Deals and Financings

Shanghai Fosun High Technology (HK: 656) and Sinopharm Group (HK: 1099) will form a JV to build a nationwide drug logistics network (see story). The “early stage” investment is expected to total between $500 million and $1 billion. The Sinopharm-Fosun JV seems to be aimed at rationalizing the highly diverse structure of China drug distribution. Fosun will own 60% of the JV and Sinopharm the remaining 40%.

Sichuan Kelun Pharma (SHE: 002422) paid $51.5 million to buy a 5% stake in Lijun International Pharma (HK: 2005) (see story). The two companies have an interesting history. In late 2012, Kelun announced it would buy a 12.3% stake in Lijun for $135 million. That transaction was cancelled eight months later, without explanation, and Kelun promised it would not purchase any Lijun shares for six months. Now, after a seven-month quiet period, Kelun announced a 5% purchase of Lijun shares. Kelun described the purchase as a long-term holding. 

Hutchison Chi-Med’s (AIM: HCM) China drug distribution JV, Shanghai Hutchison Pharma, was granted rights to distribute six prescription TCM drugs in China (see story). The drugs, which have annual sales of $7 million, are made by Shanghai Traditional Chinese Medicine, Chi-Med’s partner in the JV. According to Chi-Med, the six-drug package is part of a restructuring of the drug distribution JV, which does not change its equity structure, but allows an “expansion of its business scope.” Chi-Med did not elaborate. 

Industry Insights

When looking for potential partners, "we're looking for differentiation," said Anand Gautam, Innovation Sourcing Director for Novo Nordisk A/S (see story). "This is very important, because not every product out there is going to cut it." Gautam was speaking to an audience – mostly Chinese – comprised mainly of biopharma execs who are interested in partnering with multinational pharmas. They were the attendees at a partnering boot camp that took place just before the recent 2014 ChinaBio® Partnering Forum in Suzhou. The audience received some very practical information. 

Venture investing in China's life sciences industry continued a three-year upswing in 2013, according to speakers at the ChinaBio® Partnering Forum (see story). Publicly disclosed VC deals topped $1 billion last year. The steady rise in venture capital investing – much of it homegrown – is a key indicator that China is building a sustainable life sciences ecosystem. BioWorld, the ThomsonReuters newsletter, reported on a panel discussion at the Partnering Forum in which China-focused venture capitalists shared their thoughts on the investment landscape.

Company News

Baxter International (NYSE: BAX) officially opened a $56 million China R&D center in Suzhou Industrial Park, the company’s first R&D center in China (see story). The Suzhou facility was charged with the mission of developing Baxter's global R&D network further and, at the same time, providing better medical services for Chinese patients. Baxter makes both biopharmaceuticals (hemophilia and kidney treatments plus vaccines) and medical products. The company plans to split into two entities during 2015, with medical products retaining the Baxter name. 

In April, the Beijing Institute of Genomics (BIG), China Academy of Sciences, together with its commercial partner Zixin Pharmaceutical Industrial (SHE: 002118), unveiled a China-developed genomic sequencing machine that takes direct aim at Illumina’s (NSDQ: ILMN) state-of-the-art sequencer (see story). BIG claims their machine offers longer sequencing reads and a 30% lower price tag than Illumina’s machine, but admits their machine’s throughput is lower. 

MicroDiag Biomedicine, a Suzhou maker of cancer diagnostic tests, was invited to present its serum circulating DNA mutation detection assay at the recent ASCO meeting in Chicago (see story). The test, which MicroDiag calls the MCA-qASA assay, allows clinicians to personalize chemotherapy when no tumor tissue sample is available. MicroDiag will complete a China clinical trial of the assay and hopes to market it in early 2015.

Trials and Approvals

Jiangsu Hengrui Medicine (SHA: 600276) announced that apatinib, its oral treatment for metastatic gastric cancer, successfully completed a Phase III trial in China (see story). Data from the trial were presented at the recent ASCO conference in Chicago, and the presentation was included as a Best of ASCO selection. Hengrui has filed with the CFDA for marketing approval of apatinib in China.

Biomerica (OTCBB: BMRA), a Los Angeles maker of diagnostic tests, said the CFDA has approved China use for two sets of tests: Parathyroid Hormone (PTH) and Calcitonin (see story). Biomerica also said the products will be distributed in China through a distribution channel that is unrelated to Biomerica's current China distributor. Although Biomerica did not name the new distributor, it did describe the company as one of China’s top three suppliers of Vitamin D tests, a related product.

Disclosure: none.