Dr. James Garner
Vice President & General Manager
Takeda Global Research and Development Center (Asia) Pte Ltd.
Drivers of Infiniti automobiles, the luxury brand of Nissan, may be surprised to learn that the company’s global headquarters is in Hong Kong. For a Japanese company, with substantial markets in the US and China, the location may not be an obvious one. For its Chief Executive, however, the rationale is clear: “the beauty of Hong Kong is that it is a gateway into China,” explains Andy Palmer, who heads the business unit and has relocated to Hong Kong from Japan.1
Few multinational life sciences companies are yet ready to move their global headquarters to Asia. But for many, the importance of a strong regional infrastructure has been thrown sharply into focus by the growing challenges associated with more mature markets. Loss of patent exclusivity on long-standing blockbusters, declining R&D productivity, and stagnant market growth are just some of the factors that have led multinational companies to look increasingly towards Asia, where pharmaceutical market growth rates of 15 - 20% are considered far from unusual.2
For example, Jean-Luc Lowinski, Senior Vice President for Asia at Sanofi, notes that his company has based its regional headquarters in Shanghai, and that China makes up 12% of Sanofi’s global revenue.3 At Merck, a new R&D headquarters in Beijing emphasizes regional collaboration and partnerships.4 For GlaxoSmithKline, the President of Emerging Markets, Abbas Hussain, who is based in Singapore, refers to the city-state as “a significant second home” for the company, and notes the $1.6 billion that his company has invested there since its establishment in 1972.5
Undoubtedly, the commercial potential of Asia is a key driver for this growing focus on Asia. IMS Health forecasts a 10 - 13% growth rate for the region, and counts Japan and China respectively, as the second and third largest pharmaceutical markets in the world.6 But other factors are increasingly relevant as well. A cross-industry survey by the European Chamber, in partnership with Roland Berger, pointed to advantages such as the transparent and efficient legal and business environment in Singapore, the favorable tax environment in Hong Kong, and the ready access to manufacturing facilities and distribution channels in Shanghai.7
A less well-recognized incentive for companies establishing regional headquarters in Asia is the expanded access that it provides to talent. For example, Quintiles, a CRO, has made substantial investments in data management infrastructure in India, which is managed from its regional headquarters in Singapore.8 iNova Pharma, a Valeant company, which recently moved its regional headquarters from Sydney to Singapore, cited the skilled talent pool as a reason for the move.9 AstraZeneca points to the availability of skilled resources in areas such as medicinal chemistry and molecular biology as one of the advantages of the company’s China R&D Center.10
For most companies, however, demand for regional talent outstrips supply. A survey by Sharpstream Life Sciences, a search firm, cites a shortage of talent as the single most significant challenge for regional executives.11 Research by PwC suggests that talent constraints have restricted innovation in 33% of life sciences companies.12 The ‘war for talent’ is nowhere more evident than in the Asian life sciences sector. To counter this shortage, both industry and government are investing substantial resources in developing regional capabilities. For example, the Taiwanese government recently announced a NT$ 300 million fund to provide training in biotechnology-related skills, and in Singapore the EDB’s ‘Company Training Scheme’ has focused on cultivating a skills base in key sectors such as production and biomanufacturing.13, 14
Access to capital can also be a meaningful driver in some instances. In Singapore, for instance, the attraction of significant government co-investment has drawn companies such as GSK and Lonza to build substantial production capabilities there. Swee-Yeok Chu, CEO of EDB Investments, notes the importance of a strong IP framework and a well-developed ‘ecosystem’ of supporting services as crucial factors for foreign direct investment of this kind.15 The Chinese government has made similar investments as part of the ‘New Drug Development and Creation Programme’ that was launched in the 11th Five-Year Plan, and although these activities have primarily targeted domestic companies, many multinationals have also been able to benefit directly or indirectly.16
Looking forward, we see several key trends emerging. First, it can almost be said already that, for pharma MNCs, the presence of a regional headquarters in Asia is now a strategic necessity. Very few companies in the industry have succeeded in managing complex, rapidly-growing markets from a distance.17 Second, we anticipate the role of the regional headquarters to transition from being an extension of a global head office to a semi-autonomous enterprise, heavily adapted to the needs and opportunities of the region. This in turn will require, among other things, a different set of skills in regional leaders: less operational, technical and managerial, and more focused on strategy, innovation and entrepreneurship. Finally, we expect to see regional headquarters consolidate in a small number of key locations – principally, Singapore, Shanghai and Hong Kong – where the infrastructure, talent pool and ecosystems are able to support a critical mass of life sciences endeavor.
About the Author
Dr. James Garner is currently Vice President and General Manager at Takeda Global Research & Development Center (Asia), a regional R&D hub from which Takeda manages clinical studies across the Asian region. Prior to joining Takeda, he was Regional Medical Director for Asia with Quintiles, a contract research organisation, and he has also held regional and global positions with several NASDAQ-listed biotechnology companies. He previously worked as a corporate strategy consultant with Bain & Company, and as a hospital doctor.
Dr. Garner completed his medical studies at St. Mary’s Hospital Medical School in London, and also holds an MBA from the University of Queensland, Australia, together with a Graduate Certificate in Applied Finance and Investment from the Financial Services Institute of Australasia. He is a Fellow of the Royal Society of Medicine and a member of the Australian Pharmaceutical Physicians Association. In 2008, he was named a ‘Young Executive of the Year’ by the Australian Financial Review’s BOSS magazine.
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