Transactions

Fuan Pharma Makes $214 Million Debut on ChiNext
Chongqing Fuan Pharmaceutical (SHE: 300194) completed a ChiNext IPO, raising 1.4 billion RMB ($213.5 million) (see story). The company was priced at a P/E ratio of 46. Established in 2004, Fuan Pharma manufactures antibiotic APIs to GMP standards. In its first open market session, Fuan’s shares slipped 4%. Both the pricing and market reaction show a cooling of speculative fervor on the ChiNext Exchange.

Zhejiang Drug Distribution Competition Heats Up
Sinopharm Group (HK: 1099) will acquire Zhejiang Wenling Drug Materials, based in Taizhou, Zhejiang province (see story). Wenling has annual revenues of 1.1 billion RMB ($168 million). The acquisition amped up a competition in Zhejiang between Sinopharm and its chief drug rival in the drug distribution sector, Shanghai Pharmaceuticals Holding (SHE: 601607).

Hisun Pharma Invests in US Biotech Startup
Zhejiang Hisun Pharma (SHA: 600267) will invest $6 million in Photolitec LLC, a brand new cancer startup located in Buffalo, NY (see story). The deal gives Hisun right of first refusal for compounds being developed in conjunction with Photolitec’s Photodynamic Therapy for oncology.

China Kanghui Buys Stake in Orthopedic Implant Company
China Kanghui Holdings (NYSE: KH), an orthopedic implant maker, has acquired a 60% stake in Beijing Wei Rui Li Medical Device Co., a manufacturer of hip and knee systems (see story). Kanghui has the right to purchase additional shares of Wei Rui Li at a pre-determined price if it achieves certain milestones. This is Kanghui's second affiliation this year with a hip and knee implant company.

Company Analysis

American Oriental Bioengineering: All Dressed Up, Nowhere to Go
American Oriental Bioengineering (NYSE: AOB) announced a $20 million share buyback (see story). Sometimes, companies initiate buybacks after reaching a high-minded, well-researched decision that its own stock is the best investment available anywhere on the globe. More often, buybacks are a small sop thrown to shareholders to lessen the pain from negative news. Unfortunately, this is a case of the latter.

Big Pharma in China

Takeda Pharma Ups Commitment to China
Takeda Pharma (TSE: 4502) of Japan has signed an agreement with China Medical City in Taizhou (see story). The company’s China subsidiary will build facilities in CMC, including buildings for R&D, manufacturing and marketing of innovative drugs. The company candidly admits it is playing catch-up in China. “We missed the boat several times in China,” said Yasuchika Hasegawa, President of Takeda, last year. “We are trying to catch the last boat.”

Novartis Will Add China Sales Reps to Gain Market Share
Novartis (NYSE: NVS) announced plans to increase its China sales force after the company saw its rate of growth in China decline in 2010 from a 30% increase in 2009 (see story). Without releasing specific figures, Novartis’ CEO, Joe Jimenez, created the impression the company’s growth rate was much lower, though still at least 10% in 2010. The goal of the sales force buildup, he said, is to gain market share.

Disclosure: none.

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