It’s been anticipated for a long time. Chinese biotech is famously fragmented, with an estimated 5000 pharmaceutical manufacturers and 10,000 distribution enterprises. This is a situation ripe for consolidation, the economic logic behind melding these small companies into larger ones being impossible to withstand. So it is not surprising when three (or maybe four) of the stories in Chinese biotech last week were about companies merging.

China Resources (Holdings) was first out of the gate, announcing that it had won the right to rescue the state-owned enterprise Sanjiu Enterprises (and its main asset, Shenzhen-traded Sanjiu Medical & Pharmaceutical Co.), paying 4.46 billion RMB ($593 million) to a group of 20 banks (see story). This is familiar territory for China Resources (Holdings), because earlier it took on the task of restructuring another debt-laden state-owned-enterprise with a pharmaceutical subsidiary, China Worldbest Group Co.

At the end of the week, Simcere Pharmaceutical (SCR) announced it would buy a 51% stake in Boda Pharmaceutical, which makes the only rival to Simcere’s best-selling drug, Bicun (see story). Bicun, an injected edaravone, is administered following a stroke to protect organs during reperfusion (a return of blood supply following stroke). Bicun currently produces one-third of Simcere’s revenues, and it apparently wants to protect its hegemony on the market.

Also on Friday, Beijing Med-Pharm (BJGP) scooped up the 51% of Sunstone Pharma it had not already agreed to buy (see story). For the 51%, Beijing Med-Pharm will give 8 million shares of stock, carrying a value of $92.7 million currently. That is almost three times the amount it paid (in cash) for the initial 49% position in the company. Cash may not be king, but it does seem to be less expensive. Beijing Med-Pharm is a whirlwind of consolidation all by itself, gobbling up drug distributors as it seeks to build its distribution network. The Sunstone acquisition supplies Beijing Med-Pharm with both drugs to distribute and inroads to OTC drug outlets.

In terms of a company that is looking for a China acquisition, the Russian CRO (contract research organization) Synergy Research Group (SynRG), is on the lookout for a CRO partner in China (see story). Synergy is building a multi-national organization, having recently established a partner in India.

We also reported a rumor that things are about to change on the regulatory front – in the US and China. According to good sources (we believe), the State FDA in China is about to decrease the waiting time for IND approval to a short four months. This is no small change as the approval time is currently eight to twelve months – and sometimes longer. This extended period has sometimes been enough to send drug makers to other markets to test their drugs. Also, in the United States, the FDA may soon accept all-China data for IND applications. Because studies in China are less expensive, this would cut the cost of getting a drug through the approval process – and prove a huge boon to the CRO business in China (see story).

In other news, Immtech (IMM) was given Fast Track Status from the SFDA for the Phase III trial of pafuramidine, an oral drug undergoing testing as a treatment for Pneumocystis pneumonia (PCP) (see story). PCP is a fungal infection in the lungs that can cause potentially life-threatening pneumonia in patients with HIV and other immune-related diseases.

Benda Pharma (BPMA.OB) was pleased to announce that a national forum on gene therapy for cancer precipitated a year’s-worth of orders for Gendicine®, the only gene therapy therapeutic available anywhere in the world (see story). Physicians, acting on behalf of their hospitals, placed orders for $3.8 million of Gendicine®, after the drug booked just $1.5 million in revenue during the first half of 2007. The orders exhausted the present supply.

Next week, China celebrates National Day. To mark the event, the stock markets will take the week off, and the news flow may be lower.



Disclosure: none.