The Swiss drug heavy plans to build two facilities in Shanghai's Zhangjiang Hi-Tech Park - an initial 5,000 m. sq. start-up facility to be ready for May 2007 and a permanent 38,000 m. sq. facility for 400 scientists that will open in July 2007.
The site will become the eighth within Novartis' R&D network and will be staffed primarily by scientists recruited from local academic, biotech and pharmaceutical research institutions, the firm said.
"The level of scientific expertise in China is rising rapidly and Shanghai is clearly emerging as a new epicenter of science globally, and is a magnet for the best and the brightest investigators," said Dr. Mark Fishman, president of the Novartis Institutes for BioMedical Research.
Novartis is already active in China through a number of collaborations, including a six-year research partnership with the Shanghai Institute of Materia Medica (SIMM) to identify and test traditional medicines for pharmacological properties as well as partnerships with drug manufacturer WuXi PharmaTech, the Chinese University of Hong Kong National Institutes of Biological Sciences (NIBS) and Kunming Institute of Botany.
In addition, the firm began construction in February on an $83m development and production plant in Changshu, Jiangsu Province, which is expected to open in mid-2007.
However this is the company's largest commitment in China to date and brings the firm more in line with a number of other international pharma firms who are planting their roots firmly in the country.
Swiss rival Roche already has two factories and one research facility in China and AstraZeneca also announced in May that it would spend $100m in the next three years on research in China.
The country's 2001 entry into the World Trade Organisation (WTO) and the government's efforts to tackle intellectual-property deficiencies, as well as the establishment of a Chinese drug regulator - the State Food & Drug Administration (SFDA) - have all helped to breathe new life into China's pharmaceutical industry.
Indeed, the country is now moving from simply a low-cost manufacturing base into a place where companies are increasingly staring to trust certain aspects of their R&D and clinical trial activities in order to gain cost benefits in these areas also.
Novartis' planned investment has certainly indicated its renewed faith in the region.
"Our activities in the new R&D centre will go far beyond conducting early clinical trials by expanding drug discovery with translational medicine principles enhanced with safety investigations, biomarker detection and bio-analytics as well as gene expression profiling," said Dr. Jean Jacques Garaud, global head of Exploratory Development at Novartis.
The new site will initially focus on addressing urgent medical needs in China and Asia, particularly infectious causes of cancer endemic to the region such as the hepatitis B virus, which kills around 300,000 people in China each year.
However, the centre will also take a two-pronged development approach and will also work to blend the benefits of both Western and traditional Chinese medicines to create innovative treatments.
"The Shanghai centre will allow us to combine modern drug discovery approaches with those of traditional Chinese medicine that have been used to treat patients in China for thousands of years and has the potential to become a global centre for biomedical innovation," said Dr. Daniel Vasella, chairman and CEO of Novartis.
Meanwhile, Novartis has also reportedly made an agreement with the Andhra Pradesh government in India to buy 150 acres of land in Hyderabad to build a new research facility along with an IT backup centre.
According to reports this would be the largest foreign investment in an R&D facility in India and create 5,000 new jobs.