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Foreign Pharmaceutical Companies Undergo Changes in China

According to an article published on the BioDiscovery.com website, foreign pharmaceutical companies have been changing their strategies in China and some are pulling out of China. GE CTC recently announced that it will no longer conduct pharmaceutical research and development in China. The work will be picked by the company’s two other research centers in Niskayuna, New York and Bangalore, India. GE has 150 research labs in China. Over 3,000 research positions will be impacted. Meanwhile, GSK, a British pharmaceutical company headquartered in Brentford, London will adjust its strategy in China. In the next two years, it will close the plant in Suzhou Jiangsu Province and change the manufacturing plant in Tianjing from a prescription drug manufacturing plant to a manufacturer of tablets only. On September 8, Eli Lilly announced that it will close its research lab in Shanghai, the first research lab in an Asia Pacific country, while also reorganizing its marketing strategy. It will impact 3500 jobs worldwide and will be completed by December 31, 2017.

The reasons for the foreign pharmaceutical companies undergoing changes in China are partly due to competition from domestic pharmaceutical companies in China. In addition, according to an article that the Epoch Times published, both AmCham China and the European chamber of Commerce indicated that the investment climate in China has deteriorated in recent years. The top three reasons for foreign companies to leave China are increases in the cost of labor, changes in the company’s strategic advantage, and concerns over China’s regulatory policies. Whereas the third reason ranked 5th last year, it made the top three this year. For example, some companies expressed fear that the new Internet security policy has increased China’s ability to control company’s private data and impose further restriction on foreign companies. Moreover, foreign companies are also becoming the subject of the influence of the party’s ideology. According to a report from Reuters in August, the Chinese partners of some foreign companies have insisted that those who are party members should be promoted to the company’s management level. It also requires that the company allocate operating funds for the party’s branch office, or even requires that the chairman of the board must be the same person as the company’s party secretary. It means that once the party organization becomes part of the company, it will have direct power over the company’s operating policies, human resources, and its strategic development policy. The practice since 2001, soon after China joined the WTO, has been that when the party organization’s involvement started in private companies in China, they would be required to “make recommendations” regarding the company’s regular operations.

Source:
Biodiscovery.com, September 15, 2017
http://www.biodiscover.com/news/politics/726032.html
Epoch Times, September 22, 2017
http://www.epochtimes.com/b5/17/9/22/n9660159.htm

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