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The Week in Review: Broad Views, Individual Company Details

publication date: Sep 13, 2008
 | 
author/source: Richard Daverman, PhD

In ChinaBio® Today over the past five days, we featured three broad overviews of the China biomedical world, each sourced from an outside publication. The news these articles imparted may seem familiar to our regular readers, who are very aware of the transformation taking place in China biopharma. For the ChinaBio® Today audience, the surprise may have been that the rest of the world still needs to be told.

Two of these “outside” stories came out of the BioBay Investor Forum 2008, which was presented by ChinaBio® and hosted by BioBay, the life science park in Suzhou, on August 27/28. The first article discussed the increasing importance of patented technologies in China biopharma, as the industry moves away from producing inexpensive copies of products that were discovered elsewhere (see story). China’s biopharmas companies are becoming more innovative, and the world of patent protection is necessary to protect their investment in drug discovery, even though some more traditional areas of the pharmaceutical industry remain wary.

The second article emanating from the BioBay Investor Forum predicted that the Yangtze River Delta, including the cities of Shanhai and Suzhou, would house the largest collection of clinical research facilities in the world by 2015 (see story). Kewen Jin, CEO of Charles River Laboratories Preclinical Services-China (NYSE: CRL) was the source for the prediction. He also said the region would see in-house R&D facilities from most major worldwide pharmaceutical companies, with a level of activity second only to the New York-New Jersey area in the US. The huge upsurge in activity is due not just to cost savings, in Jin’s view, but is also driven by the large supply of talent in the region. 

BusinessWeek was the source for the third overview of China biopharma, an article that highlighted the sea turtle phenomenon (see story). Going back to the 1980s, BusinessWeek pointed out the significance of the American educational system in training so many China scientists. The scientists then went to work in American universities and businesses; about 70,000 émigrés from China currently work for American biopharmaceutical companies. But the interdependence continues to work both ways. According to BusinessWeek, the returned sea turtles depend upon US biopharma for clients and for mentoring, as they seek to turn their drug discoveries into products.

Turning to individual stories, on the deal front, another US-China CRO alliance was announced last week, as Provid Pharmaceuticals of New Jersey formed a relationship with Acesys Pharmatech of China (see story). The new group combines Provid’s US-based drug discovery expertise with Acesys’s China-based medicinal chemistry resources and favorable cost structure. Recently, the China CRO Venturepharm (HKEX: 2285) announced that it had acquired Acesys, although no mention of that relationship was made in the Provid-Access announcement. Venturepharm also formed a JV (and made a capital investment in) US-based CRO Commonwealth Biotechnologies (NSDQ: CBTE). All of this gives the Provid-Access relationship an even greater reach, even though it makes the web of relationships quite confusing.

In company news, Tianyin Pharmaceutical (OTCBB: TYNP) released very solid unaudited results from its fiscal 2008, which ended June 30, 2008 (see story). Tianyin’s revenues climbed 65% to $33 million while net income was 50% higher at $5.9 million. The company expects to release audited numbers by the end of September, and management will discuss them in a conference call at that time. The company went on to forecast that revenues and net income would rise by at least 25% in 2009. Tianyin expects to commercialize between four and six new products during the next 12 months.

Tongjitang Chinese Medicines (NYSE: TCM) will address the problem of its depressed stock price by buying back its own shares (see story). The company announced a plan to purchase up to $20 million of its stock, a significant move in a company with a $128 million market capitalization. Tongjitang’s stock price fell to $3.80 after management rescinded its offer to take the company private at a price of $10.20. The company has $107 million in cash on its books, so the market is putting a very low valuation on the ongoing business of Tongjitang.

There were also several announcements last week that chronicled progress in individual product development. China Sky One Medical (AMEX: CSY) maintained its barrage of press releases by reporting its Heilongjiang Tianlong Pharmaceutical subsidiary has completed R&D on 26 new drugs. The company has submitted the drugs to the SFDA for approval (see story). Like most of China Sky One’s product portfolio, the new drugs are mainly external use products. The company expects the products to increase its revenues by 30% next year if they are all approved by the end of 2008. China Sky One paid just $8.3 million to acquire Tianlong earlier this year, so it seems to be getting its money’s worth.

Tianyin Pharmaceutical (OTCBB: TYNP), after releasing financial results, also told investors the SFDA has approved Laonian Kechuan Tablets, a new drug for the company, which was approved with a dose of 0.25 gram/tablet (see story). Like most of its portfolio, the new product is a modernized traditional Chinese medicine. Laonian Kechuan is aimed at asthma sufferers who are 60 years old and above. Tianyin will launch the product in November. Tianyin now has 37 drugs on the market while 48 additional products await approval.

Oculus Innovative Sciences (NSDQ: OCLS) is launching its Dermacyn™ wound treatment product in China by sending samples of the product to hospitals in ten China provinces (see story). Sinopharm is distributing the product in China for Oculus, and it featured Dermacyn at a recent trade show. The product was approved by the SFDA in March of this year to treat acute and chronic wounds including ulcers, cuts, contusions and burns. A major target for Dermacyn is diabetic foot ulcers.

Sinovac Biotech (AMEX: SVA) announced the launch of the 2008-2009 version of its seasonal flu vaccine, Anflu® (see story). Anflu is the only split influenza vaccine produced without preservatives in China. Sinovac will market the vaccine to adults. Last year, Sinovac signed a co-promotion agreement with GlaxoSmithKline (NYSE: GSK) under which Sinovac was responsible for marketing Anflu to children, while GSK took over the duty for adults. GSK was able to substantially increase Sinovac’s revenues from the product, so presumably the two companies are co-promoting the vaccine this year.

And finally, Genesis Pharmaceuticals Enterprises (OTCBB: GNPH) booked $12 million in new orders at the 43rd Annual New Drugs Conference sponsored by China Health Tech Forum 2008 (see story). Genesis will deliver the products over the next 12 months to more than 800 wholesale distributors. Genesis also said that more than 60% of the orders were for its newest product, Radix Isatidis Dispersible Tablets, a nonprescription TCM treatment for flu. Radix Isatidis is a popular treatment for flu in China, but Genesis will be the first to market the drug in a dispersible tablet formulation.

Disclosure: none.


 

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