BUSINESS
VIWA’S BUSINESS MODEL
JEAN-FRANÇOIS TREMBLAY/C&EN
business as the customers,” he says. Most of Viwa’s competitors in China, he adds, aren’t able to supply technical data along with their products. Another difference is that instead of producing at company-owned facilities, Viwa relies on toll manufacturers. Zhejiang CUSTOM CHEMICAL SUPPLIER not only serves customers abroad province is home to about 70% of China’s but also brings foreign products to the Chinese market pharmaceutical ingredients manufacturing capacity, Ye estimates. Most plants are within a few hours’ drive of Hangzhou. IT’S A PROBLEM that most companies manager for marketing and sales at the ItalViwa—as well as Datang—defines the buying drug ingredients from China have ian pharmaceutical ingredients producer production protocols. “We may not own faced or are struggling with now: Who is a Fabbrica Italiana Sintetici (FIS) and a memthe plant, but we own the product because reliable supplier? Chinese prices for many ber of C&EN’s editorial advisory board. we’ve developed it in our labs,” he says. drug ingredients are so competitive that it “Jack understands Western thinking very In addition to keeping manufacturing makes little sense not to buy from China. well and is able to bring together the ‘two costs minimal, Ye has found a way to miniBut the vast country offers an overwhelmworlds,’ which is still rare for partners in mize the cost of developing R&D capabiliingly large number of drug ingredities. Viwa and Datang operate two ents suppliers to choose from, few labs in Hangzhou and are planning of which are capable of meeting the to set up a third one. The facilities expectations of foreign buyers. Solvare housed in universities and opering that riddle is, in a nutshell, Jack H. ated under special arrangements. Ye’s business plan. Viwa and Datang pay the universiYe is the founder and managties for lab space and access to exing director of the Chinese custom pensive lab instruments through a chemical supplier Viwa. “There are in well-defined contract. The labs are China many bigger companies than staffed by company employees but us, better established ones with nice led by academics, who are paid by R&D labs and impressive production the universities and are still active facilities,” he says. “But in business, lecturers. The professors are bound it takes a lot longer to establish trust by secrecy agreements to protect than to build facilities.” any intellectual property that they Based in Hangzhou, in China’s Zhemight come across, Ye says. jiang province, Viwa does not own or Working with Ye and his team, operate a manufacturing facility. And yet, China.” In 2007, FIS and Laforce says, has not only helped VALUABLE PARTNER Ye works on both export its main business is custom manufacturViwa agreed to form Dato solve for FIS the riddle of how and import sides of ing of active pharmaceutical ingredients, tang Pharmachem, a joint to safely source materials from the pharmaceutical pharmaceutical intermediates, and active venture that is involved in China, it has also revealed how ingredients trade. ingredients for agrochemicals. More than rapid synthesis screening to open the Chinese market for 90% of its products are sold to customers and method development FIS products. Laforce says that abroad, Ye reckons. The firm is also develfor FIS and other clients. imports and distribution need to oping a business of importing into China Datang also imports and distributes some be managed by a China-based company, drugs in bulk and finished dosage forms. of FIS’s products in China. something that Datang can accomplish. Several of the companies he represents Viwa operates differently from many “There are many tax laws, tax incentives, in that new business are from Europe and other Chinese producers of pharmaceutical and tax benefits throughout China that are India. Viwa’s sales have been growing by 50 ingredients, Laforce says. “Many companies changing constantly and vary province to to 100% annually since the company was in China first build a plant and then look for province,” Laforce says. “You need a partfounded in 2004, Ye says. “But that’s from a business opportunities,” he says. “These ner who understands all the tax rules.” small base,” he points out. companies may have outstanding plants, but Ye sees a high potential for his business of Although Viwa is just five years old, its the marketing and sales part is very weak.” importing foreign generic drugs into China. founder is a relatively well-known face in He points out that some oncological drugs pharmaceutical manufacturing circles. NOT SO AT VIWA, it seems. Ye says he’s from India are more competitive than those Prior to setting up his own company, Ye been careful to staff his sales team with produced in China. In addition, many Westworked for a decade at Sinochem, China’s people who have a technical background. ern drugs, even generic ones, are protected largest state-owned chemical and pharmaViwa employs a total of 42 people, includby manufacturing process patents or made ceutical trading firm. ing R&D staff and Datang’s operations. by only one producer. More and more, he “I have had a good personal and profes“They may be more at ease writing e-mails says, companies like FIS see China not just sional relationship with Jack for over 10 than speaking in English, but they basias a source of cheap materials but also as a years,” says Roger Laforce, the general cally have the same understanding of the market.—JEAN-FRANÇOIS TREMBLAY WWW.CEN-ONLINE.ORG
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