The Danish pharma company is setting up a joint science research foundation with the Chinese Academy of Science (CAS).
The collaboration will concentrate on diabetes and biopharmaceuticals research, including related fields and technologies such as protein chemistry, immunology, inflammation, toxicology, oncology and drug delivery.
The new project sees the coming together of two of the pharma industry's fastest growing markets: China and biopharmaceuticals.
Over the next three years, China is predicted to become the joint fifth largest pharma market, alongside the UK with an estimated value of $24bn (€18bn), according to data from the Boston Consulting Group.
The global market for biologics is growing almost twice as fast as the pharmaceutical market in general and was estimated to be worth $50bn in 2005.
"This cooperation illustrates the great attention Novo Nordisk pays to China as well as our long-term commitment to help in further developing the Chinese healthcare system," said Dr Mads Thomsen, chief science officer at Novo.
A spokesperson at Novo told DrugResearcher.com that the initial $2m outlay from the company can be used to fund research projects or individual scientists with significant collaboration between CAS, Novo and Chinese academics.
As part of the deal, Novo will be offered first right of refusal on any intellectual property resulting from the research.
The Novo spokesperson went on to explain that the foundation will be primarily administered through CAS and their research centres as opposed to through Novo's existing R&D centre in China.
The foundation's board will comprise of nine members - five from CAS and four from Novo.
The Novo R&D centre was established in 2002 and also concentrates on diabetes research - specifically biopharma research relating to insulin products.
Dr Thomsen said that Novo plan to carry on increasing its research presence in China.
The CAS brings together around 6,000 research professionals including scientists from 24 research institutes, 13 research centres, and 26 key State and CAS laboratories.
The organisation was the first in China to conduct biotechnology research relating to monoclonal antibodies, transgenic animals and plants, somatic cell cloning, and stem cell and protein engineering.
The organisation also claims to have developed more than 50 new drugs, including an anti-malaria medicine based on Artemether, a shrub used in traditional Chinese medicine.
Novartis sell the drug under the name Coartem (artemether-lumefantrine)but although 63m treatments were delivered last year, it is sold on a not-for-profit basis.
Novartis hopes that selling its drugs at cost price will engender trust in emerging markets and lead to increased prominence in the area.
The CAS state that it is "the only drug initiated by China for export" .
"Novo Nordisk is well recognised in China for its major role in preventing and treating diabetes," said Professor Chen Zhu, CAS vice president and set to chair the foundation.
Novartis and Novo Nordisk are not the only large pharma firms increasingly looking to Asia for research.
GlaxoSmithKline is also stepping up its presence in India and Singapore and have publicly stated its intention to have an Indian-led drug on the market within the next five years.