AstraZeneca Expands R&D in China to Boost Drug Discovery

AstraZeneca Plc (AZN), which has the worst-performing stock this year among Europe’s biggest drugmakers, will work with a research company in China to speed discovery of new medicines.

The partnership with Beijing-based Pharmaron will add “a few hundred” scientists to AstraZeneca’s 300-strong team in China, Martin Mackay, AstraZeneca’s president of global R&D, said in an interview in Shanghai. The move marks the London- based company’s biggest expansion in research in the world’s fastest-growing pharmaceuticals market.

AstraZeneca may seek similar tie ups to help bolster its pipeline of experimental medicines after expiring patents on its top-selling products caused its share price to fall. Chief Executive Officer Pascal Soriot suspended share buybacks on Oct. 1, his first day on the job, prompting speculation the company will embark on larger takeovers.

“This is about flexibility, as suspending the buyback allows Pascal and the leadership team to be able to invest,” Mackay said in an interview in Shanghai. “There are some really good assets to go after.”

AstraZeneca, the U.K.’s second-biggest drugmaker, fell 0.3 percent to close at 2,860.50 pence in London on Oct. 12. The stock has declined 3.9 percent this year, the worst performance among Europe’s five biggest drug companies.

The maker of the Crestor cholesterol pill is in talks on “a number” of deals, Mackay said. AstraZeneca in June agreed to pay Bristol-Myers Squibb Co. (BMY) $3.4 billion to co-develop the diabetes drugs of Amylin Pharmaceuticals Inc., which Bristol is acquiring for $5.3 billion.

More Deals?

“We like doing deals in diabetes, and we’d like to do more in Alzheimer’s’ disease, inflammation,” said Mackay, who left Pfizer Inc., the world’s biggest drugmaker, in May 2010 to oversee AstraZeneca’s research efforts. “We like to do in-line and late stage deals -- things that are nearer the market so that we can gain revenue.”

Mackay declined to give financial details of the “multiyear” arrangement with Pharmaron, a closely held provider of research and development services for the pharmaceutical and biotechnology industries. The companies will look for treatments in the areas of cardiovascular, respiratory, gastrointestinal and infectious diseases, as well as cancer, neuroscience and inflammation, Mackay said.

AstraZeneca’s sales in China increased 20 percent to $1.26 billion last year, the fastest-growing market among those for which the company gives country-specific information, according to data compiled by Bloomberg. Total revenue increased 1 percent to $33.59 billion last year.

China Market

Drug spending in China will expand 15 percent to 18 percent annually through to 2016 to reach as much as $165 billion, IMS Health Inc. estimated in July.

AstraZeneca has a center in Shanghai focused on cancers more common in Asia. Gastric and liver cancers haven’t been a major focus of Western drugmakers, creating a “huge unmet need” for treatments for those diseases in Asia, said Steve Yang, AstraZeneca’s Shanghai-based head of R&D for Asia and emerging markets, who followed Mackay from Pfizer.

AstraZeneca’s scientists worked with Chinese partners to develop diagnostic tools to screen Asian patients for genetic mutation that’s targeted by the lung cancer drug Iressa, Yang said.

“In Asia the mutation is between 30-40 percent and in some sub-populations, for example women of a certain age who are non- smokers, this percentage is even higher,” Yang said. In comparison, fewer than 10 percent of U.S. patients have the mutation. Screening for the mutation “allows us to tailor the treatment and gives us the best response rates,” he said.

AstraZeneca is looking for other biomarkers, particularly in cancer, to personalize treatment, Yang said.

To contact Bloomberg News staff for this story: Daryl Loo in Beijing at dloo7@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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