The New Money In Old Medicine

AstraZeneca is betting on a traditional herbal remedy to speed its expansion in China.

- John Lauerman, with Dong Lyu and Tom Metcalf

AstraZeneca Plc is spending big to develop cancer drugs that can sell for hundreds of thousands of dollars per patient annually. But in China, the British pharmaceutical giant is betting on a traditional heart remedy that can be bought for about $2.50 a pack. The product, an extract of a dietary supplement often used to lower cholesterol called red yeast rice, is arguably more herbal treatment than innovative medicine. Luye Pharma Group Ltd., the Shandong-based company that makes the remedy, says its partnership with Astra makes the U.K. company the first multinational with exclusive promotion rights for a Chinese drug.

Astra’s willingness to straddle the murky line between drugs and less-regulated supplements illustrates how determined the U.K. company is to push into the world’s second-biggest pharmaceuticals market. Chief Executive Officer Pascal Soriot began pointing to China as a crucial growth market soon after taking the reins in 2012. The focus has paid off: Sales there last quarter surged 21%, outpacing those in all other regions, led by such innovations as the cancer medicine Tagrisso. Now, with the herbal extract called Xuezhikang, Soriot is looking at China as a source of new treatments, not just as a burgeoning market. Astra says it will consider getting the remedy licensed and sold elsewhere, including the U.S. and Europe.

Under Soriot, the company has jettisoned rights to older, off-patent drugs to focus on expensive— and profitable—new medicines for cancer. Yet Ruud Dobber, head of the U.K. drugmaker’s biopharmaceutical 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.