Bloomberg Businessweek - USA (2019-06-17)

◼ BUSINESS Bloomberg Businessweek June 17, 2019

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COMPANY

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THEBOTTOMLINE Withstrikethreats,jammedairports,andtoo

manyplanesflyingtotoomanydestinations,Europeis bracingfor

40%moredelaysthissummerthanlast.

AstraZenecaPlcis spendingbigtodevelopcancer

drugsthatcansellforhundredsofthousandsof

dollarsperpatientannually.ButinChina,the

Britishpharmaceuticalgiantis bettingona tradi-

tionalheartremedythatcanbeboughtforabout

$2.50a pack.Theproduct,anextractofa dietary

supplementoftenusedtolowercholesterolcalled

redyeastrice,is arguablymoreherbaltreatment

thaninnovativemedicine.LuyePharmaGroup

Ltd.,theShandong-basedcompanythatmakesthe

remedy,saysitspartnershipwithAstramakesthe

U.K.companythefirstmultinationalwithexclu-

sivepromotionrightsfora Chinesedrug.

Astra’swillingnesstostraddlethemurkyline

betweendrugsandless-regulatedsupplements

illustrateshowdeterminedtheU.K.companyis to

pushintotheworld’ssecond-biggestpharmaceuti-

calsmarket.ChiefExecutiveOfficerPascalSoriot

beganpointingtoChinaasa crucialgrowthmar-

ketsoonaftertakingthereinsin2012.Thefocus

haspaidoff:Salestherelastquartersurged21%,

outpacingthoseinallotherregions,ledbysuch

innovationsasthecancermedicineTagrisso.Now,

withtheherbalextractcalledXuezhikang,Soriot

is lookingatChinaasa sourceofnewtreatments,

notjustasa burgeoningmarket.Astrasaysit will

considergettingtheremedylicensedandsold

elsewhere,includingtheU.S.andEurope.

UnderSoriot,thecompanyhasjettisonedrights

toolder,off-patentdrugstofocusonexpensive—

and profitable—new medicines for cancer. Yet

Ruud Dobber, head of the U.K. drugmaker’s bio-

pharmaceutical unit, says the Luye partnership

makes sense because it can help Astra maintain

its strength in the market for heart drugs in China,

where it also sells the blood thinner Brilinta.

Astra is pushing at least one other relatively

cheap, older drug in China. It won a contract to sell

its cancer treatment Iressa in bulk to a centralized

medicine program for 11 major cities there. The

arrangement “creates headwinds for older prod-

ucts,” Soriot said in May. But “the good news for us

is that we have critical mass in China.”

Xuezhikang is also approved in Taiwan,

Singapore, and Malaysia, according to Luye. But

red yeast rice compounds have provoked warnings

by some health researchers in Europe because of

potential side effects patients may not anticipate.

With the Luye agreement, Soriot is linking Astra

to an industry favored by Chinese President Xi

Jinping, who’s called for promotion of traditional

therapies alongside western medicine. Soriot has

professed admiration for Xi. “A group of people,

whether it’s a company or a country, has to have

that shepherd person,” he says. “He has a vision for

China;hehasa visionfortheworld.”

SometraditionalChineseremedieshaveturned

intovaluablemedicaltools,suchasartemisinin,

a malaria treatment derived from thesweet

wormwoodplant.Yetsuchexamplesarerare,and

mostbigdrugmakershaveshiedawayfromtrying

toturn such medicines into profitable products,

● AstraZeneca is betting on a

traditional herbal remedy to speed

its expansion in China

The New Money

In Old Medicine

● AstraZeneca revenue

◼China

◼ Rest of the world

2012 2018

$20b

10

0

year, according to consumer group Flightright.

At Frankfurt Airport, Lufthansa’s primary hub,

outdated scanners and procedures mandated

by the police mean each security line can handle

fewer than half as many passengers as those in

Amsterdam or London, according to the German

Aviation Association. Extra security gates and a ter-

minal under construction will help, but the new

facility won’t open until 2021. In Berlin, Willy Brandt

International Airport has been sitting empty for

seven years as workers repair countless construc-

tion defects. The capital’s other two airports, mean-

while, are jammed far beyond capacity.

To ease congestion, the government, airlines, air-

portoperators,andpolicehaveagreedon 24 mea-

suresrangingfromautomatedsystemsforchecking

boardingpassestohigher-altitude flight paths. But

officials warn that it will take time for them to pay

off. “We’re working hard to provide good travel

opportunities,” Transport Minister Andreas Scheuer

said at a March conference where the measures were

negotiated. “But we can’t make everyone happy this

summer.” �William Wilkes, with Richard Weiss