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As China Continues to Open Market for Integrated Bio, Agilent Ups Investment

In 2004, China became the No. 3 market for Agilent Technologies' life sciences unit, behind the US and Japan, respectively.

Recently, representatives of the Palo Alto, Calif.-based company told Chinese news agencies that Agilent will continue to increase activity in the country with a goal of investing $100 million over a five-year period as part of its strategy of reaching $10 billion in total revenues in the next three to five years.

Agilent had sales of $7.2 billion last year, with more than half of that coming from outside the US. For Agilent's FY '04 ending Oct. 31, the company's Life Science and Chemical Analysis unit's revenues were 23 percent of Agilent's total sales.

China is seen as an attractive market for the molecular biology tools industry. Indeed, BioCommerce Week Index companies such as Agilent, Invitrogen, and Thermo Electron have made initial strategic efforts to organize and sell within the country despite concerns about intellectual property protections that may limit sales to basic commodity tools.

In December, Invitrogen spent $8 million to purchase BioAsia, a 5-year-old reagent manufacturer and R&D services provider that will distribute Invitrogen products in China.

Also in December, Thermo Electron opened a 90,000-square-foot manufacturing facility in Shanghai slated to product 10 products initially. Thermo also operates a manufacturing facility in JinQiao and has commercial locactions in Beijing and Hong Kong as well as a newly opened office in Guangzhou.

Last week, China's ruling Communist party said in offering its economic plans for 2005 that the country will build new scientific networks and upgrade existing state-run science and technology laboratories (to see the document, click here). Additionally, the country will continue to make functional genomics a priority, but did not provide specific details. These are all business opportunities for the molecular-biology tools industry.

Agilent used the occasion of its China media day to announce the construction of a new office building near Beijing, which will consolidate R&D, marketing, sales, service, and support functions across all of Agilent's business units in China's capital.

In January, Agilent announced the formation of a Shanghai-based holding company, Agilent Technologies China Holding Co., to consolidate its business entities in China. The company tapped Chan to oversee operations and development of the unit. The company has 1,100 employees in China and has initiated efforts in R&D, manufacturing, sales, and support

For Agilent's life sciences and chemical analysis unit, China is a market for its well-established technologies, primarily its gas chromatography line, said Christina Maehr, Agilent spokeswoman for the division.

"The products we are moving to China are those that are easier to transition, as opposed to new and highly evolving products, which we are inclined to keep in the US," she said.

That would include microarrays and mass spectrometry products, Maehr said.

Agilent's LSCA products have been applied to China's environmental and petrochemical markets, and, more recently, to its pharmaceutical and traditional medicine market, which is moving to state-agency-regulated commercialization, she said.

Agilent's China customers are primarily subsidized by the government, she said. "There is less private industry there."

In September, Ludwig Huber, Agilent's international compliance expert, conducted training seminars in Beijing on "Worldwide Trends in Compliance for the Pharmaceutical Industry" for officials of the local Beijing Food and Drug Administration and the new State FDA (SFDA), formed in April 2003 during the National People's Congress. Some 70 officials attended the seminars, the company said.

China's Scientific Support

China last week said the study of functional genomics is one focus for its economic development plans for 2005, according to a report published in the People's Daily Online, a state-owned media outlet.

The document, which was submitted on March 5 to the 10th National People's Congress, said that China will work to bring its R&D spending up to 1.5 percent of GDP. The country has grown its R&D spend from 0.6 percent of GDP in 1995 to 1.3 percent in 2003, according to the Organization for Economic Cooperation and Development. By comparision, Israel spends 4.72 percent of its GDP on R&D.

China said the state will begin constructing nine major science and technology facilities, and will upgrade another group of key state laboratories in order to "nurture bioindustry."

In matters of intellectual property, the government said it would support an increase in the export of products and services covered by "our own proprietary intellectual property rights and bearing our own brand names."

"We will work hard to enhance our capability for independent innovation and our core competitiveness and support enterprises in the development of key technologies with proprietary intellectual property rights, with the emphasis on improving capacity to independently develop major equipment and basic software," the report said. "We will energetically develop new and high- technology industries."

It is unclear how this will influence Agilent, or others, but Maehr said any scientific expansion would represent a business opportunity for the company.

This week, Shi Erwei, vice president of the Chinese Academy of Sciences, told the Xinhua news agency that the academy is focusing on a five-year project to build "innovation bases" — research networks to combine academic resources of different academy institutes for strategic scientific projects — including information technology, agriculture, life sciences, advanced manufacturing, and new materials.

Erwei said the Chinese academy will work to strengthen cooperative ties with universities as well as "big Chinese" companies and would provide research facilities for joint programs, and the incubation of new high-technology businesses.

— Mo Krochmal ([email protected])

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