Johnson & Johnson Medical Companies broke ground for its new Ethicon factory on Thursday in Suzhou of East China's Jiangsu province, in an attempt to address the health problems faced in the country.
The new Ethicon factory has attracted a total investment of $180 million. The factory will be responsible for the manufacturing of Johnson & Johnson's patented medical devices, such as triclosan-coated sutures, endoscopic staplers and linear cutters. These surgical products will be used to treat critical diseases such as lung cancer, liver cancer and gastric cancer.
This is the first time that Johnson & Johnson has brought the production line of the minimally invasive and open surgical solutions to China. It is also the first of its kind outside the United States. Covering 14,776 square meters, the Ethicon factory will be put into operation in two phases: first in the fourth quarter of 2019 and second in the third quarter of 2020.
With this new investment, Johnson & Johnson also plans to gradually localize its procurement process and support local partners to upgrade their technological and management standards.
According to Vladimir Makatsaria, company group chairman for Johnson & Johnson Medical Devices Asia-Pacific, the new facility is built to address the healthcare challenges that China is confronting as the country's population－especially its elderly－continues to grow.
China is the company's second largest market, behind only the US, Makatsaria said. As China remains a key growth engine globally for Johnson & Johnson, the company hopes that China will overtake the US and become the group's largest income contributor in the near future, he added.
Johnson & Johnson set its first footstep in Suzhou in 2006 by starting a factory for orthopedic products. Five years later, it set up the Asia-Pacific research and development center in Suzhou.
The US medical and consumer goods giant's new investment in Suzhou has offset the concern that foreign medical companies' confidence in the Chinese market is waning, especially since US pharmaceutical giant Eli Lilly announced in early September plans to shut down its China R&D center in Shanghai. British pharmaceutical firm GSK said in August it would close its R&D center for neurological diseases in Shanghai.
According to China Medical Pharmaceutical Material Association, China's medical devices market size has surged from 53.5 billion yuan ($8.1 billion) in 2007 to 370 billion yuan in 2016. The compound average growth rate comes at 23.97 percent, which is much faster than the 8 percent global average growth rate.