Review and forecast: How execs view industry and China's economy

Allan Gabor, president of Merck China and managing director, Merck Electronics China

Q1: How do you evaluate your company's performance in China as well as in the global market in 2021?

Merck has been in China for 88 years. To accelerate the implementation process of In China For China, China, as a strategic market both in market size and growing capacity, has become our second-strongest growth driver and second-largest sales market worldwide. With the double-digit growth, China remains the No 1 market for oncology, general medicine as well as for our electronics sectors.

We have also reached important milestones for localization in China, to be closer to our customers.

In addition to our two existing innovation hubs, we launched Shanghai Innovation Base in October, to bring in innovative startups and partner with them in strategic growth fields for Merck, such as AI-enabled health solutions, bioelectronics and cultured meat, as well as early-stage exploration in the fields of neuromorphic systems and organoids.

In terms of healthcare business, we have made efforts to improve the accessibility and affordability of innovative solutions nationwide.

By leveraging Lecheng Global Special Drug Insurance, our two innovative drugs not yet listed in China have been included in the special drug catalogue of 2021, namely the oral MET inhibitor Tepmetko and PD-L1 inhibitor Bavencio, which will certainly benefit our Chinese patients.

Besides, investment is another major focus in the innovators of tomorrow which also plays a key role to expand R&D capacities and local production.

In our electronics business sector, as part of our Level Up program announced in September, we plan to invest significantly more than 3 billion euros ($3.39 billion) up to the end of 2025.

As for life science, we opened our M Lab Collaboration Center in Shanghai. There, we help biopharmaceutical and biologics companies to improve their processes – from drug discovery to their development to their manufacturing.

From global perspective, we are showing strong profitable growth for Merck with all three business sectors and all regions contributing. Our Big 3 growth engines, process solutions, new healthcare products and semiconductor solutions performed superbly and enabled us to raise our outlook for the full year 2021.

Q2: Do you plan to deepen your company's footprint in China next year? If so, how?

We are committed to China, and will promote and strengthen localization in China market with steady growth and sustainable investment in business and people. To become the most localized multinational company and a trusted partner in China across all of our three business sectors, all our businesses are among the national prioritized industries such as pharmaceuticals, life science and electronics.

We are continuing to extend our footprint in the electronics business. Our strategic investment of Electronics Technology China Center plan to launch in 2022 will be one of our most comprehensive electronics technology centers in China, providing comprehensive technical services and customized material solutions for Chinese local customers and partners, empowering the electronic information industry and digital economy in China.

On the life science part, with one of the broadest product and solution portfolios in the industry, we are dedicated to making scientific research faster and better, and are committed to increasing the effectiveness and quality of drug discovery and biomanufacturing to help increase access to healthcare. This year, we have been dedicated to improving our local capability by enhancing customer experience, strengthen our supply chain capabilities in China. I believe much progress will be announced soon in 2022.

China market is being redefined by the pandemic, digitalization, sustainability and other trends, leading to emerging opportunities in cutting-edge technologies such as biotech, next-gen chips, AI and the human-machine interface. We will embrace a new era with greater integration with innovation and digital transformation.

To accelerate the pace of China development into the global ecosystem, further increase digitization and drive manufacturing interconnection, we put high value on supply chain upgradation, and keep expanding the capacity in China and globally. We believe that ensuring a resilient and reliable supply chain and continued innovation in semiconductor materials are critical for addressing chip shortage challenge along with our customers and partners.

Q3: How do you rate China's economic performance in 2021?

At the beginning of the 14th Five-Year Plan period, decisive success in resource allocation, employment creation and reducing energy consumption has been made, which provides guidance to our development strategy in China to meet the fundamental goal of satisfying the people's growing needs for a better life.

China's economy shows great resilience and achieves positive growth regarding its major economic targets, despite global uncertainties and economic downturn caused by the pandemic. We believe fruitful achievements and breakthroughs of China economy can be expected and will inject fresh impetus into the world economy.

Q4: What are your views on the improvements in China's business environment in 2021, and what are your expectations for further reform and opening-up?

With the development of high standard opening-up and latest update of foreign investment policy, a favorable environment of investment has been shaped and more potentials have been cultivated. China has actively promoted international cooperation by continuous shortening the negative list for foreign investment and expanding the opening-up.

Meanwhile, China has adopted a series of policies on intellectual property and talent development to encourage and pursue innovation-driven development. We're glad to witness a vigorous and strong innovative ecosystem is being built up and optimized as the status quo. This will definitely pave the way to a full spectrum of business development, and benefit other perspectives in executing the 14th Five-Year Plan and 2035 Vision.

Foreign businesses, our company included, have benefited a lot from China's rise and advancement. To further leverage national platform and seize new opportunities in China, we make and adjust our enterprise strategy consistent with the nation plan, give full play to advantages in life science, healthcare and electronics, driving healthy profitable economic growth and nurturing business potentials based on the requirements of development nationwide.

Q5: What are your forecasts of China and the global economic performance in 2022?

We believe China will achieve economic growth well above its target in 2021, and follow a positive trend despite the threats posed by COVID-19 variants and supply constraints. We believe there will be emerging markets and growing opportunities nationwide in the face of ever-changing environment.

As for the global economy, there is a continuing recovery, even as the pandemic resurges. It seems being back on track slowly but steadily with joint efforts of the international community. Also, China keeps contributing to global economy as a major stabilizer and key driver.

In this regard, our unique strategic position and diversified business pipeline will give play to the leading role in our expertized field and supporting part in the development of both the world and China, improving people's wellbeing and life to some extent. Our Merck Group is very dedicated to human progress, and we are also proud to play our part in promoting the development of sustainable science and technology.