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 Februaruy 2008 Minimize
ParkwayHealth Ups Investment in Shanghai Healthcare 2/1/2008
by Life Science: China
Parkway Holdings Ltd. (SIN: P27 ) the Singapore-based integrated healthcare provider, announced earlier this week that it would increase its equity stake in the World Link network of medical and dental centers in Shanghai. This latest investment by the company, also known as ParkwayHealth, advances the company’s goal to be the largest publicly traded healthcare company in Asia.
ParkwayHealth management announced that its wholly owned subsidiary, Medical Resources International Pte. Ltd. (MRI) has entered into a master agreement with Shanghai Alliance Investment Limited (SAIL), Ruijin Hospital of Shanghai Second Medical University and Shanghai Guangci Medicine High-Tech Co., Ltd. to acquire a 10% equity interest in each of Shanghai Rui Hong Clinic Co., Ltd., Shanghai Rui Xin Healthcare Co., Ltd. and Shanghai Xin Rui Healthcare Co., Ltd. collectively referred to as the World Link Companies. It is also granted to MRI call options to acquire the remaining 30% equity interests in the respective World Link Companies under certain conditions.
In April 2007, ParkwayHealth acquired a 60% stake in World Link Medical and Dental Centers via its acquisition of MRI for S$64 milllion (US$45 million). Parkway’s recent investment, valued at S$7 million (US$5 million), will raise its stake to 70%. On exercise of the purchase option the World Link companies will become wholly-owned subsidiaries of MRI at a purchase price of an additional S$21 million (US$14.8 million).
This recent investment is intended to augment the market presence of ParkwayHealth in Shanghai. The company established a firm foothold in Shanghai with the opening of the US$8 million Shanghai Gleneagles International Medical, Dental and Surgical Centre in May 2007. The 32,000 square foot center, operated as a joint venture with Huashan Hospital, offers high-end healthcare to the local and expatriate communities. The center offers medical services in family medicine and dentistry, minimally invasive surgeries of various specialties, gynecology, orthopedics, sports medicine, plastic surgery and general surgery, among others.
Speaking earlier on the World Link acquisition, Dr Jonathan Seah, the group vice-president of Parkway North Asia, said, “The deal will allow for significant synergies with Parkway's Shanghai Gleneagles International Medical and Surgical Centre. Parkway's Shanghai network will now be able to offer international quality outpatient surgical services and also extend its reach to local Chinese consumers seeking premium medical care.”
Founded in 1974 as Singapore Glass Ltd., the company went public on the Singapore exchange in 1975. After divesting its glass business, Parkway entered healthcare in 1991 and has expanded both in terms of size and reputation to become a recognized international leader in hospital development, management and operations. In addition to its three core hospitals in Singapore, Parkway operates 14 hospitals with 2,800 beds in China, Malaysia, Viet Nam, India and Brunei. The company also boasts a network over 1500 healthcare providers in 40 specialties and medical referral centers in over 24 countries worldwide.
For the 2006 fiscal year, Parkway reported revenues of S$868 million (US$614 million), up 54% from 2005. EBITDA was S$189.6 million (US$134 million) or 22% of revenues, an increase of 34% on the year. Net profits before extraordinary items were S$70 million (US$49.5 million). International hospital revenues accounted for S$239 million (US$169 million) or 28% of total revenues, growing at a 106% pace for the year.
Position: None
Winter Storms Hit TCM 2/4/2008
by Life Science: China
Tongjitang Chinese Medicines Company (NYSE: TCM ), a pharmaceutical company focusing on the development, manufacturing, marketing and selling of modernized traditional Chinese medicine in China, announced today that severe snow storms in central and southern China will negatively impact its first quarter 2008 financial results.
Xiaochun Wang, Tongjitang’s chief executive officer and chairman of its board of directors, stated, “The extreme weather conditions are creating widespread power shortages and interrupting our manufacturing and product transportation. We halted manufacturing and product delivery from Guizhou Tongjitang Pharmaceutical and Guizhou LLF Pharmaceutical, and we are working diligently to assess the impact the extreme weather will have on our first quarter 2008 results. We also believe that our sales and promotional efforts are temporarily waning in the Central and Southern areas of China, as businesses remain closed and salespeople are unable to effectively travel. While all of these issues are short-term in nature, we anticipate that our first quarter results will reflect at least two weeks of weather-related sales disruption.”
Mr. Wang continued, “Tongjitang will resume normal operations as soon as conditions allow, and we expect to update investors with any material developments as we deem appropriate. One certainty is that we remain confident in our long-term growth prospects.”
Nineteen provinces and regions in China have been hit by the worst winter storms in over 50 years. Damage has been extensive in agricultural areas, particularly in areas in southern China producing winter crops. The Ministry of Agriculture reports that over 23 million acres of agricultural land have been affected by snow and freezing rain, with as much as 2.7 million acres having a total loss of winter production. In addition, extensive damage has been reported to greenhouses, support structures and agricultural equipment.
Along with agricultural damage has come extensive damage to property and economic production. The storms have resulted in over 60 deaths and over 1.7 million people relocated in the past two weeks. China’s Ministry of Civil Affairs reports that the storms have destroyed 223,000 houses and damaged another 862,000, and caused a direct economic loss of RMB 53.8 billion (US$7.47 billion). Numerous cities and rural areas have been hit by power outages. Transportation disruptions have stranded hundreds of thousands of travelers, with the disruption made worse by the crush of travel occurring this week due to the upcoming Chinese New Year national holidays.
Despite the immediate disruptions, the longer term impact of the storms is expected to be muted. World Bank economist Louis Kuijs said that most of the impact of the storms, including rising food prices and a decline in industrial output over January and February, will turn out to be temporary, and that there 'could be some pick-up (later in the year) as investment takes place to solve the bottlenecks'.
Position: None
West Pharma Services Breaks Ground in Shanghai 2/4/2008
by Life Science: China
West Pharmaceutical  Services Inc. (NYSE: WST ), the Pennsylvania-based manufacturer of packaging and delivery systems for healthcare and personal products, announced Friday that it broke ground on its new manufacturing plant in Shanghai. The company plans to tap into China’s fast growing pharmaceutical market.
“China was a new challenge for us,” said Jeremy Layman, Vice-President for Sales and Marketing, Asia/Pacific in earlier comments. “We predominantly supply to large multinationals, but the majority of drugs in China are locally produced for local consumption, and there has not been a high level of quality control in the market.  But the level of regulation is rapidly changing, and companies are beginning to demand the high standards used in regulated markets. And as manufacturing becomes more sophisticated it is also reasonable to predict that China will begin to produce pharmaceutical products for export. So as standards tighten, we would like to take a bigger part in that market.”
The factory, located in the Shanghai Qingpu Industrial Zone, is expected to be put in operation by the end of 2009. The company has invested US$20 million in developing the first facility, meant to produce plastic closures for intravenous systems to be used by an established European customer with a manufacturing plant nearby. The company plans to build a second facility, to produce elastomeric components for the domestic China market, anticipated to be completed in 2011 with a total investment in Shanghai of up to US$80 million.
West has previously supplied customers in the Asia Pacific region from its manufacturing plant in Singapore. In May 2007 West announced plans to invest US$32 million to expand capacity at its Singapore facility. The plant manufactures stoppers, seals and packaging components used for injectable drug delivery and diagnostic systems. West has maintained sales offices in China since the mid-1990s. Their regional multinational customers include Baxter, BD, Schering Plough, GE Healthcare, Ranbaxy and Hospira.
For the nine months ending Sept. 30 2007 the company reported global revenues of US$764 million, an increase of 12% from same period in 2006. Gross and operating profits were US$221.3 million and US$87.3 million respectively. Revenues from Asia Pacific accounted for roughly 4% of revenues.
The company’s financial results were negatively impacted in the fourth quarter 2007 by the high profile market failure of Pfizer’s Exubera inhaled insulin product, as West was the only U.S.-based contract manufacturer producing the inhalation delivery device used with the drug. As a result the company took an impairment charge of up to US$13.1 million along with a restructuring charge of up to US$12 million. Despite these charges the company expects full-year 2007 revenue to be slightly over $1 billion, consistent with previous guidance. Guideance was also unchanged for adjusted diluted EPS for the full year, which is expected to be between $2.32 and $2.36.
Position: None
MBK Makes Bid for Asiapharm 2/5/2008
by Life Science: China
AsiaPharm Group (SIN: A61 ), a Singapore-listed pharmaceutical manufacturer, announced yesterday that private equity firm MBK Partners has proposed to acquire the company for S$357 million (US$253 million). At S$0.725 (US$0.513) per share the offer values the company at a premium of 14.2% over the company’s share price as of Jan. 31 2008.
Cayman Islands based MBK proposes to acquire Asiapharm via LuYe Pharmaceutical Investment Co., a wholly owned subsidiary of MBK. LuYe has formed a consortium with members of Asiapharm senior management to make the offer with a view to taking the company private. Asiapharm key shareholders, who hold 44.17% in the company, have agreed to sell their shares to LuYe.
Founded in 1994, Asiapharm has grown steadily as a manufacturer and distributor of pharmaceuticals primarily in the Peoples Republic of China. The company has two manufacturing facilities in Nanjing and in Yantai, Shandong province. The company also has an extensive distribution network covering 30 provinces, municipals and autonomous regions in China servicing approximately 2,500 hospitals as well as drug retail outlets.
While the company has 15 drugs in production and 9 in the pipeline, Asiapharm derives 93% of its revenues from 3 products: Lutingnuo (reduced glutathione for injection), Maitongna (sodium aescinate for injection), and Nuosen (sodium pantoprazole for injection).
For the 2006 fiscal year the company reported net profits of RMB 83.7 million (US$12 million) on revenues of RMB 308.3 million (US$43 million). The company’s revenues fell over 10% from 2005 due primarily to regulatory restriction on drug sales by hospitals as well as a decline in the sales price of its Maitongna injectable anti-inflammatory drug. The company’s share price has suffered, falling over 40% in the past year to a recent low of S$0.47 (US$0.33) before rebounding to S$0.635 (US$0.45) on news of MBK’s offer.
Position: None
Chindex Flying High on Strong Earnings 2/8/2008
by Life Science: China
Chindex International Inc. (NYSE: CHDX), a US-based healthcare company that provides healthcare services and supplies medical capital equipment, instrumentation and products to the Chinese marketplace, reported third quarter 2007 earnings this morning. Company shares rose near their all-time high due to strong results on both the top and bottom lines.
Revenue for the quarter ended December 31, 2007 was US$36.0 million, a 19% increase same quarter in 2006. Net income from continuing operations for the quarter ended December 31, 2007 was US$3.9 million, compared to last years results of US$0.7 million. Earnings per basic share on continuing operations of US$0.50 represented a 400% increase over  the quarter ended December 31, 2006.
Revenue for the nine months ended December 31, 2007 was US$95.4 million, a 17% increase over revenue of US$81.2 million in the nine months ended December 31, 2006. Net income from continuing operations for the nine months ended December 31, 2007 was US$6.3 million, with earnings per basic share on continuing operations of US$0.85. This compared favorably to results of US$2.3 million and US$0.34 respectively for the same period last year.
"Our continuing top and bottom line performance on a consolidated basis this quarter was again led by an increase in the profitability of our Healthcare Services division,” said Roberta Lipson, Chindex CEO. “This was fueled by continued growth in inpatient and outpatient results in both the Beijing and Shanghai markets. Our development program for new United Family Healthcare facilities in Guangzhou and Beijing is entering a new phase. Since our last quarterly report, we have completed a series of equity and debt financings that will provide us with $105 million in total financing. We are currently implementing our market entry program in Guangzhou with the commencement of construction of an outpatient clinic center, and moving forward the initial phases of our main hospital facility development program. We were also pleased to announce our active participation in programs related the Olympics to be held in Beijing this summer."
"The Medical Products division reported profitable results for the quarter due to strong performance in imaging and surgical product categories. The market issues which have been impacting us over the past several quarters have not abated completely, however the pent up demand for imported medical devices which has been accumulating over the past two years is driving sales throughout the country now. Our outlook for the Medical Products division continues to be optimistic. We believe the conditions are aligned for continuing good performance in this division in the future."
Chindex’s results represent a solid beat on both top and bottom lines. Prior to the report, analysts were estimating third quarter EPS of US$0.26. FY 2008 revenues and EPS were previously estimated to hit US$100 million and US$0.71 respectively. It is notable too that the company’s medical products division, which has run consistently in the red for several quarters, showed a profit in the third quarter. While adverse winter weather may have a short term impact on the fourth quarter, it is clear that the company will have a banner year.
Chindex continues to execute on what could be considered a difficult business model. China’s healthcare services sector continues to be highly regulated, and has not always been receptive to foreign-owned operators. The company has experienced significant delays in the buildout of its healthcare facilities, but construction plans appear to be moving forward.
Following a restructuring in FY 2006 that allowed the company to focus on its healthcare services and medical products divisions, the company has shown progressively improved operating results. Chindex appears to be favorably positioned to benefit from positive market conditions developing in China over the next few quarters, including the upcoming Beijing Olympics. In addition the Chinese government has committed to significantly increasing funding for healthcare services, which should provide a tailwind for the medical products division as public hospitals upgrade their facilities.
Investors have shown their appreciation for Chindex’s results. Shares bottomed out at US$3.10 in October 2005 during the difficult FY 2006 restructuring and have risen steadily since then. Trading near its all-time high of US$38.98, the company has outperformed both the Chinese and US market indexes over the past several months. This was particularly true today, with shares rising over 10% by midday to a recent US$37.15.
Position: None
Tianyin Pharmaceutical Reports 2nd Quarter Results 2/15/2008
by Life Science: China
Tianyin Pharmaceutical, Inc., (OTCBB: VSCO) , a Chengdu, China based manufacturer and supplier of modernized traditional Chinese medicine (TCM) announced fiscal results for its 2nd quarter ending December 31, 2007.
Total revenue for the 2nd quarter of 2008 increased 69.8% to approximately $7.7 million compared to approximately $4.3 million for the 2nd quarter of 2007. Gross profit was approximately $3.2 million and gross margins of 41%, compared to approximately $1.6 million in gross profit at a gross margin of 37.2% during the 2nd quarter of 2007. Operating income for the 2nd quarter of 2008 totaled approximately $2 million, a 68% increase from the $1.2 million reported for the 2nd quarter of 2007. Operating margins were 25.5% and 27.1% for the 2nd quarter of 2008 and 2007, respectively.
For the 2nd quarter of 2008, net income was approximately $1.7 million, an increase of 67.5% from $986,317 recorded during the 2nd quarter of 2007. The Company incurred taxes of $300,000 and $160,000 for the 2nd quarter of 2008 and 2007, respectively, which equated to an effective tax rate of 15% and 13.6%. Tianyin had 14.6 million shares outstanding on February 12, 2008.
For the six months ended December 31, 2007, revenues increased approximately 82% to $14.9 million compared to the same period in 2006. Gross profit was $6.1 million for the first six months of 2008, representing an increase of 94.3% from the first six months of 2007. Gross margins were 40.6% for the first six months of 2008 compared to 38% for the same period in 2007. Income from operations was $3.8 million for the first six months of 2008, representing an increase of 65% over the first six months of 2007. Operating margins were 25.4% for the first six months of 2008 compared to 28% for the first six months of 2007. Net income was $3.2 million for the six months ended December 31, 2007, an increase of 65% from the same period in 2006.
"We are very pleased with our performance for both the second quarter and year to date. 2008 has proven to be an inflection point for our Company after we entered the U.S. capital markets with a $15 million investment by a diverse group of institutional investors in support of our highly qualified and competent management team," said Dr. Guoqing Jiang, CEO of Tianyin. "The underlying growth dynamics, supported by increases in disposable income and improving fundamentals in the overall modern traditional Chinese medicine industry provide further confirmation that we are properly positioned to capitalize on this opportunity on a go forward basis."
"I would like to thank all of the investors who participated in our recent private placement. This capital will be used to significantly expand our production capacity during the coming six to twelve months to meet demand supported by the continued growth in expenditures per capita on Traditional Chinese Medicines (TCMs) and government support for additional cost reimbursement of our products," stated Jiang. "TCM's have been deeply ingrained in Chinese culture for thousands of years and long been perceived by many Chinese to be both safe and efficacious. Strong government support to include more TCM's to the list of medicines subject to reimbursement in the National Medicine Catalog, along with the Chinese SFDA's plan to release more product approvals will be advantageous for the future growth prospects for our large pipeline of new products."
Established in 1994, Tianyin was acquired in whole by the current management team in 2003. The company has two manufacturing facilities and over 1,100 employees located in Chengdu, Sichuan Province. The company also reports a nationwide distribution network throughout China with a sales force of over 500 salespeople and six regional distributors. They currently manufacture and market a portfolio of 34 products, 22 of which are listed in the National Medicine Catalog of the National Medical Insurance program. The company also reports a pipeline of 51 products which are pending regulatory approvals with the China State Food and Drug Administration.
Tianyin went public on the OTCBB in January via reverse merger with Viscorp Inc., a shell company registered in Delaware. The merger was accompanied by a private placement of US$10.2 million in convertible notes and warrants, raising US$9.2 million for the company. The company subsequently raised US$5 million via a similar private placement, resulting in a total of US$13.7 million in capital for the company. The company has filed to change its corporate name to Tianyin Pharmaceutical Co. and will soon trade under a new symbol on the OTCBB. The company has also filed to issue up to 25 million shares of “blank check” preferred shares for the purposes of raising additional capital.
Source: PRN Newswire
Position: None
NovaSecta Finds Chinese Partners for Drug Discovery Solutions 2/18/2008
by Life Science: China
NovaSecta, a London-based R &D service provider for smaller to mid-sized pharmaceutical and biotech companies, announced today a strategic alliance with Shanghai’s Sundia Meditech and HD BioSciences. The alliance, meant  to provide drug discovery solutions for European pharmaceutical and biotech companies, will bring together the scientific capabilities of Sundia and HD BioSciences with NovaSecta's extensive client base and unique understanding of European mid-sized pharmaceutical and biotech companies.
"We selected Sundia Meditech and HD BioSciences as our alliance partners based on their professionalism and track record in repeatedly delivering drug discovery solutions to their US and multi-national clients.” said Robert Thong and John Rountree, NovaSecta's co- founders and Managing Directors. “Combining the skills and demonstrated drug discovery track record of their scientific teams with the expertise of European drug discovery scientists will surely lead to faster and more efficient generation of high quality drug candidates."

For Sundia and HD Biosciences, the alliance builds on their previously announced CRO Service Alliance and the recent merger of Sundia with United PharmaTech. . The initial alliance was formed to quickly and successfully expand into the complete range of CRO services to fit the increased demands from clients worldwide while maintaining high quality and efficiency and minimizing cost. "We believe that by extending our alliance to include NovaSecta, we will bring significant benefits to European customers, so we look forward to working with NovaSecta and more European clients," said Dr. Xiaochuan Wang, Sundia Meditech's founder and CEO and Dr. Xuehai Tan, HD BioSciences' founder and CEO.
Position: None
China to Expand Rural Healthcare 2/18/2008
by Life Science: China
China's rural cooperative medical care system is to expand to cover all rural residents by the end of 2008 and government spending on the system will be sharply increased, Vice Premier Wu Yi said at a national conference in Beijing on Friday. Funds pooled for each person in the scheme will be doubled to RMB 100 (US$14) in two years, she said.
The scheme, seen by many as a way to help Chinese farmers who have virtually no medical insurance, now requires a participant to pay RMB 10 (US$1.40) a year. Central, provincial, municipal and county governments supply another RMB 40 (US$5.60) per person to the fund. With the new subsidies central and local government subsidies will be increased to RMB 80 (US$11.20) per person, according to Ding Xudong, official with the Ministry of Finance.
Initiated in 2003, the system has expanded to cover 730 million rural residents, or approximately 86 percent of rural areas by the end of 2007. When rural residents fall seriously ill, the pooled funds cover part of their medical costs. Coverage varies by illness and the actual expenses.
A total of RMB 42.8 billion (US$6 billion) was pooled by the fund last year, according to Wu, compared with only RMB 4 billion in 2003. The fund paid out about RMB 59.1 billion (US$8.27 billion) over the past five years in reimbursements. Beneficiaries from the cooperative medical care system reached 920 million person-times.
Wu stressed at the conference that construction of medical service networks should be reinforced, pharmaceutical supply for rural areas and the management of the medicare fund should be supervised.
Increased spending on rural healthcare by the Chinese government is likely to provide a boost to healthcare companies in China, including pharmaceutical manufacturers and medical device makers. According to the China Pharmaceutical Enterprise Management Association, in 2008 total government spending on rural healthcare is expected to reach RMB 60 billion (US$8.4 billion); including government subsidies for uninsured urban residents ups the total amount to as much as RMB 150 billion (US$21 billion).
As indicated by Vice Premier Wu Yi, the numbers are expected to grow in the coming years. The China Chamber of Commerce for Import & Export of Medicines & Health Products (CCCMHPIE), a division of China’s Ministry of Commerce, reports that by 2010, construction investment in the rural health care system is expected to reach RMB 200 billion (US$28 billion), with medical equipment purchases expected to account for 30% of total investment. Total spending on drugs is expected to exceed RMB 100 billion (US$14 billion).
 
Source: Xinhua
Position: None
BioMerieux to Assist China MOH in Infection Prevention 2/19/2008
by Life Science: China
BioMerieux Inc. (PA: BIM ), the French maker of in-vitro diagnostic systems for medical and industrial use, announced Monday its agreement with the Chinese Ministry of Health (MOH) to assist in upgrading the country's hospital infection prevention system. BioMerieux will assist the MOH in improving virus infection prevention networks in hospitals through training, formulating joint standards, providing anti-virus tests and constructing information networks, according to the project plan.
"The project will enhance the cooperation between clinical section, microbiology labs and infection management departments in hospitals, organizing training and stipulating guidelines for doctors and nurses, and a DNA database will be established for clinical reference," said Guo Yanhong, an MOH official.
According to the statistics of MOH, the infectious rate in Chinese hospitals is about 5 percent and most infectious cases happen in intensive care units, hematology clinics and wound-healing clinics. Guo Yanhong attributed China's infectious cases to patients and nurses' insufficient knowledge of hospital infections, relatively backward facilities and techniques, and slow test speed. The project will be launched in nine state-level hospitals in Beijing and Shanghai municipalities and Hunan and Guangdong provinces.
With 2006 sales of €1.04 billion (US$1.5 billion) BioMerieux is the eighth largest player in the invitro diagnostics market worldwide. Its clinical applications in the molecular biology, bacteriology and immunoassay fields generated €894 million (US$1.3 billion) or 86% of total revenues. Its industrial applications including pathogen detection and quality control in the food and biopharma manufacturing industries brought in €143 million (US$210 million) in 2006 and are growing over 11% annually. The company derives 11% of sales from the Asia-Pacific region, with China leading in the region in sales and earnings contributions.
Reflecting the increased importance of China, BioMerieux is increasing its presence in the country. In 2005 BioMerieux initiated a research collaboration with the Chinese Academy of Sciences to identify emerging pathogens in China. The company also launched a research laboratory within Shanghai’s Fudan University Cancer Hospital, the biggest cancer hospital in China, focused on the detection of breast and colorectal cancer using molecular diagnostics. In January the company announced the creation of a Shanghai-based joint venture with Shanghai Kehua Bioengineering (SHE: 002022). BioMerieux will transfer microplate immunoassay manufacturing currently located at its Boxtel site in the Netherlands to the joint venture, with manufacturing overseen by Kehua.
Position: None
China (Yanhuang) Health Media to Acquire HealthMedia China? 2/20/2008
by Life Science: China
China Health Media, aka Yanhuang Health Media, a leading digital display advertising operator covering healthcare locations in China, plans to acquire competitor Healthmedia China. As reported in ChinaVenture, the acquisition will occur prior to a planned IPO in the third quarter of 2008.
If completed, the acquisition will complete a rapid string of mergers and takeovers that have made China Health Media the largest provider of in-hospital digital display advertising in China. Most prominently, in January the company acquired the hospital display network of Focus Media Holdings Ltd. (Nasdaq: FMCN ), consisting of an installed base of approximately 2,461 LCD displays covering hospitals and drug chain stores in about 31 cities throughout China. Focus Media also invested US$5 million into China Health in return for a 20% equity stake.
In addition to the Focus Media deal, China Health has completed nearly a dozen other acquisitions of competitors over the past year. The company recently acquired Kings Media China, with 6,000 installed screens in over 500 hospitals in southern China. The rapid pace of acquisitions has boosted the company’s market presence dramatically. With 32,800 digital displays in 3,300 hospitals in 36 of China’s largest cities the company has nearly tripled its installed base in less than a year. CCTV Market Research Corp. reports that China Health has 80% market share in the fast growing in-hospital display advertising sector.
As the smaller competitor in a hot market, HealthMedia (China) Co. Ltd. may be vulnerable to a takeover. The company recently announced plans for a third funding round with the intent of raising US$60 million. The financing is intended to allow HealthMedia to expand the company’s presence in hospitals and pharmacies, and to strengthen internal management in preparation for an overseas IPO.
 Founded in 2003 by Pan Xinhua, HealthMedia initial growth was fueled by venture investments of a reported US$30 million from Morningside Group Hong Kong and Julian Robertson’s Tiger Management LLC. HealthMedia reports an installed base of over 10,000 liquid crystal display (LCD) screens in 20 cities throughout China. The company’s network consists of over 1,000 hospitals and 4,000 pharmacies with a reported weekly audience of 40 million people. Although the company does not release its financials, revenues for 2006 were reported to be roughly RMB 100 million (US$13.5 million) and the company is reported to be profitable.
China Health is clearly pressing its bet based on strong market fundamentals. China’s hospitals and pharmaceutical companies are under pressure from government efforts to cap drug prices and reduce hospital income from prescriptions. This has resulted in a steady stream of hospitals eager to supplement their income, and healthcare suppliers looking to make a favorable impression on Chinese consumers. Surveys have shown that the average Chinese urban resident shops at a pharmacy 8.4 times per year, spending slightly over 19 minutes. The same resident will go to a hospital or clinic 6 times per year, with an average waiting time of 122 minutes. This captive audience is becoming increasingly attractive to advertisers.
Before yearend, China Health management expects to have reached 80,000 liquid crystal display screens in 6,000 hospitals throughout the country. The company anticipates 2008 revenues to come in at RMB 350 million (US$49 million) with profit margins reported to be in excess of 50%. Management  expects revenues and profits in 2009 to be double that of 2008. With Focus Media currently selling at a 12 month forward PE near 25, China Health could carry a valuation in excess of US$1.2 billion based on anticipated earnings in 2009.
Position: None
Omnicare Expands in China 2/20/2008
by Life Science: China
Omnicare Clinical Research, the King of Prussia-based clinical research branch of pharmacy services provider Omnicare (NYSE: OCR ), announced Tuesday that it has opened offices in Beijing and Shanghai. Its expanded presence is intend to enhance Omnicare’s client support in the areas of project management, clinical trial services, regulatory affairs and business development.
Dr. Dale Evans, President and CEO of Omnicare Clinical Research said “The opening of our Shanghai and Beijing offices represents a vital component of our Asia Pacific business strategy. The region is a burgeoning center of drug development that offers numerous advantages. We’re committed to the marketplace here and our new offices will help us provide clients with an even greater level of support. Our presence in China is another step in our global expansion.”
Founded in 2000, Omnicare Clinical Research provides phase I to IV contract research services to a range of companies in the biopharmaceutical and medical device industries. With a specialization in the management of outsourced contract research, the company has established a presence in 30 countries. In addition to its offices in China, the company’s other established offices in the Asia Pacific region include Australia, India, Japan, Singapore and Taiwan.
Omnicare, Omnicare Clinical Research’s parent, is reported to be the largest provider of pharmacy services to long-term care facilities in the US. The company’s pharmacists serve more than 1.4 million residents of skilled nursing, assisted living, and other healthcare facilities in 47 states and Canada. The company has leveraged the data gathered via its pharmacy services operations to enhance its clinical research in the field of geriatric medicine.
For the nine months ended Sept. 30, 2007 Omnicare reported net income of US$134.8 million on sales of US$4.7 billion. Contract research services brought in US$146 million, up 17% from the same period in 2006.
Position: None
3SBio Plunges on Earnings Miss 2/21/08
by Life Science: China
3SBio (Nasdaq: SSRX) a leading China-based biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products, reported its fourth quarter and full year results for 2007. The company missed expectations and lowered expectations for 2008.  Shares dropped over 25% on the news to a new low.
For the fourth quarter, net revenues were RMB 45.7 million (US$6.3 million) rising 29.8% over the same period in 2006. Operating income dropped 29.6% to RMB 6.1million (US$0.8 million). Net income was RMB 17.9 million (US$2.5 million, with earnings per ADS at RMB 0.82 (US$0.11). With net revenue consensus expectations at US$7.09 million and EPS of US$0.13, 3SBio’s results missed expectations on both the top and bottom line.
For FY 2007 net revenues were RMB 180.2 million (US$24.7 million) rising 41% over the previous year. Operating income rose 32.9% to RMB 48.5 million (US$6.7 million), and net income increased 167% to RMB 81.5 million (US$11.2 million). Earnings per ADS were RMB 3.89 (US$0.53) in 2007, compared to RMB 2.13 per ADS in 2006 and meeting analyst expectations. Looking forward, management saw revenues of US$30 to $32 million, significantly lower than analyst consensus forecasts of US$36 million.
For the full year, the company’s recombinant human erythropoietin product EPIAO accounted for revenues of RMB 118.6 million (US$16.6 million), up 22.6% from 2006. Market share for EPIAO rose to 32.6% on a volume basis and 39.9% based on value. Sales of TPIAO gained 168.3% to RMB 42.1 million (US$5.9 million). Export sales rose 15.4% to RMB 6.8 million (US$ 0.9 million).
Margins were negatively impacted by higher operating costs. For the fourth quarter, total operating expenses increased by 42.8% to RMB 33.8 million (US$4.6 million) as compared to the same period in 2006, which was primarily attributed to the increase in research and development expenses of the company’s recombinant human thrombopoietin product TPIAO,  higher personnel costs, and increased sales and marketing expenses. For the full year, total operating expenses increased by 43.4% to RMB 114.2 million (US$15.7 million) from RMB 79.6 million in 2006. Of note is that operating expenses rose faster than revenues for both the quarter and the full year.
Much of the rise in operating costs was due to sales, general and administrative expenses. SGA rose 41.3% and 39% for the quarter and year respectively. This was attributed to higher marketing costs, staff costs and bonuses as a result of an increase in headcount. The new hiring, including a previously announced increase in the company’s oncology sales force, resulted in a rise in recruitment bonuses which the company characterized as non-recurring.
R&D expenses were another concern. These expenses rose 58.4% to RMB 3.7 million (US$0.5 million) in the fourth quarter 2007 from RMB2.3 million for the same period in 2006. R&D expense as a percentage of total net revenues increased to 8.1% in the fourth quarter 2007 from 6.7% for the same period in 2006. For the full year, R&D increased by 90.7% to RMB11.6 million (US$1.6 million) from RMB6.1 million in 2006. R&D expense as a percentage of total net revenues rose to 6.5% in 2007 from 4.8% in 2006.
The increase in R&D expenses was attributed primarily to increased phase IV post-marketing clinical tests for TPIAO which are expected to be completed in the second quarter of 2009. In addition, phase III studies of high dose EPIAO have been extended by the prinicipal investigators to evaluate for risks associated with higher hemoglobin levels. Ongoing product pipeline development also contributed to R&D costs.
Along with the phase III studies on high dose EPIAO, the company is in phase III trials for the use of TPIAO in treating the blood disorder idiopathic thrombocytopenic purpura. The company has initiated phase III trials on NuLeusin , an interleukin-2 compound for the treatment of cancers including renal cell cancer and malignant melanoma. The company is also in pre-clinical development on a second generation erythropoetin (NuPIAO) and a humanized monoclonal antibody anti-TNF mAb (SSS07).
An earnings miss and lowered earnings expectations going forward were not received well by analysts or investors. UBS analyst Vicky Chen said the results were 'lower than expected,' calling the company's margin 'significantly lower.' In a note to clients, the firm is reported to have said that it would be revisiting its earnings model on the company. Investors were similarly downbeat. Prior to the close shares fell over 27% to US$8.47 on over 15 times average volume.
Position: None
Amarillo Bioscience Launches Clinical Trial in Taiwan 2/21/08
by Life Science: China
Amarillo Biosciences, Inc. (OTCBB:  AMAR ) a US-based biotechnology firm, announced Tuesday that the U.S. Food and Drug Administration (FDA)has approved its Investigational New Drug (IND) application to test its low dose oral interferon in a Phase 2 hepatitis C clinical trial. The company has partnered with Cytopharm to fund and conduct a clinical trial of 144 chronic hepatitis C patients in Taiwan .
Cytopharm is a subsidiary of Vita Genomics, Inc., a genomics-based biotechnological and biopharmaceutical company based in Taiwan. Cytopharm has licensed Amarillo’s oral IFNA and will be funding the Hepatitis C trial. The 144 patients with Hepatitis C in the study will receive one of two different dosages of oral human interferon alpha or placebo. The aim of the trial is to reduce relapse rate for those patients who have completed the standard combination therapy, consisting of high dose injectable interferon alpha and Ribavirin given orally. 
The trial is expected to start in the 2nd quarter of 2008. In addition to studies on hepatitis C, under the terms of the license and supply agreement between both the companies, CytoPharm will be testing oral interferon in human studies of chronic active hepatitis B and influenza.
Amarillo Biosciences is involved in the development of low-dose, orally administered interferon alpha (IFNA) as a treatment for a variety of conditions, including Sjogren's syndrome, Behcet’s disease, viral infections, and chronic cough in patients with chronic lung disease. The company owns or licenses 13 issued US patents and a pending patent relating to the manufacturing or oral use of interferon. Hyashibara Group, a privately held Japanese conglomerate, owns 12% of Amarillo and is a source for research funding as well as manufacturing the company’s oral IFNA and oral drug delivery system.
Position: None
China, South Korea Lead International Patent Boom 2/24/2008
by Life Science: China
In a year that saw a record number of filings under the World Intellectual Property Organization (WIPO) Patent Cooperation Treaty (PCT), the cornerstone of the international patent system, inventors from the Republic of Korea (4th place) and China (7th) consolidated their top ten position in 2007, along with the United States of America (1st) , Japan (2nd), Germany (3rd), France (5th), United Kingdom (6th), Netherlands (8th), Switzerland (9th) and Sweden (10th). In total, a record 156,100 [1] applications were filed in 2007, representing a 4.7% rate of growth over the previous year. For the fourth year running, the most notable growth rates came from countries in north east Asia which accounted for over a quarter (25.8%) of all international applications under the PCT.
“The growth in patent filings by a number of countries in north east Asia and their share of overall patenting activity is impressive and confirms shifting patterns of innovation around the world,” said Dr. Kamil Idris, Director General of WIPO. “It is most encouraging to see clear evidence that countries in the region are embracing the tools of the international patent system to stimulate commercial activity and economic growth,” he added, noting “The PCT remains an attractive option for businesses as it makes it easier for companies and inventors to obtain patent rights in multiple countries.” The Director General further noted that “Strategic use of the patent system is a business imperative in today’s knowledge-driven economy. The success of the PCT is largely due to the sustained use of the system by some of the world’s foremost innovation-based companies.”
The Republic of Korea, which experienced 18.8% growth in 2007 as compared to 2006, overtook France to become the 4th biggest country of origin of PCT filings, and applicants from China, whose use grew by 38.1%, dislodged the Netherlands to take the position of 7th largest country of origin.
With more than 52,000 PCT applications, inventors and industry from the United States of America represented 33.5% (a 2.6% increase over 2006) of all applications in 2007. Applicants from Japan, who unseated their German counterparts in 2003 for the number two spot, maintained their second place position with 17.8% of the total number of applications, representing a 2.6% increase over 2006. Inventors and industry from Germany held third position with 11.6% of all applications in 2007, representing an 8.4% increase, followed by users in the Republic of Korea (4.5% of all applications and an 18.8% increase) and France (4.1% of all applications and a 2.1% increase). Of the fifteen top filing countries, China achieved double-digit growth (7th highest filer, with a growth rate of 38.1% in 2007). Among other countries to register double-digit growth in 2007 were Brazil (15.3%), Malaysia (71.7%), Singapore (13.9%) and Turkey (10%).
Mr. Francis Gurry, Deputy Director General who oversees the work of the PCT, said “WIPO is continuing to enhance the PCT and its operations to ensure that applicants benefit from access to ever-more efficient, cost-effective quality services of the highest caliber”, and pointed out that WIPO receives on average over 400 PCT applications every day. Mr. Gurry said “We have seen tremendous efficiency gains in the delivery of PCT services over the last four years. WIPO is handling an unprecedented volume of applications with lower staff numbers and is effectively responding to increased demands resulting from changing patterns of innovation. We are clearly seeing a maturing of the system as the PCT celebrates 30 years of operations and currently enjoys a membership of 138 countries.”
Top Applicants
The year 2007 saw some changes in the list of top users of the PCT system. Matsushita of Japan moved into 1st place (2,100 applications published in 2007), overtaking the Dutch multinational Philips Electronics N.V. (2,041 applications published in 2007). Siemens (Germany) (1,644) retained 3rd place. Huawei Technologies of China moved up 9 places to become the 4th largest applicant with 1,365 applications published in 2007. These were followed by Bosch (Germany) (1,146), Toyota (Japan) (997), Qualcomm (USA) (974), Microsoft, which jumped 38 places to 8th place (USA) (845), Motorola (USA) (824) and Nokia (Finland) (822). Among the 20 top filing companies, six were from the USA, six from Japan and three from Germany.
Fields of Technology
The largest proportion of PCT applications published in 2007 related to the telecommunications (10.5%), information technology (10.1%) and pharmaceuticals (9.3%) sectors. The fastest growing technology areas are nuclear engineering (24.5% increase) and telecommunications (15.5%).
Developing Countries
WIPO continued to receive international patent applications from developing countries in 2007. The largest number of applications received came from the Republic of Korea (7,061) and China (5,456) followed by India (686), South Africa (390), Brazil (384), Mexico (173), Malaysia (103), Egypt (41), Saudi Arabia (35) and Colombia (31).
Developing countries make up 78% of the membership of the PCT, representing 108 of the 138 countries that have signed up to the treaty to date.
 
Growth rates in the filing of PCT applications have been particularly dynamic over the last nine years. It took 18 years from the beginning of PCT operations in 1978 to reach 250,000 total applications, but only four years to double that figure (500,000), and another four to double it again (1,000,000).

Souce: World International Patent Organization
Position: None
Winter Flu Boosts China Pharma Sales 2/25/2008
by Life Science: China
China Pharma Holdings Inc. (OTCBB: CPHI ) a Haikou, China based manufacturer of generic and branded bio-pharmaceutical products in China, announced today new purchase orders for its Pusen OK oral flu remedy. Totaling approximately US$5.6 million with gross margins higher than 55%, the sales are to be recognized during 2008.
Gross margins on the sales are approximately 10 percent higher than the Company's average gross margins during the past year. Company management attributed the increase in Pusen OK sales to the severe winter weather that has hit large areas in central and southern China. The weather has caused an increased incidence of flu and cardiovascular diseases, and has increased the demand for Pusen OK, a generic combination of Naproxen Sodium and Pseudoephedrine Hydrochloride for the treatment of cold and flu symptoms.
Separately, the Company announced preliminary revenues for 2007 of at least $33 million. With sales of US$21.8 million in FY 2006, year over year revenue growth is over in expected to exceed 50%. Net margins are running 36% for 2007, indicating that net income should come in over US$11.8 million. This would exceed the company’s previously announced net income target of US$7.6 million for 2007.
"I am very pleased to announce this new order for our Pusen OK product as our focused sales and marketing efforts have successfully created awareness among many of our major pharmaceutical distributors,” said Zhilin Li, president and CEO of China Pharma. “The Company recently initiated production to fulfill these orders and anticipate initial contributions during the first quarter. Further, we expect Pusen OK will be a significant contributor to our growth during 2008, and will be supported by increased sales from our existing product portfolio in addition to the launch of two new products during the first half of 2008."
China Pharma has grown by targeting for development off patent drugs with worldwide sales over $1 billion dollars. Because China’s drug laws recognize products that have never been manufactured in China as new drugs these therapeutics can qualify for exclusive protection in China for up to 12 years. The company also participates in the government funded urban and rural cooperative medical insurance systems.
The company’s product line includes compounds indicated for CNS, infectious disease, respiratory, gastrointestinal, oncologic and wound healing disorders. Fibroblast growth factor rhaFGF, used for wound healing and scar reduction, is the company’s top selling product at 18% of revenues. Roxithromycin, a derivative of the antibiotic erythromycin used to treat respiratory tract, urinary and soft tissue infections is its top antiinfective and accoundts for 13% of revenues. Pusen OK contributed approximately $4.1 million in revenues during 2007.
Hospital sales account for 85% of China Pharma’s revenues. The company distribution network includes 16 offices and 680 sales agents throughout 29 provinces and autonomous regions in China. The company also works with drug resellers, who resell their Cproducts to local hospitals, drug stores, and other channel distributors. In addition, China Pharma sells its products directly to hospitals and retail drugstores.
Position: None
China Nepstar Jumps on Acquisition News 2/26/2008
by Life Science: China
China Nepstar Chain Drugstore Ltd. (NYSE: NPD ), the largest drugstore chain in China based on the number of directly operated stores, today announced that it will acquire all of the 68 drugstores including inventory and store equipment owned by Ningbo New Century Medical Ltd. ("New Century") for cash consideration of RMB30 million (US$4.1 million). China Nepstar expects to take over the operations of the acquired stores in March 2008, upon completion of the acquisition.
The New Century drugstore chain was established in 2002 and generated revenue of approximately RMB50 million (US$6.8 million) in 2007. It is one of the top three drugstore chains in Ningbo based on the number of outlets. New Century's stores are located mostly in newly developed, satellite districts of Ningbo, including Beilun, Ninghai, and Yinzhou Districts, where China Nepstar does not currently have a strong presence. The growth of these new satellite districts has been driven by local government initiatives to boost local economies and position the districts in key growth industries. For example, Yinzhou, Ninghai and Beilun have become centers for apparel wholesaling, stationary wholesaling and ocean shipping, respectively.
"This acquisition represents our first step towards our goal of consolidating the fragmented Chinese retail drugstore industry,” said Dr. Simin Zhang, Chairman of the board of directors of Nepstar. “We will continue to execute our strategy of deepening penetration in high growth cities where we already have a presence. The acquisition of New Century's outlets will extend our market leadership and strengthen Nepstar brand in this important region."
"We plan to continue to seek synergistic acquisition opportunities throughout China to complement our robust organic growth. We believe well- identified acquisition opportunities will allow us to rapidly expand our market share, leverage our central procurement platform, and enhance our long- term value," concluded Dr. Zhang.
Located in the affluent Zhejiang Province, Ningbo is an important business center and a port city with a metropolitan area of 2,462 square kilometers and a population of approximately 6.5 million people. According to the Ningbo Statistics Bureau, Ningbo's GDP per capita reached RMB51,285 (US$7,180) in 2006. Ningbo had 1,700 retail drugstores, including 500 chain drugstore outlets and 1,200 independent stores at the end of 2006. The top three drugstore chains in Ningbo at the end of 2006 were China Nepstar (73 outlets), Si Ming Chain Drugstore (73 outlets) and New Century (56 outlets). After acquiring the New Century stores, China Nepstar is expected to have a total of over 160 stores in Ningbo as of March 2008.
With revenues of approximately RMB 1,950 million (US$273 million) expected for 2007, Nepstar is one of the largest and fastest growing drugstore chains in China. As of September 30, 2007, the Company had 1,791 stores in 62 cities and 11 regional distribution centers in China. It uses directly operated stores, centralized procurement and a network of regional distribution centers to provide customers with pharmacy services and a wide variety of other merchandise, including over-the-counter (“OTC”) drugs, nutritional supplements, Chinese herbal products, personal care products, family care products, and convenience products including consumables and seasonal and promotional items.

Nepstar went public on the NYSE in November 2007 at US$16.20 per share. After an initial rise to US$21.25 following the IPO, shares slumped over 50% in difficult market conditions to a recent low of US$10.25. Investors were encouraged by the recent expansion news however. At midday, Nepstar shares have risen nearly 25% to US$14.33 on above average volume.

 

Source: China Nepstar Chain Drugstore Ltd.
Position: None
Alliance Boots Bets on China Growth 2/26/2008
by Life Science: China
Alliance Boots Ltd., the U.K.'s largest drugstore chain, aims to make mainland China its fastest- growing region through a venture with a local partner.
``We're willing to invest as much money as needed for acquisitions or expansion in China. We expect China to contribute significantly,” said Alliance Boots Chairman Stefano Pessina. The Italian billionaire Pessiana and private equity firm Kohlberg Kravis Roberts & Co. took Alliance Boots private for £11.1 billion (US$22 billion) last year.
Alliance Boots is an international pharmacy-led health and beauty group with two core businesses, pharmaceutical wholesale and retail pharmacy. Formed on 31 July 2006, Alliance Boots is privately owned and employs around 105,000 people. It has a wholesale and distribution network serving more than 126,000 pharmacies, hospitals and health centers via over 360 depots in 15 countries and a network of 3,100 outlets in nine countries, of which over 2,800 have pharmacies.
The Nottingham, England-based retailer’s commitment to China is likely to benefit BMP Sunstone (Nasdaq: BJGP) a US-listed pharmaceutical marketing and distribution company that offers services in China. Alliance Boots recently completed the formation of its 50:50 joint venture company with Guangzhou Pharmaceutical Company Ltd. The joint venture company, Guangzhou Pharmaceuticals Corporation ("GP Corp") received a total consideration of approximately £41 million (US$81.6 million) via Alliance Boots subsidiary company, Alliance BMP Limited. Alliance BMP Limited is a UK-based investment vehicle 80%-owned by Alliance Boots and 20%-owned by BMP Sunstone,.
Guangzhou Pharmaceutical (HK: 0874 ) is China's fourth-biggest drug wholesaler. They operate 29 pharmacies in China, the maximum allowed for a foreign-invested partnership. The company, listed in Hong Kong and Shanghai, has 3 percent market share in China and 16 percent in the southern province of Guangdong. The GP Corp. joint venture targets market share of 10 percent nationally in five years, and more than 20 percent locally, Pessina said.
The pharmaceuticals market in China is expected to be the world's sixth-biggest by 2010, up from ninth now, Alliance Boots said in January last year. China's economy expanded 11.2 percent in 2007, making it the fourth-biggest globally.
 
Source: Bloomberg
Position: None
Emerging Markets to Drive Global Drug Sales 2/27/2008
by Life Science: China
Emerging markets will be an increasingly important driver for pharmaceutical sales, with sales set to reach $400 billion by 2020, as growth slows in the developed world, according to IMS Health. The healthcare information provider forecasts growth of 12-13 percent a year in countries including China, India, Brazil, Russia, Mexico, South Korea and Turkey, while mature markets grow at a meager low single digit percentage rate.
By 2020, emerging markets will contribute more than 50 percent to worldwide pharmaceutical market growth, up from an expected 33 percent in 2011 and just 13 percent in 2001, IMS analyst Murray Aitken told an Economist conference on Wednesday. That business is equivalent to the revenues generated today from the United States and Europe's top five markets combined.
Multinational companies are already focusing more and more on the new opportunity, but the results have been mixed.   Some companies like Sanofi-Aventis (SASY.PA) and Bayer (BAYG.DE) are now seeing 30 to 35 percent of their total sales growth coming from emerging markets, with Novartis (NOVN.VX) on around 21 percent, he said. Others, such as Amgen (AMGN) and Takeda (4502.T), have no significant presence yet.
"There is a wide level of variability but, by and large, the large multinational companies are already enjoying rapid growth from these markets," Aitken said.
Weak patent protection remains an issue in many places, however, and multinationals also face competition from some powerful local manufacturers in large markets like China and India.
The global pharmaceutical market is set to grow by 5-6 percent this year to $735-745 billion, according to previously published IMS forecasts.
 
Source: Reuters
Position: None
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