Last week’s news from the China biomedical world started off with a flurry of announcements that were unusual in their uniformity: each centered on the subject of Deals and Financings. As the week progressed, the news developed a greater diversity of themes, ending with a significant story that the US FDA will soon establish an office in China (see story). This is the first time that the FDA has opened a permanent office on foreign soil. So the Beijing branch, which is expected to be operational in October, is momentous, in our words. The news of the upcoming China FDA office came from an article in the Genetic Engineering News (see article), which also contained a somewhat skeptical discussion of how successful the FDA could be in assuring food and drug safety in the sprawling world of China biopharma.

Our own “boots on the ground” Executive Editor, Greg Scott, took exception to several of the points made in the article, based on his own experience in China biopharma (see story). Besides adding the information that two more offices will soon be added in China, he pointed out that the SFDA is much more sophisticated than it appears in the Genetic Engineering News article. It has been around longer that the story suggests, in some respects has more exacting requirements than the FDA, and has established collaborations to make certain it fully understands and maintains global standards. Further, Dr. Qimin Zhan, Chief Scientist of the 863 Program, which provides support for early stage biopharmas in China, detailed plans for the government program at the recent BioBay Investor Forum in Suzhou, presented by ChinaBio. The 863 Program shows China intends to develop itself as a world class center of innovative drug R&D. To win the world’s respect, China needs to follow the same rigorously exacting scientific procedures as the West. The FDA’s new office in China will help make that happen.

On the major theme of the week, Deals and Financings, the biggest transactions were, unfortunately, just rumors. In a recent article, The South China Morning Post announced that two major China biopharma IPOs were imminent: China National Pharmaceutical Group (Sinopharm) would seek to raise $750 million by listing on the Hong Kong exchange in Q4, and CITIC Pharmaceutical Group would attempt to place $200 million of its securities (see story). Trouble was, the state-owned Sinopharm denied the report immediately. Skeptical observers also noted that a state-owned enterprise would probably list on a domestic exchange, not in Hong Kong. Sinopharm already has one publicly traded subsidiary. China National Medicines Corporation Ltd. (SH: 600511), which trades on the Shenzhen exchange, is responsible for 80% of Sinopharm’s total profits on just 20% of its income. Sinopharm is the largest pharmaceutical distribution company in China.

Moving on to deals that were actually completed, dermatology company Profex, Inc. announced the closing of a $15.5 million Series A funding (see story). The round was led by Trident Capital and joined by Mustang Ventures, Trident’s partner in China venture investing. The new capital will be used for marketing. The company will increase its sales efforts and extend its geographical reach inside China. Shanghai-based Profex licenses, acquires, and markets an international portfolio of proprietary and third-party dermatological products. Its products include prescription medicines, OTC drugs, aesthetic products and cosmeceuticals.

Beijing Beilu Pharmaceutical Co., Ltd. raised 66.6 million RMB ($9.7 million) by issuing 12.5 million shares to seven investors (see story). The largest block went to Infotech Pacific Ventures, whose 7.5 million shares constitute 15% of the outstanding stock of Beilu. Infotech paid 40 million RMB ($5.8 million) for its shares. By giving the company more capital, the funding also improves the company’s financial measures, which is important because Beilu is moving toward listing its shares on the Growth Enterprise Market.

Biomics Biotechnologies (Nantong) Co. closed a Series B funding of 34 million RMB ($5 million) (see story). In January 2007, Biomics raised $3.5 million in a Series A round, according to Zero2IPO. The B round was led by Jiangsu Dinghong Venture Capital Co., Ltd., with Jiangsu Benefit Rise Group also participating. Biomics says that its siRNA drug R&D is combined with a drug delivery system that puts the company in the forefront of China’s siRNA sector.

China Botanic Development Holdings Limited (HKEX: 2349) paid 23.6 million RMB ($3.4 million) to purchase all of Guangdong Kangli Pharmaceutical Company Limited, a company involved in the direct sales of medicine, health care products and equipment in China (see story). China Botanic is a manufacturer of packaged foods, but it has recently been diversifying into pharmaceuticals. In late 2007, it bought Shenzhen Conseco Seabuckthorn Biotechnology Company. Presumably, China Botanic will sell its seabuckthorn products using the direct sales model of Guangdong Kangli, which also has a license to sell health care products on the internet.

Venturepharm Group (HKSE: 8225) continued to expand its web of collaborations by establishing a relationship with Canadian biotech Lorus Therapeutics (AMEX: LRP) to develop Lorus’ portfolio of cancer drugs (see story). Lorus has eight molecules in its pipeline. Four of them are in pre-clinical testing while the remaining four are development stage. Only two have begun clinical trials, and one, a potential treatment for pancreatic cancer, has been partnered with ZOR Pharma. Venturepharm also announced that it has absorbed Acesys Pharmatech, a Nanjing global drug discovery CRO with about 70 chemists, into its China-located Exelgen operation. Last week, we added details about Venturepharm’s relationship with Commonwealth Biotechnologies (NSDQ: CBTE). Venturepharm owns 43% of CRO Commonwealth and has established a JV with them.

Decision Resources released a report forecasting that the market for hepatitis B drugs in China will grow 135% by 2012. From $340 million in 2007, sales of hepatitis B treatments will increase to $800 million over the five year span, a CAGR of 18% (see story). Part of the reason behind the high dollar value of drugs for this population is that the nucleoside/nucleotide analogue class of drugs generally used to treat the disease must be given long term, usually for the rest of a patient’s life. For China’s patients, the choice is often between a more-expensive Western drug and a domestic treatment that is perceived to be less effective.

And finally, Beijing SL Pharmaceutical Co. Ltd. (SZSE: 002038) reported that it received SFDA approval to begin producing a hepatitis drug and a second separate SFDA authorization to begin clinical trials of a drug for male infertility (see story). Adefovir dipivoxil, the new hepatitis B drug, is already marketed by 10 China biopharmas, but SL Pharma is one of only three to have permission to manufacture and sell the drug in capsule form. SL Pharma’s male infertility product is thought to be modafinil, the stimulant drug that is marketed as Provigil by Cephalon (NSDQ: CEPH). The drug is given to treat excessive daytime sleepiness, especially among people suffering from narcolepsy. It has also been used to improve patients’ moods, but it has never before been tested as a treatment for male infertility.


Disclosure: none.