Follow The Money: Where Pharma Is Investing // Pharmalot

Everyone talks about how the pharmaceutical industry is increasingly investing in facilities - R&D and manufacturing - in China and India. But just how much money is flowing into those countries? And how does that compare with the level of investment in other places, not just the US, but still other locales that are thought to be up and coming or, conversely, on the decline?

Well, between 2007 and 2010, the US received the largest investment - $73.3 billion, followed by China with $29.8 billion, Singapore with $17.7 billion, India with $16.8 billion and $16 billion pumped into Ireland. The results are not surprising, yes? Other countries that also ranked high were Italy, Germany, Switzerland, Canada and Brazil.

The ranking contrasts remarkably, though, with the period between 2003 and 2006, when investments in the US hit $38.7 billion. Next up was Ireland with $37.1 billion, Singapore with $27.6 billion, China with $19.7 billion and Germany with $14.8 billion. The top 10 was rounded out by Spain, France, Puerto Rico, India and Sweden. As you can see, four countries dropped off the most recent list.

The findings, which were published in a new report by Jones Lang Lasalle, the commercial real estate firm, underscore how drugmakers are seeking low-cost venues for their most labor-intensive activities. For instance, in Asia, investment has been growing rapidly in Taiwan, Malaysia and the Phillipines. Similarly, Argentina, South Africa and Egypt are designated up-and-coming venues.

Meanwhile, the report finds ?a number of higher-cost locations in Europe are starting to see the balance of investment shift away from manufacturing to R&D. The UK is a prime example, while France, Belgium and Sweden appear to be heading in this direction. The data also suggests many European locations will continue to see healthy levels of investment, since pharma has not yet turned to the Middle East or Africa as ?a platform for operating margin improvement or revenue growth.?

A couple of other observations - Puerto Rico is on the decline. Last year, the island government passed a law that imposes a 4 percent tax next year on companies that conduct manufacturing on the island, but are headquartered elsewhere. Ever since, some drugmakers have grumbled about the possibility of picking up and leaving (back story).

And while the report predicts that Canada will become a more important R&D hub, Johnson & Johnson apparently does not agree. Earlier this week, the drugmaker disclosed plans to shutter an R&D center in March, which will put 126 people out of work, including 36 employees and another 90 who were hired by outside contractors, some of whom work at an manufacturing plant (see here).

HERE IS THE COMPLETE REPORT

Source: http://www.pharmalot.com/2012/01/follow-the-money-where-pharma-is-investing/

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