Ronald Christie, Novo Nordisk China
Release Date: 2009-08-18
Before talking about the company, let’s start with the situation of diabetes in China. As the leading specialized global player in diabetes, what is Novo Nordisk’s assessment of the magnitude of the disease in China and the main trends identified for the coming years?Diabetes is a major problem in terms of healthcare in China. The government has a number of diseases that it has recognized constitute an important threat to healthcare, and diabetes is up there. It is one of the focus diseases that the government is concentrating on. As for the number of people currently suffering from diabetes in China, the estimations vary considerably as this is a very big country and it is difficult to carry out epidemiology studies. Although estimates range from 20 to 60 million depending on whom you ask, the general consensus is that there are approximately 40 million people in China with diabetes and this is the figure that Novo Nordisk is using.
There are a number of different factors leading to the growing prevalence of diabetes in China, but the most significant is the country’s rapid urbanization. As we have seen in other countries, people who move from the countryside to the cities tend to change their lifestyle in terms of an unhealthier diet, less exercise, etc. This leads to increasing prevalence of not only diabetes but also other chronic diseases. According to the China Center for Disease Control studies, while the overall prevalence of diabetes in the country lies somewhere between 3% and 4%, in cities like Beijing it can reach up to 10% of the population. And as we all know diabetes is a serious disease that has a long term impact on people’s health, so it is a big concern for the government.
How has Novo Nordisk worked in partnership with the government and other stakeholders in order to put diabetes high on the health agenda in China?
Diabetes is already high on the government’s health agenda. According to IMS, it is the second biggest therapeutic area for treatment in China. Everyone, including those in the government, knows someone with diabetes. So awareness of the disease is already quite high in China.
As for Novo Nordisk, we have worked in several ways with the government. Most notably, we have partnered with the Ministry of Health and the Chinese Diabetes Society in order to prepare and produce a diabetes guideline document for doctors. The program began in 2003 and lasted 5 years, during which we helped educate 11,800 doctors in several hundred Chinese cities in order to create a consensus on how to treat diabetes. In addition Novo Nordisk itself organized educational programs for some 190,000 healthcare professionals across China in the past 6 years. This is an example of the type of activities that Novo Nordisk participates in, in order to raise awareness about diabetes and to improve people’s ability to detect and treat the disease.
The government has recently announced further details of its healthcare reform plan which will expand service centers and insurance to cover for the first time hundreds of million Chinese in rural and inland areas. How do you expect this to impact the diabetes care sector and market?
Healthcare reform in China is an evolutionary process, not something completely new or radical. There are also many different aspects to it, but for sure it will have an impact on treatment. However, in reality the level of healthcare coverage in Rural China is already very close to the 90% goal that the government has set out to reach, in one form or another. One of the main challenges for the government is actually that some people will not join the system, often because they prefer to take private insurance when they can afford it in order to avoid the long claim and reimbursement process. There are other reasons why some remain outside of the system, such as young people’s idea that they never get sick and therefore lack of interest in getting covered, but this is not at all unique to China.
Novo Nordisk established the first R&D centre in China by an international biopharmaceutical company in 2002. How would you rate the success of this investment and how has Novo Nordisk further increased its R&D activities in China ever since?
Novo Nordisk’s research facilities in China are an intricate part of the company’s overall R&D structure. It takes many years to firmly establish an R&D facility. What we concentrated on initially in China was building up skills. Now we have a very competent group of researchers working for us here. All of them have international experience, and half of them have at least a Master’s degree, many have PhDs. The institute has concentrated on certain areas of research, particularly proteins, and we now have a very strong skill set in this field.
Novo Nordisk also continues to expand the range of our research activities in China. Recently, we invested in an animal facility for research into different drugs and therapeutic areas. It is an ongoing development. What is pleasing for us is that many of the functions that our staff has had have been executed very well and this has been recognized by the head office. Another milestone was achieved last year when Chinese researchers came up with an idea for a new chemical drug to treat inflammatory diseases, receiving the go-ahead and funding from headquarters. It is a very encouraging sign that China can play an important role in terms of discovering and developing new drug candidates for the company’s future.
Thanks to all this Novo Nordisk is willing to consistently increase its R&D investments in China, which is not a common thing in the current global context.
Many observers of the pharmaceutical industry believe that these huge inflows of global investments in recent years towards China in terms of R&D are based mainly on cost considerations. In your view, how accurate is this belief?
The cost factor is not an important consideration for Novo Nordisk when deciding to invest in China. And although it is true that it is cheaper here than in developed countries, costs are going up fast in China. So the main reason we are doing all this in China is because Novo Nordisk wants to have a complete presence in the country. China is already one of the top 5 markets for us in the world and it is expected to further grow in importance in the coming years. In this regard, it makes sense to want to have a strong presence here, not only in terms of the market but also in research. We want to engage with local research institutes and scientists so that we are aware of what is happening in China, something that is difficult to do from Europe.
As many other big pharma players, Novo Nordisk has been expanding its manufacturing capacity in China in recent years. In 2008 it was even announced that you would build yet another site, with an investment of $400 million dollars. What is China’s role today and in the coming years in terms of Novo Nordisk’s global industrial strategy?
The primary focus of manufacturing in China has always been to supply the local market needs. We started out like most companies, just doing packaging. The next step was to start manufacturing our durable injection devices. It was a logical decision, considering that China represented 50% of the world market for Novo Nordisk in that area. We have found that the productivity and efficiency levels in China were much higher than European standards, so our objective was to move all of Novo Nordisk’s durable injection production here. By the end of 2009 we should have completed the shift and be manufacturing these products in China for the entire world.
Now we are currently focusing on the next step, which is the construction of a new formulation filling plant in China. Again, the aim is to primarily supply the local market since it is already a very significant part of Novo Nordisk’s business, but these facilities will also enable us to export those products to other countries in Asia. We are busy now making progress on this project, which will become Novo Nordisk’s largest formulation filling plant in the world.
The Chinese government has identified the pharmaceutical and biotech sector as one of the strategic industry with aims to transform the country into an innovation-based economy. What kind of role can foreign invested companies play in this regard?
I believe we can lead by example. Chinese companies are learning from Western companies in terms of how we operate and concentrate on quality. The fact that multinational companies are building such a strong presence in terms of R&D and manufacturing in China is also boosting the pool of talented people in the Chinese pharmaceutical industry. Gradually there will be a diffusion of the knowledge and skills as people move from multinational companies to work with domestic players, thus raising the industry’s overall standards.
Through our industry association we are lobbying strongly in order to explain how these contributions that research based pharmaceutical companies make should be recognized in terms of market access and pricing. I believe that the message is getting through. The government wants to build a domestic research based pharmaceutical industry, making it more difficult for countless generics companies to proliferate as in the past. The change is not only from the government side. Consumers are also becoming more and more aware of the value of the innovative medicines we bring them. Some people think mistakenly of China as the land of low-quality goods, but that is a part of the past. The reality today is that the Chinese consumer is very demanding. They expect good quality and reliability. So both the authorities and the consumers are moving in the same direction, which is encouraging.
With so much of the global pharmaceutical industry’s attention and investments going towards China nowadays, do you believe there is any risk that the interest in the country could fade or even drastically drop in the coming years?
Maybe 5 years ago there it was still unsure how things would evolve, but today there is no doubt about China’s future. Even with the current crisis, which is affecting China albeit to a lesser extent than elsewhere, the country continues growing strong and the pharmaceutical market as well. Growth may not continue at levels over 20%, but it will remain in the double digits. The perspectives are positive looking both at the disease patterns and increasing government spending on healthcare, particularly for chronic diseases like diabetes. Indeed, if there is one place to invest in the world right now for the pharmaceutical industry it is China.
After having worked many years in Africa and being responsible for Novo Nordisk’s activities in dozens of countries there, what has been the most exciting thing about your job in China?
The difference is enormous. What I really enjoy about Asia is that it is such a dynamic and fast-growing area of the world; China in particular. It is nice to be in such a booming environment, where growth means that you have the opportunity to be very creative. Our organization has grown significantly just in the 5 years since I have been here. We have gone from 400 odd employees to about 1800 just in terms of the commercial organization. Including production and R&D the total number is about 2500 compared to 500 when I arrived. This is very rapid development, the type you won’t see anywhere else in the world. Thanks to all of this and to the highly competent people I am working with in China, my job at Novo Nordisk it is a thoroughly enjoyable and gratifying experience.
| Company: | Novo Nordisk China |
| Position: | VP International Operations - General Manager China |
| Country: | China |