Sanofi-Aventis said on Monday it will begin producing flu vaccines including ones to combat pandemic strains for the Chinese market by 2012 in a new $148 million vaccines facility.

The investment would roughly double the French drug company's previous spending in the mainland and help China produce vaccines to combat flu pandemic strains identified by the World Health Organisation (WHO), said company executives.

In the case of a pandemic, this plant could be manufacturing hundreds of millions of doses, Jacques Cholat, president of Sanofi Pasteur International, the firm's vaccine arm, told reporters.

For a normal influenza season the first investment phase of production would be able to manufacture 25 million doses annually, while the facility could be expanded to double that in the future.

In absolute terms this is not a major investment, but it is significant for us, said Cholat.

Since 2001 Sanofi has invested almost 1 billion euros in the production of influenza.

The Sanofi Pasteur facility will begin construction next year and be built alongside an existing Sanofi plant producing other vaccines.

The agreement was signed during a state visit to China by French President Nicolas Sarkozy.

Rivals GlaxoSmithKline Plc, Novartis AG, AstraZeneca Plc and Eli Lilly & Co are all increasing their investment in China, underlining the desire of top drug firms to increase their presence in the country.

The country is set to become the world's fifth-largest medicine pharmaceuticals market by 2010, with sales nearly doubling to $25 billion from $13 billion in 2005, Boston Consultancy, an independent consulting group, said last year.

(US$1=7.40 yuan=0.6754 euro)

(Reporting by Kirby Chien; Editing by Ben Tan)