Germany's Merck Spends €80m on China Manufacturing Facility

German pharmaceutical giant Merck & Co. said it made further investment in a Chinese manufacturing facility, despite parrying a probe into foreign drugmakers over alleged price fixing and corruption.

The company said that it has invested €80m ($107.7m, £67m) in a new pharmaceutical manufacturing facility in the Greater Shanghai region.

The facility will focus on the production of Merck's leading brands, treating diabetes, cardiovascular diseases and thyroid disorders. The construction of the 40,000-square-metre facility is expected to start in 2014 and to be completed in 2016. The facility would begin commercial production in 2017.

"This further investment in China reflects Merck's long-term commitment to the country where our group has been present for 80 years," said Belén Garijo, CEO of Merck Serono, the biopharmaceutical division of Merck.

"We are proud to be one of the first multinational companies investing in a local site focused on the manufacturing of medicines referenced in China's essential drug list, and serve the country's expanding healthcare needs in the areas of diabetes, cardiovascular diseases and thyroid disorders, by bringing high-quality medicines made in China to a broader population, in full alignment with the Chinese government's goal to increase access to quality products."

Corruption Scandal

The investment comes as a number of foreign drug companies including Merck is facing probe into alleged corruption and price fixing by Chinese authorities.

The scandal broke out as a number of employees at the China division of British drugmaker GlaxoSmithKline were found bribing doctors for prescribing their medicine. The employees were accused of funnelling up to 3bn yuan to travel agencies to facilitate bribes to doctors and officials to boost its drug sales.

Following the development, foreign drugmakers including Merck, Novartis, AstraZeneca, Sanofi, Eli Lilly and Bayer have been questioned by Chinese authorities. China's National Development and Reform Commission (NDRC) had been investigating 60 foreign and local pharmaceutical firms over price-fixing.

China Growth Potential

The company is looking to capitalise on the world's most populous country's ever rising need for quality medicines.

Spending in China's healthcare sector is expected to soar to $1tn by 2020 from $357bn in 2011.

The country is set to be the second-biggest drugs market behind the US by 2016, according to IMS Health.

Merck has been present in China for about 80 years, and has so far developed a research centre in Beijing and several enhanced clinical development capabilities. It also expanded its commercial presence in the country, while building a network of collaborations with medical institutions and local companies.