GlaxoSmithKline to build research centre in China

GlaxoSmithKline is to expand its global presence by establishing a research and development site in China.

The chief executive Jean-Pierre Garnier said Europe's largest drug-maker wanted to compete with the rest of the world and tap into China's massive potential.

An upbeat Dr Garnier made the announcement as he delivered a strong set of full-year results. Pre-tax profits rose 16 per cent to £7.8bn over the year on a 7 per cent increase in turnover to £23.2bn, boosted by sales of the key Avandia treatment for diabetes.

Unlike many other big drug firms, GSK has a healthy pipeline. It is set to launch five products this year which Dr Garnier said was unprecedented. The company will seek approval for its most promising new product Cervarix, a cancer vaccine, by April and will launch Tykerb, a breast cancer drug. Both are central to GSK's expanded presence in the oncology field.

Jeremy Batstone, an analyst at Charles Stanley, said the year's launches "should go much of the way towards offsetting the adverse impact of generic competition" for two of GSK's best-selling drugs, Zofran and Wellbrutin. GSK said earnings per share will rise as much as 10 per cent this year as the new products are launched. Shares increased 1.5 per cent yesterday.

Although GSK is not yet releasing further details on its China site, it said it will be a "fully integrated research centre", a stand-alone facility which will benefit from expertise in Chinese and western medicine. Pudong, near Shanghai, is one potential site.

Before releasing its figures, GSK announced two late-stage additions to its pipeline taking the number of late-stage drugs to 31. It has struck deals to develop drugs for neuropathic pain with the biopharmaceutical firm Xenoport and for major depressive disorder with US drug company Fabre-Kramer.

The company also announced its weight-loss drug, Alli, has become the first to be approved for over-the-counter use in the US, where 65 per cent of the population are obese.

Dr Garnier said GSK would be "very picky" when it comes to acquiring companies and sees no need for large transaction that could dilute its extensive pipeline. "When you have a great opportunity, as we do, to create lots of shareholder value through the pipeline, you are not in a rush to do anything significant in terms of large transactions," he said.

Quizzed about possible job cuts, he said GSK was constantly restructuring and cutting costs where necessary. It has closed 28 sites in the past seven years, he added. Dr Garnier, who steps down next May, remained tightlipped on his successor.