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BUSINESS
CHEMEXPLORER
LILLY DROPS AN
ANCHOR IN SHANGHAI
Senior scientists staff new office COORDINATING R&D in China
JEAN-FRANÇOIS TREMBLAY, C&EN HONG KONG
LAST MONTH, a group of senior scientists
from Eli Lilly & Co. started working out of
an office in Shanghai’s Zhangjiang Hi-Tech
Park. Rather than do research themselves,
they are there to provide scientific leadership
to the Chinese firms that Lilly has
tasked with a steadily expanding range of
R&D activities.
“Large multinational drug companies
conduct research in China either by building
their own brick-and-mortar R&D
centers or by building relationships with
contract research organizations,” says
Robert W. Armstrong, a Lilly vice president
in charge of global external R&D. “We are
in the second camp.”
Non-U.S. pharmaceutical companies,
including Novartis, AstraZeneca, Roche,
and GlaxoSmithKline, have built or are in
the process of building their own R&D centers
in China. U.S. drug firms such as Lilly,
Pfizer, and Merck & Co. have generally opted
to take advantage of China’s scientists
by collaborating with third parties there.
Armstrong does not see the new coordination
facility in Shanghai as contradicting
Lilly’s aversion to brick-and-mortar investments
in Chinese research. As the range
and complexity of the R&D services Lilly
purchased in China expanded, the need for
a permanent scientific presence became
clear. For one thing, Lilly can now better
respond when a research partner in China
comes up with lab results that are at odds
with what scientists at the firm’s Indianapolis
headquarters had expected.
More important, the presence of experienced
Lilly scientists in China improves the
firm’s ability to identify promising research
partners. “If we stay in Indiana, we’re going
to be closing ourselves to the ideas that are
elsewhere,” says William W. Chin, the Indianapolis-based
vice president in charge of
discovery research and clinical investigation.
Lilly was motivated to come to China,
Armstrong points out, because both patients
and shareholders are demanding
improvements in Lilly’s ability to bring innovative
drugs to the market in a cost-efficient
way. “We see partnerships as a mechanism
to learn how to do things differently,
not as a substitute for the things that we do
right now” in the U.S., Armstrong says.
Important for Lilly is that the availability
of drug development services in China
is steadily expanding. The same week that
Lilly inaugurated its R&D center, three
others opened biology service facilities in
Shanghai: the U.S. firm Charles River; the
Chinese company PharmaLegacy Laboratories;
and Medicilon-MPI, a joint venture
between China’s Shanghai Medicilon and
Michigan-based MPI Research. Darren Ji,
chief executive of PharmaLegacy, says his
REACHING OUT
In China, Lilly
collaborates with
local research
companies such
as Shanghai
ChemExplorer,
an employee of
which is pictured
here.
company provides preclinical
specialty pharmacology
services.
For the five years
beginning in 2007 and
running until 2011,
Lilly will spend a minimum
of $100 million
on third-party research
in China, says Tony Y.
Zhang, the managing
director of the new Shanghai center who
relocated to China from the U.S. earlier
this year.
THROUGH ITS LOCAL PARTNERS, Lilly
already employs 300 scientists in China, the
majority of them chemists, Zhang points
out. Shanghai ChemExplorer, a member
of the Shangpharma contract research and
manufacturing group, works exclusively on
Lilly projects. About a year ago, Lilly set up
a profit-sharing research collaboration with
Shanghai-based Hutchison MediPharma
(C&EN, Oct. 22, 2007, page 39).
Lilly’s investment in the coordination
center is modest, Zhang acknowledges. It
consists of 5,500 sq ft of office space essentially
devoid of scientific instruments.
Zhang says Lilly’s scientists will make use
of data and instrumentation supplied by
the company’s Chinese partners. There are
10 Lilly senior scientists from Indianapolis
in China now, and Zhang expects that number
could increase to 30.
The group that Lilly has established
in China may be small in number, but it
is staffed with “drug hunters,” Chin says.
These are scientists who over the years
have demonstrated the ability to tease
promising drug candidates out of the
reams of data that discovery labs generate
every day. For example, before Peter A.
Lander relocated to Shanghai to become
Lilly’s head of discovery chemistry in Asia,
he was in charge of drug lead generation at
the firm’s headquarters.
Armstrong insists that Lilly employees
in the U.S. don’t feel threatened by the company’s
expansion in China. In response to
cost pressure, “we have been challenged to
do things differently,” he says. “China is part
of a transformation agenda for our R&D.”
According to Armstrong’s colleague
Chin, merely cutting expenses and employees
is not a smart way to contain the cost of
bringing new drugs to market. “We have to
have an innovation engine,” he says. “We
cannot save our way into the new drugs for
our patients of the future.” ■
WWW.CEN-ONLINE.ORG 15 NOVEMBER 3, 2008