By Ben Hirschler
LONDON (Reuters) - AstraZeneca (L:AZN) aims to build up its already strong position in China by making and developing more medicines locally, and will invest more than $800 million (527.8 million pounds) in the country over the next 10 years, it said on Wednesday.
The British drugmaker's decision to step up investment in China, notably through a strategic alliance with local firm WuXi AppTec, chimes with Beijing's desire to see more treatments made in China.
The upside for AstraZeneca should be that locally produced medicines win faster approval from the China Food and Drug Administration, rather than being delayed for years as often happens with imported products.
"We don't want to have drugs that are approved in the U.S. and elsewhere and it then takes another five or six years to bring them to patients in China," Bahija Jallal, head of research at AstraZeneca's biotech division MedImmune, told Reuters.
China is the world's second biggest drugs market, behind the United States, and AstraZeneca punches above its weight in the country after several years of rapid growth, ranking number two after Pfizer (N:PFE).
The Chinese market, however, is challenging for multinational companies following an anti-corruption scandal in 2013 that snared GlaxoSmithKline (L:GSK) and a government drive to curb the over-prescribing of off-patent Western "branded generics".
In future foreign firms will be more reliant on new, patented medicines, analysts believe, although the scale of demand for such expensive products is uncertain in a country with only basic health insurance cover.
AstraZeneca hopes to position itself better for this new era with its new investments.
One element involves WuXi AppTec producing new biotech medicines locally in China, with AstraZeneca having the option to acquire WuXi's manufacturing capacity through an overall investment of $100 million.
AstraZeneca is also spending $50 million on developing traditional "small molecule" drugs in China and is creating a new global hub for pharmaceutical development in and around Shanghai.
The decision to increase local Chinese investment parallels similar moves made by AstraZeneca and other international drugmakers to invest in production in Russia - another country where the government is keen to build up local pharmaceutical capacity.
"In a few larger emerging markets that want to play a bigger role in meeting their healthcare needs locally, having a local capability can make a big difference," said AstraZeneca's head of international operations Mark Mallon.
"Russia and China are two markets that are important enough that we are ready to partner with governments and meet their desires."