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Week in Review: Walgreens Boots Alliance Spends $420 Million for China Pharmacy Presence

publication date: Dec 2, 2017
 | 
author/source: Richard Daverman, PhD

Deals and Financings

Walgreens Boots Alliance (NSDQ: WBA), a global retail pharmacy chain, will pay $420 million to acquire a 40% stake in Sinopharm Holding GuoDa Drug Store Co, the largest retail pharmacy chain in China (see story). GuoDa is a subsidiary of state-owned Sinopharm, the largest pharmaceutical company in China, and it is the industry's revenue leader for the past five years, with nearly 3,700 stores in 70 major cities across China.  

Ping An Good Doctor, one of China’s most popular online medical platforms, plans a $1 billion IPO on the Hong Kong exchange during the first half of 2018 (see story). The platform can be used to consult doctors on line and schedule appointments. Users may be able to order prescriptions in the future. In 2016, Good Doctor raised $500 million in an initial funding that valued the business at $3 billion. The company has signed up Citigroup and JPMorgan to run the initial offering.  

Zhenxing Biopharmaceutical & Chemical (SHZ: 0403), a blood plasma company, raised $322 million by selling a 19% share of the company to Kaisa Group Holdings (see story). Kaisa is a China company known mostly for construction, though it also already owns several healthcare companies. It said the investment would provide diversification and immediate revenues. Zhenxing, which operates mainly in Guangdong and Hunan provinces, has a market capitalization of $1.4 billion.  

AstraZeneca (NYSE: AZN) formed a strategic joint venture with the Chinese Future Industry Investment Fund (FIIF) to develop and commercialize new drugs in China (see story). FIIF is managed by the state-owned SDIC Fund. The JV, named Dizal Pharma, will take over AstraZeneca's Shanghai Innovation Center, including all of its staff and three projects in pre-clinical development. Dizal, headquartered in Wuxi City, will have $132.5 million in cash, presumably FIIF's contribution, giving the JV, which is equally owned by AstraZeneca and FIIF, a valuation of $265 million.

Fullerton Healthcare, a Singapore-based private healthcare provider, raised $121 million in a funding led by Ping An Insurance (see story). Fullerton will use the capital to expand its healthcare clinic offerings to mainland China companies. Initially, Fullerton plans to open 100 clinics in Shanghai, Beijing and Guangzhou. Ping An is a natural fit for Fullerton: its divisions include Ping An health insurance, Ping An Good Doctor (a mobile app) and Ping An Wanjia Healthcare (a healthcare delivery company). Established in 2011, Fullerton operates over 227 medical centers in southeast Asia.

I-Mab Biopharma, a Tianjin company, in-licensed greater China rights to an anti-CD38 antibody discovered by Germany's MorphoSys AG (FSE: MOR) (see story). The deal could be worth up to $120 million. MorphoSys is testing the candidate in a Phase I/IIa trial in patients with relapsed/refractory multiple myeloma. I-Mab was formed earlier this year when Third Venture Biopharma merged with Tasgen and raised $150 million in capital from C-Bridge/I-Bridge Capital and Tasly Pharma. I-Mab intends to develop innovative biologics for immuno-oncology and autoimmune diseases.  

12 Sigma Technologies, a San Diego medical imaging firm founded by a team of Chinese scientists, raised $30 million in a B round led by China VC firm SBCVC (see story). 12 Sigma was founded in 2015 by two former Qualcomm employees specializing in deep learning and computer vision. Its novel products can detect lesions as small as 0.01% of an image with an accuracy of 98.5%. 12 Sigma, which has partnered with GE Healthcare, has R&D labs in Shanghai and Suzhou and targets the China market for its products.  

GenomiCare Biotechnology, a Shanghai precision medicine company for cancer, completed a Series A financing co-launched by Morningside Venture Capital, Apricot Tree Capital and Carebridge Holdings (see story). Although GenomiCare did not disclose the size of the A round, the company did say it has raised $25 million since its inception in 2015. The company stresses early diagnosis plus precision, full-solution therapy. China Renaissance Group provides financial consulting services for GenomiCare.  

Chengdu's HitGen announced a drug discovery collaboration with Boehringer Ingelheim, using HitGen's DNA-coded library of 90 billion leads (see story). The latest HitGen collaboration will identify novel small molecule leads for "targets of interest to Boehringer Ingelheim," though no further details were provided. All together, HitGen has disclosed eight collaborations with other pharmas in the last two years. Each one is built on a financial structure of upfront payments plus milestones, though no specific financial information is disclosed.  

Aspen Holdings, a South African generic drug company, plans to establish partnerships to build its China drug portfolio, according to management (see story). The company established a China presence by acquiring anesthetic and thrombosis drugs from AstraZeneca (NYSE: AZN) and GlaxoSmithKline (NYSE: GSK) in 2016. With 650 staff, China is now Aspen's largest regional office. It has opened "key" sales offices in Beijing, Shanghai and Guangzhou, and is now ready to expand, the company said.

Trials and Approvals

Gilead Sciences (NSDQ: GILD) priced its Sovaldi treatment for hepatitis C at $8,938 in China -- about one-fifth the current price in the US (see story). In 2013, when the drug originally went on sale in the US, it cost $84,000 for a three-month round of treatment. Because it was 95% effective in a difficult-to-cure population, Gilead made the case that Sovaldi was worth the high cost. In most less-developed countries -- including India -- Gilead allows sales of Sovaldi at less than $400 for a three-month regimen. China is not included in that group.  

Disclosure: none.


 

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