Water famously flows downhill, just as money flows toward opportunity. So it’s not surprising that China biopharma news was dominated last week by articles about investment in China facilities for drug development. After all, China biopharma, with its low costs and big markets, offers unusual levels of opportunity.

Genzyme (NSDQ: GENZ) committed $90 million to building an R&D center in the Zhongguancun (ZGC) Life Science Park of Beijing (see story). The center marks a number of firsts: it was the first time a US-based biotech company established a major R&D center in China and it was the first time Genzyme located an R&D facility in a city that was not named Cambridge: Genzyme’s original labs are in Cambridge, MA and the company put its second facility in Cambridge, UK. The initial focus for the Beijing facility will be the second generation of Genzyme’s cartilage repair product, which improves on the first generation by offering a less invasive method of delivery. Genzyme already has a presence in the China drug market with Synvisc® (hylan G-F 20), which offers pain relief for people with arthritic knees, and Thymoglobulin® (anti-thymocyte globulin rabbit). More products for China are expected next year.

The beginning of construction of another biomedical facility was announced last week, this one for a joint venture owned by Unigene Laboratories (OTCBB: UGNE) of New Jersey and Shijiazhuang Pharmaceutical Group Corporation (see story). The JV will manufacture various formulations of calcitonin, a treatment for osteoporosis, including the nasal spray that is sold in the US under the name Fortical®. The JV will also develop a nasal spray formulation of a parathyroid hormone. Cash-strapped Unigene is not contributing any hard money to the $7 million initial capitalization of the JV. It will instead supply the company with technology, while Shijiazhuang Pharma will extend a two-year, interest-free loan of $1.05 million to cover Unigene’s share of the initial capital.

Changzhou Tongtai Biopharmaceutical Co., Ltd., a startup company with strong credentials in rabies vaccines, is being launched with initial capital of $10 million (see story). It will construct a facility combining R&D and manufacturing functions in the Changzhou National High-tech District, located in Jiangsu Province. The company is headed by Dr. Fu Zhenfang, Professor of Veterinary Medicine at the University of Georgia. Changzhou Tongtai will develop inactivated rabies animal vaccines, which are not currently produced in China. Veterinarians in China must use either attenuated rabies inactivated vaccine, which are not as effective, or imported vaccines that are prohibitively expensive. Changzhou Tongtai projects eventual revenues of $200 million from its rabies vaccine.

Simcere Pharmaceutical Group (NYSE: SCR) acquired control of a second cancer drug by taking a 70% position in Wuhu Zhong Ren Pharmaceutical Co. Ltd. (see story). The principal product for Zhong Ren Pharmaceutical is SinoFuan, a fluorouracil sustained release implant indicated for cancers of the digestive tract. It is the only such product approved for use in China. Revenues for the product were not disclosed, though Simcere said it will pay 65 million RMB ($9 million) to acquire the stake. Simcere, which derives most of its revenues from branded generic products, markets the gene therapy cancer drug, Endu. The company expects it will be able to increase sales of SinoFuan by promoting it through its cancer drug distribution network. For Simcere, the transaction was the fourth acquisition in the year since it made its IPO on the NYSE.

Moving away from deals that will build drug development, the Beijing Genomics Institute said it has expanded its capacity to sequence genes by purchasing an additional 11 Genome Anlyzers from Illumina (NSDQ: ILMN) in a “multi-million dollar” transaction (see story). Beijing Genomics Institute now owns 17 of the machines, which take advantage of massively parallel technology to give them their computing power, bringing their total number of Illumina analyzers to 17. Beijing Genomics Institute has already completed two complete human genomes in their initiative to sequence at least 100 genomes of Asian individuals.

We also looked at Lotus Pharma (OTCBB: LTUS) last week, a company that reported its 2007 revenues moved 57% higher to $57 million while net profits climbed 34% to $8.5 million or 19 cents per share, fully diluted (see story). Lotus derives its revenues from four principal products, and it has an impressive seven drugs currently awaiting SFDA approval, plus three additional products in clinical trials and one more in pre-clinical development. Even with the growth and the deep pipeline, the company sells for less than one times sales and a PE ratio of less than five.

Finally, Aida Pharma (OTCBB: AIDA) disclosed that its recent purchase of Shanghai Qiaer has yielded a second anti-cancer compound, Vasostatin-Apo2L, currently in pre-clinical development (see story). The new drug candidate incorporates Aida’s previously announced drug, Rh-Apo2L, which causes apoptosis (cell death). The new product is a recombinant fusion protein that integrates the function of extracted fragments of Vasostatin, an inhibitor of angiogenesis and tumor growth, with the apoptosis function of Rh-Apo2L. Aida estimates that Vasostatin-Apo2L may eventually have a market of 80,000 - 100,000 patients annually. 


Disclosure: none.