AstraZeneca Loves This $100Bn Market
This article has been adapted from our sister site across the pond, Fool U.K.
There is a very clear fault line in the world economy right now.
A tale of two worlds
On one side of this line, we have slow-growing, large, developed nations, including the U.S., U.K. and the leaders of the eurozone. Struggling with high levels of national and personal debt and slow growth, these economies are very much the laggards of the post-crash era.
On the other side, we have booming developing countries such as the BRICs: Brazil, Russia, India, and China. With their huge populations and low levels of indebtedness, these countries are sucking in resources and growing at breakneck speed.
If you were to consider making a major investment in one of these regions, where would you go? The answer, it increasingly seems, is to go east.
AstraZeneca loves China
The Chinese pharmaceutical market grew from $10 billion in 2004 to $41 billion in 2010, more than quadrupling in six years, according to industry research specialist IMS Health.
What's more, this market is expect to continue booming, growing to $100 billion by 2015, driven by increased Chinese government investment in health-care infrastructure and by expanding private insurance coverage.
Thus, in order to move away from its reliance on "white pills and Western markets," the U.K.'s second-biggest "Big Pharma" firm, AstraZeneca (NYS: AZN) , is betting big on China. Yesterday, the group announced that it is to invest $200 million in a new manufacturing facility in China Medical City, Taizhou City, Jiangsu province in eastern China.
This is AstraZeneca's largest-ever investment in a single manufacturing facility. The site -- due to be completed by the end of 2013 -- will produce "both intravenous and oral solid medicines for the company's growingbusiness in China."
By opening the site, AstraZeneca hopes to "reach some of the estimated 900 million people in urban and rural Chinese communities who lack access to high-quality medicines."
The lure of the East
Of course, this isn't the pharma's firm's first foray into China. Indeed, AstraZeneca has been building up its presence in the Middle Kingdom since 1993, with turnover exceeding $1 billion in 2010.
Today, AstraZeneca employs 5,000 staff in China, working in manufacturing, salesandmarketing, clinical research and new product development at its headquarters in Shanghai and across numerous sites in mainland China and Hong Kong.
Even so, this substantial injection of capital into this operation suggests that AstraZeneca has a long-term commitment to China.
With a potential market exceeding 1.3 billion customers and gross domestic product (GDP) forecast to grow by 9.4% this year, who wouldn't want to be at the heart of Chinese commerce?
Want to know more about investing in China? This special report --4 Shares To Profit From The Rise Of The Chinese Consumer-- is free to download!
More from Cliff D'Arcy:
The Motley Fool owns shares in AstraZeneca.
At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.