Pfizer Inc. staked its claim in China's growing generics market by joining Zhejiang Hisun Pharmaceutical Co. Ltd. to create Hisun-Pfizer Pharmaceuticals Co. Ltd.

The companies said the joint venture will develop, manufacture and commercialize off-patent pharmaceutical products in China and global markets, strengthening the ability of Pfizer and Hisun to increase their market penetration in Asia's branded generics space.

Hisun-Pfizer leaves the starting gate with an aggregate investment of $295 million and registered capital of $250 million, with Hisun holding a 51 percent share in the operation and Pfizer holding 49 percent.

New-York based Pfizer and Hisun, of Hangzhou, Zhejiang, both plan to contribute existing products to the joint venture, which will have a portfolio covering cardiovascular disease, infectious disease, oncology, mental health and other therapeutic areas. The companies plan to contribute manufacturing sites, cash and other assets.

Hisun-Pfizer's registration facilities and production plants will be located in Fuyang, Zhejiang, with offices in Shanghai – where Pfizer China operates an R&D center – and R&D in Hangzhou. Published reports indicated the joint venture plans to have 1,000 employees in place by the end of the year, growing to 1,500 by the end of 2013.

Representatives from Pfizer and Hisun did not respond to interview requests.

In a statement, the companies said the goal of Hisun-Pfizer is to build a marketing and sales network that covers most regions and hospitals in China and then to infiltrate the international market, leveraging Pfizer's global business networks.

China's bifurcated hospital market includes some 4,000 urban hospitals and a broader market of small hospitals and clinics that serve the majority of the country's population.

The deal represents one of the first joint ventures between a multinational big pharma and a state-owned pharmaceutical company in China. The companies said the operation will seek to combine Hisun's market outreach and experience in manufacturing and commercializing branded generics with Pfizer's scientific expertise, manufacturing quality management and global market promotional reach.

Although the primary focus is the development, production and commercialization of branded generics, Hisun-Pfizer also will seek broader commercialization of existing medicines. Whether the joint venture ultimately will pursue the commercialization of new chemical entities, biologics and biosimilars remains an unanswered question, as does the question of patent rights on technologies that might emerge from Hisun-Pfizer.

Trends in patent filings suggest the U.S. already lags both in patent applications and patents issued around the globe. At current growth rates, the U.S. pharmaceutical industry is expected to lose its leadership position to China, on a per-capita basis, in 2029. But indexed to gross domestic product, the nation's big pharma industry will lose its leadership to China in 2015. (See BioWorld Today, May 2, 2012.)

Still, with China increasing its importance to big pharmas, Hisun-Pfizer is a relatively low-risk venture for Pfizer. Off-patent medicines, including branded generics, are an easy sell in emerging markets, where cost and access are primary growth drivers. In China, branded generics account for 70 percent of the domestic pharmaceutical market.

And Pfizer doesn't need the deal for name recognition. Pfizer China already has $1 billion in investment and more than 9,000 employees in business, R&D and production capacities in China, where pharmaceutical efforts focus mainly on vaccine development and cardiovascular and metabolic agents.

Established in 1956, Hisun is known primarily as an active pharmaceutical ingredients manufacturer but has signed deals with several U.S. biotechs. Earlier this year Celsion Corp., of Lawrenceville, N.J., selected Hisun to produce ThermoDox, its heat-activated liposomal encapsulation of doxorubicin. Enzon Pharmaceuticals Inc., of Piscataway, N.J., also has a deal to apply its linker technology to the development of pegylated versions of select therapeutic candidates in Hisun's pipeline.

The need for pharmas to grow their presence in China is amplified by the fact that deals are being consummated by the dozens in the world's most populous nation. The Hisun-Pfizer deal was disclosed the same day China's ShangPharma Corp. and the Dutch biotech Harbour Antibodies BV disclosed a collaborative licensing agreement enabling ShangPharma to develop therapeutic antibody candidates using Harbour's transgenic mouse-based fully human antibody development technology. And earlier this week, MedImmune Inc., a unit of AstraZeneca plc, of London, formed a joint venture with contract research organization WuXi AppTec to develop and commercialize MEDI5117, a biologic for autoimmune and inflammatory diseases, in China. MedImmune will provide technical and development expertise, while WuXi AppTec will provide local regulatory, manufacturing, preclinical and clinical trial support. The companies will have equal ownership in the joint venture, with AstraZeneca/MedImmune holding an option to acquire full rights to commercialize MEDI5117. Otherwise, those rights will default to the joint venture.

That deal was just the latest for AstraZeneca, which has invested more than $700 million in manufacturing, R&D and commercial infrastructure in China over the past 20 years.

At the BioPartnering North America conference in Vancouver, British Columbia, in February, Technology Visions Group LLC partner Robert Kilpatrick predicted Pacific Rim markets – with China leading the way – will contribute 40 percent of overall global pharmaceutical industry growth in the next two years, reaching $156 billion annually despite growing price interventions. (See BioWorld Today, Feb. 29, 2012.)