Novartis sees trust as path to profit in Asia
feelings of trust and respect in emerging Asian markets. These
include researching locally endemic diseases and selling drugs at
cost price.
That was the claim of Paul Herrling, head of corporate research at Novartis, while speaking at The Economist's 13th Annual Pharmaceutical Conference, held this week in London, UK. As the pharma industry faces soaring R&D costs - it is now estimated to cost over $800m (€610m) per new drug - Novartis doesn't make any profit from its biggest selling drug, Herrling revealed this week. Coartem (artemether-lumefantrine) is designed, as part of a collaboration with Chinese scientists, to treat malaria and is based on an Asian herb, which studies indicate was used to treat the disease more than 2,000 years ago. Herrling explained that the goal of the collaboration with the Shanghai Institute for Materia Medica (SIMM) was "drug discovery with purified natural compounds from plants and fungi used in traditional Chinese Medicine." So far, the company has screened nearly 3000 natural compounds with up to nine of them being possible candidates for licensing by Novartis. Although extended in 2004, the collaboration is currently set to end this year. With 63m treatments delivered last year, Coartem is Novartis' biggest drug but makes no profit. Novartis hopes that selling its drugs at cost price will engender trust in emerging markets and lead to increased prominence in the area. Novartis hopes the scheme will eventually leave the company well positioned in the high growth pharma market in this region. As part of the strategy, the company set up the Novartis Institute for Tropical Disease in Singapore in 2003. The centre focuses on drug development for tuberculosis, malaria and dengue fever. Herrling said: "It has put us on the map; all the countries in south-east Asia want to talk to us now." Explaining Novartis' approach further, he continued: "Pharma companies traditionally invested only where large markets existed. However, developed societies have evolved to accept some responsibility for the developing world." He continued: "Pharma shareholders accept that part of the profits are allocated to alleviate the access to medicine problem. "In developing countries with endemic disease, treatments will be made available to poor patients, without profit." According to Herrling, Novartis are the only company doing R&D for dengue fever. He pointed out that there are 50m cases of Dengue each year with 2.5bn people at risk and the problem is growing. He went on to explain that there are currently no antiviral treatments for Dengue available and although vaccines are in clinical development, he described them as "problematic." Before setting up R&D centres, Novartis believe the first step to gaining the trust of local scientists is through the personal touch; the company sends 10 to 15 of its scientists to meet with local researchers and present work on topics of mutual interest. "This opens doors to new areas of interest that Novartis could invest in," said Herrling. He explained that the symposiums usually attract the national minister of health or minister of science and so allows access to authorities for Novartis' local business. Novartis has now dedicated around $200m to such external collaborations, many of which are now in Asia. The first Asian collaboration was set up in Japan and focuses on cardiovascular research. Since then the company has held talks with scientists in Korea, Russia, Taiwan and, most recently, Indonesia.
