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The world's ninth largest medicine company Eli Lilly and Company (Lilly) decided to stick to its core strategy of focusing on research and development (R&D).

"One of our strategic bets over the coming years is expansion in the emerging markets - which enables us to take advantage of the fastest-growing healthcare markets. There is no better example than China," said Lilly global CEO John C. Lechleiter.

China's compound annual growth rate is forecasted to be about four times faster than that of markets in the US and Europe between 2007 and 2012.

The country's population is becoming older, more urban, and wealthier - meaning there's a rising demand for healthcare.

Lilly announced it will still put 20 percent of its sales revenue into R&D as it has done every year, despite the global financial turmoil and a lot of consolidations and acquisition activity by its peers. And it will launch 15 new products and line extensions in the China market over the next five years. Most pharmaceutical companies typically put 15 percent of their turnover into R&D.

The company's China business tactic coincides with its global strategy and R&D is "the heart of the business, the soul of the enterprise", said Lechleiter.

The pharmaceutical giant has relied on China for critical early-stage development for many years and opened its R&D headquarters in China on Oct 15, 2008 in Shanghai.

Lilly's R&D activities are performed by its own worldwide laboratories and through collaborations with various scientific organizations.

It has increased its cooperation with local partners on R&D in China, adopting a unique model, which the company calls Fully Integrated Pharmaceutical Network.

Lilly started collaboration with Shanghai ChemExplorer as early as 2003. Shanghai ChemExplorer now boasts a dedicated team of 300 scientists working exclusively for Lilly. The two sides also set up two subsidiaries, PharmExplorer and BioExplorer, to engage in basic research.

The company cooperates with Wuxi AppTec, a Wuxi, Jiangsu-based pharmaceutical firm, which provides drug discovery to manufacturing services for Lilly.

Lilly started working with the Chinese medicine firm Hutchison MediPharma in 2007. The partners joined hands to develop anti-cancer drugs targeted at the global market and share intellectual property rights of the drugs.

The China R&D headquarters in Shanghai coordinates Lilly's R&D business in China, including the collaboration with the three Chinese corporate partners and co-developing projects with a group of universities and scientific institutions.

"We will recruit more R&D talent in China," said Lechleiter.

There are hundreds of Chinese working in Lilly's global R&D center in Indiana, US, he added.

Lechleiter stressed that Lilly is well-positioned to address patient needs in China, explaining that Lilly's R&D focusing on designing drugs to deal with untreated ailments such as cancer, diabetes, mental illness, chronic inflammation, autoimmune diseases and cardiovascular disease. These diseases represent one of the fastest-growing pharmaceutical markets in China.

The US-based company is to double its sales force this year in China - from about 1,000 to 2,000 - to meet with booming demand here. It is also doing campus recruiting right now across China to expand its operations team significantly. So far Lilly's has more than 1,500 employees in the country.

Lilly held a groundbreaking ceremony for the expansion of its manufacturing facility in Suzhou on March 19.

The company set up a factory in Suzhou Industrial Park in 1996, a manufacturing facility to meet domestic demands and for producing exports bound for Greece. It also acted as a packaging and distribution center for Asian and Pacific areas.

The new facility, with investment exceeding US$40 million, is meant to help satisfy the ever-increasing local demand for insulin and cephalosporin products. It will provide 200 jobs for Suzhou.

"Our goal is to become the fastest-growing pharmaceutical company in China," said Lechleiter.

Lilly's focus on R&D differs from its rivals, whose strategies center around mergers and acquisitions.

The global medical sector witnessed several major acquisitions, such as Pfizer and Wyeth, Merck and Schering-Plough, and Roche and Genentech, over the last two months.

"We believe that large scale combinations do not create sustainable long-term value for share holders. Lilly will continue to pursue our strategy - one that has innovation at its core," said Lechleiter.

(China Daily April 13, 2009)

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