Last week witnessed the formation of an unusually high number of partnerships between biomedical companies, one of them China-based, the other(s) not. That should come as no particular surprise to readers of ChinaBio® Today. Given the strong lure of participating in the China biopharma scene, ex-China companies are finding ways to participate in the advantages the country offers.

Perhaps the most unexpected announcement last week came when WuXi PharmaTech (NYSE: WX) announced it had signed a Memorandum of Understanding with Covance (NYSE: CVD), a fellow CRO with worldwide facilities (see story). Under the new agreement, Covance will now partner with WuXi on the Suzhou toxicology lab that WuXi has been building since Q3 of 2007. Covance will throw $30 million into the new JV, and WuXi will contribute the facility itself, estimated to cost $40 million. WuXi has already begun offering the tox services at a temporary Suzhou lab. Some analysts wondered about whether the collaboration made sense for WuXi. It’s certainly true that Covance will be able to direct a lot of business to WuXi – Covance has revenues of $1.5 billion. But WuXi has always seemed able do a very find job of attracting customers by itself. That makes one wonder what WuXi receives for giving up 50% of the revenues of the JV. Nevertheless, investors certainly cheered the lower risk profile. In a very negative week on Wall Street, WuXi rose 18%, climbing $3.18 to $21.68.

In a collaboration with potentially far-reaching implications, the US and China entered into an Understanding that will apply scientific research methods to traditional Chinese medicines (see story). Acknowledging that “alternative” medical practices already figure in the health routines of many Americans, Secretary of HHS Mike Leavitt said that the new initiative will help both countries to find how to integrate the two disciplines. The program is not unprecedented. In 2007, the NIH’s National Center for Complementary and Alternative Medicine (NCCAM) supported nearly $20 million in research on traditional Chinese medicine practices.

In a very interesting deal, a three-way joint venture, called Pacific Biopharma, combines San Diego’s PacificGMP, QB3 and the Taizhou government (see story). PacificGMP is a three-year-old contract manufacturing enterprise; QB3 is a consortium of three University of California Universities and business leaders; and the Taizhou government is seeking tenants for its GaoGong Science and Technology Park. Taizhou actually made the original overtures that resulted in the JV. The contract manufacturing JV will specialize in small batch manufacturing of biological drugs.

The very large Slovenian generic drug manufacturer, Krka, made a very small investment into two China pharmaceutical companies (see story). Krka paid just under $800,000 apiece for a 7.5% share in each of two companies: Cejang Menovo Pharmaceuticals Co. Ltd. and Anhui Menovo Pharmaceuticals Co. Ltd. The two companies have combined annual revenues of approximately $30 million. Krka said it made the investment to a secure a source for inexpensive APIs and chemicals for its generic drugs.

In a straight-ahead out-licensing deal, BioAlliance Pharma SA (Euronext Paris: BIO) sold the China commercialization rights for Loramyc™ to NovaMed Pharmaceuticals (see story). The deal could be worth up to $4.5 million to NovaMed in upfront and milestone payments. Loramyc (miconazole Lauriad®) is a muco-adhesive antifungal therapy. The Lauriad muco-adhesive technology enables targeted release at the disease site, delivering an anti-fungal drug via a buccal tablet. The targeted delivery allows the product to be used in immunocompromised patients, particularly patients with cancer. NovaMed will be responsible for obtaining SFDA approval for the product, and will market it in China after approval.

Oculus Innovative Sciences, Inc. (NSDQ: OCLS) entered a deal with Bayer (Sichuan) under which Bayer will seek to gain approval of its Microcyn wound healing/anti-infective product in pets and livestock (see story). Following approval, Bayer will have first negotiating on China marketing rights for Microcyn in animals. Microcyn is an oxygenated water product with a disinfectant quality, giving the externally applied product the ability to kill spores, fungi and viruses. Occulus received SFDA approval to use the product to treat burns and chronic wounds in humans earlier this year.

Microbix Biosystems Inc (Toronto: MBX) will establish a joint venture with the Hunan provincial government to build a very large influenza vaccine facility in China (see story). Hunan will contribute a $99 million incentive towards building the $197 million facility. The new facility will be able to produce 100 million doses of vaccine per year; presently, the world capacity for flu vaccine is less than 500 million doses, so the new plant will have a considerable impact on the world’s supply of flu vaccine. The new plant will use Microbix’s Virusmax manufacturing technology.

If collaboration was the theme during the last week, then the Yunnan Baiyao story is the variation on the theme. A maker of traditional Chinese Medicines, Yunnan Baiyao Group Co Ltd. (SZSE: 0005380) has bought the 49% of Lijiang Medicine Co. that it did not already own (see story). In other words, instead of greater collaboration, the deal represents consolidation. As is typical in mergers, Yunnan Baiyao projects synergies of operation from combining the two companies.

There were two other stories which we reported on last week that did not have anything to do with deals. One of them involves Bayer AG (FSE: BAYA), which has its sights on becoming the biggest seller of prescription drugs in China this year, bypassing current leader AstraZeneca (NYSE: AZN) (see story). Arthur J. Higgins, the head of Bayer Healthcare, told Reuters that revenues in China for the German biopharma would top $500 million this year. They have been growing at more than 40% annually.

And finally, ChinaBio® Today published its last installment of last week’s series of sessions on China at the BIO Convention. This session encompassed VC investment in all Asian countries (see story). The panelists mined their considerable VC experience to highlight a number of important issues. The difficulty of communication was one topic, showing how communication is more than a matter of words. It also involves a full understanding of concepts. And the panel talked about the effect of big pharma’s R&D foray into China. Although big pharma is already causing some shortages in the talent pool, particularly among experienced personnel, the longer-term effect will be beneficial. Big pharma will train China researchers and entrepreneurs, creating both markets for drugs from start-up biopharmas and experienced researchers to develop those drugs.


Disclosure: none.