Pharmaceutical and Biotech conference in London, White said that emerging market economies such as China, Brazil and India would become increasingly important revenue drivers for drug and healthcare companies.

“We will be doing more of our R&D in other parts of the world [outside the US],” he told the conference. “You tend to put your investments where your revenues are.”

The Merck facility will open in 2014, and will consist of 47,000 sqm of office and laboratory space. It was described by the company as an “important milestone”.

This is not Merck’s first foray into China – the company has commercial headquarters in Shanghai and has manufacturing capabilities at other locations in the country.

Merck’s move certainly echoes the sentiments of Lars Rebien Sorensen, president and chief executive of Novo Nordisk. Sorensen said at the conference that drug companies considering a move into emerging economies “should invest for the long-term or you shouldn’t invest at all, and if you’re going to invest you should make a sizeable investment over time.”

Merck’s $1.5bn is certainly that.

Related reading:
Pharma still bullish on EMs