China will soon announce a plan to invest a massive $1.5 trillion over five years into seven industries. The goal is to transform each sector into a world-class leader in innovative technology (see story). Biotechnology is one of the target industries. Unlike most of the strategies presently in place for creating innovation, the plan does not call for huge government subsidies, but relies instead on creating incentives for bank lending, corporate investment and help from local governments. It is thought that China will cut the income tax rate in half – to 7.5% – for investors in the industries.

The National Development and Reform Commission (NDRC) has ordered price reductions on 174 drugs from 60 companies (see story). Since 2000, it has been the policy to allow pharmas to set their own prices if the drugs were innovative, patented formulations. Now, it seems the NDRC will be in control of all pricing. The price cuts, which averaged 17%, will go into effect on December 12.

Cardinal Health (NYSE: CAH) made a major foray into the China pharma distribution business by paying $470 million to acquire privately held Zuellig Pharma China, a China drug distribution company with annual revenues of over $1 billion (see story). Cardinal said almost all of the multinational pharmas work with Zuellig in China. Known locally as Yong Yu, Zuellig Pharma is the largest importer of drugs in China.

Shanghai Pharmaceuticals Holding (SHEX: 601607) will buy a majority 55% stake in China Health System, which will help the company expand its drug distribution business in North China (see story). CITIC Pharmaceutical Group, one of the top three pharma distributors in China, is a subsidiary of CHS. After the acquisition, Shanghai Pharma will be the second largest drug distributor in China.

According to well-placed sources, GlaxoSmithKline (NYSE: GSK) will soon acquire Nanjing MeiRui Pharma, a China company specializing in the urology market (see story). The price is rumored to be in the low hundreds of millions of dollars. Both companies are active in the urology market, with drug products that address benign prostatic hyperplasia. GSK is expected to announce the deal before the end of the year.

C&O Pharmaceutical Technology Holdings Limited (SPEX: COPT), a diversified China pharma that is listed on the Singapore exchange, said Sumitomo Corporation has bought a 29% stake in the company, paying $73 million (see story). Sumitomo purchased the shares from a corporation owned by C&O’s Executive Chairman, Gao Bin.

Sino Biopharma (HK: 1177) will spend $37 million to purchase additional shares in two of its subsidiaries, both of them located in Jiangsu Province (see story). In the largest transaction, Sino Biopharma will acquire 25% stakes in Jiangsu Chia Tai Fenghai Pharma and Yancheng Suhai Pharma. The shares are held by a company called Ace Elite, which Sino Biopharma is purchasing for 202 million RMB ($30 million).

3SBio Inc. (NSDQ: SSRX) acquired worldwide rights to a clinical-stage treatment for gout from EnzymeRx of New Jersey for $6.25 million (see story). In a pair of Phase I trials, Pegsiticase (Uricase-PEG 20), a pegylated recombinant uricase, proved effective against gout in all patients. 3SBio plans to develop the drug for use in China, while out-licensing the drug to partners for development elsewhere in the world.

Dongsheng Pharmaceutical International (OTCBB: DNGH) acquired all rights to a vasodilator drug from Shanghai Wan'Te Pharma for $1.5 million (see story). Micro-emulsion alprostadil injection is the second most widely used cardiovascular disease treatment in China hospitals, according to the company. Dongsheng plans to begin marketing the drug in March 2011.

Ascenta Therapeutics of the US has struck a deal to co-develop cancer drugs with Ascentage Pharma Group, a company with operations in Hong Kong and Shanghai (see story). As the names suggest, the two companies are closely related. Ascentage was Ascenta’s R&D operation in China until it was spun off last year. The companies contend their collaboration will use each entity’s complementary strengths and speed up the process of regulatory review.

Disclosure: none.