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Glaxo in Active Talks to Set Up China Joint Venture on Vaccines

GlaxoSmithKline Plc, the world’s largest maker of vaccines, is in discussions to form a joint venture with a Chinese company to help with research and marketing.

Talks with several potential partners haven’t been affected by an investigation on alleged “economic crimes” in China, said Christophe Weber, head of the company’s vaccines unit.

“We are keen to find a partner in China,” Weber said in an interview at the unit’s headquarters in Wavre, Belgium. Over the next 10 years, “the Chinese government will progressively upgrade its immunization calendar, and we want to be there and to be a partner when that happens.”

Glaxo is seeking to expand in China, where growth will be driven by a rising population and efforts to reduce child mortality, Weber said. The company is moving ahead with plans even as it faces allegations of economic crimes in China involving 3 billion yuan ($489 million) of spurious travel and meeting expenses as well as trade in sexual favors, the Ministry of Public Security said last week.

A joint venture in China would follow similar partnerships in Japan with Daiichi Sankyo Co. and in India with Biological E. Ltd., Weber said. A collaboration would help Glaxo serve emerging markets, where sales will be double that in U.S. or Europe in 10 years, he said.

India Venture

The venture in India is focused on developing a six-in-one pediatric vaccine that would combine Glaxo’s polio shot with Biological E.’s five-in-one vaccine. Such collaborations will also help Glaxo develop regional vaccines that are targeted at specific populations, a new direction for inoculations, Weber said.

While the proportion of sales coming from emerging markets will outstrip the developed regions, margins won’t necessarily grow, Weber said. That’s because Glaxo has a tiered pricing structure that takes into account each country’s gross national income per capita, which is lower for emerging markets than for the U.S. and Europe, he said. Profitability is being managed through improved manufacturing productivity and cost reductions, Weber said.

At the Wavre site, the world’s biggest biotechnology production and research complex with 8,000 employees, the company is building a new manufacturing facility for polio vaccines that will have newer, more efficient technology and greater capacity to replace an older site.

Vaccine Sales

Glaxo holds 24 percent of the global vaccines market, followed by Sanofi, which commands a 23 percent share, according to Glaxo. Revenue from the unit fell 2 percent to 3.3 billion pounds ($5.1 billion) last year after a program in Japan introducing the cervical-cancer vaccine Cervarix ended. The company expects growth this year, Weber said. He declined to disclose a sales target.

The company is also committed to helping the World Health Organization implement its Global Vaccine Action Plan to prevent millions of deaths by 2020, Weber said. That includes continuing to supply vaccines at affordable prices through its tiered pricing structure, he said.

In terms of experimental drugs, the company is expecting to release data from a late-stage study on a therapeutic cancer vaccine, MAGE-A3, by the end of this year and will release further data on efficacy after 18 months of its malaria vaccine, which would be the world’s first.

Glaxo is also in early stages of researching a “supra-seasonal” flu vaccine that could potentially protect against the seasonal flu for multiple years, an approach that could also be applied to addressing pandemic influenzas, Weber said.

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