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Johns Hopkins Partners with Tsinghua University in Biomedical Engineering 1/16/2007
by Life Science: China
In a formal ceremony held Jan. 8th in Beijing, Johns Hopkins University and Tsinghua University formally marked the opening of the Tsinghua-Johns Hopkins Joint Center for Biomedical Engineering Research. With a focus on international cooperation, the center will carry out research in biomedical fields including neural engineering, medical imaging, and tissue engineering.  It will also promote graduate student and faculty exchange and joint cultivation, and organize bilateral academic symposia.
Wang Xiaoqin PhD, a professor of Neuroscience and Biomedical Engineering at Johns Hopkins University School of Medicine, will serve as Director of the center. Dr. Wang is currently servin g as the Changjiang Scholar Visiting Professor with Tsinghua’s Department of Biomedical Engineering. Dr. Wang is a recognized expert in the field of auditory neurophysiology and a past recipient of the esteemed US Presidential Early Career Award for Scientists and Engineers.
“We plan to make the Center into a high-level international academic platform that combines engineering and life science. I hope more outstanding professors and experts can join the Center in the future,” said Gu Binglin, President of Tsinghua University.
Position: None
Shenzhen Chipscreen Reaps Fees on Cancer Drug 1/18/2007
by Life Science: China
Shenzhen Chipscreen Biosciences Ltd., a southern China-based life sciences company that specializes in discovering and developing proprietary small molecule therapeutics, disclosed this week that it has received US$28 million in fees from HUYA Bioscience International, LLC. As reported by the Office of the Ministry of Commerce in Shenzhen, the fees are derived from Chipscreen’s international patent licenses to Huya for the investigational cancer compound Chidamide.
Chidamide is a inhibitor of histone deacetylase, a compound in humans that is involved in regulating genetic activity including cell birth and death. Histone deacetylase inhibitors (HDIs) are being studied as a treatment for neurodegenerative diseases and cancers, including leukemias. Chipscreen filed an investigational new drug (IND) application in China for Chidamide in December 2005. The company has received patents on the compound in the US and China.
In October 2006 the company signed an out-license agreement for Chidamide with San Diego-based HUYA Bioscience for worldwide rights outside China. Subsequently, the two companies initiated a Phase I clinical trial in China for the use of Chidamide in the treatment of advanced solid tumors. While results remain pending, Chipscreen reports that “remarkable efficacy in certain indications has been observed.”
Established in March 2001, Chipscreen was founded by returnees to China with Western biopharma experience at companies including Galderma, Dendreon (Nasdaq: DNDN ), and Amgen (Nasdaq: AMGN ). The company’s 10,000 sf research facility in Shenzhen houses 50 employees, 27% of whom are PhDs. In addition to its proprietary drug discovery efforts, Chipscreen also provides fee-based contract research services including chemistry services, assay development and multiple-target high throughput screenings, gene expression analysis by microarray, in vivo efficacy testing, PK/PD profiling, and preclinical studies for synthetic and botanical compounds.

With headquarters in San Diego and Shanghai, HUYA Bioscience is attempting to leverage the varied strengths of life science companies in the US and China by identifying and licensing promising Chinese pharmaceuticals for commercialization in Western markets. The company targets drug compounds that have demonstrated results within China’s SFDA (State Food and Drug Administration) testing program. In addition, the company utilizes data gathered from the SFDA testing to provide a roadmap as to the best methods and procedures for drug approvals in the US and Europe. In January 2007 chemical giant Akzo Nobel (OTC ADR: AKZOY ) subsidiary Organon took an equity stake in HUYA to collaborate on the search for new, proprietary biopharmaceuticals or pharmaceutical compounds and explore opportunities involving life science companies in China.
Position: None
NovaMed Pharmaceuticals Raises VC Funding 1/22/2007
by Life Science: China
Novamed Pharmaceuticals, a China-based provider of outsourced development and commercialization services for pharmaceutical and biotechnology companies, announced a successful Series B funding round. $13.8 Million in a Series B round of funding was awarded today to the company by Fidelity Asia Ventures and its US affiliate, Fidelity Biosciences, with participation from returning investor Atlas Venture.
The company will use the proceeds from Series B funding to finance the in-licensing of new molecules for China, expand sales and distribution operations and strengthen medical research and development capacity. This successful round brings the total raised by Novamed in one year to nearly $20 Million.
Mark Lotter, CEO and Co-Founder of NovaMed , said "Series B funding marks a significant milestone in NovaMed's business development in China. It allows us to continually expand and strengthen our portfolio in a number of important therapeutic areas while playing an increasingly stronger role in China's drug development landscape."
"NovaMed has continued to demonstrate effective execution capabilities through in-licensing of further programs from multinationals," says Zina Affas, Principal at Atlas Venture, an investor in NovaMed. "The rapid raising of a Series B investment following our Series A investment in May 2007 demonstrates our strong belief in the capabilities of the team and the potential of the company to develop and deliver products to the Chinese market."
"Fidelity Asia Ventures and Fidelity Biosciences are delighted to have the opportunity to invest in NovaMed, whom we see as the leader in the China specialty pharmaceutical industry," says Norman Chen, Partner at Fidelity Asia Ventures. "We look forward to utilizing our global life sciences expertise to further refine and develop NovaMed's platform of high-quality, proprietary drugs for China and in bringing this exciting business to its next stage of development.
Founded in August 2005 NovaMed offers a broad range of services to international pharmaceutical and biotechnology firms in China, including facilitating the outsourcing of clinical research to China, registering unique and new chemical entities for the China market and commercializing and distributing products for multinationals in China. The company has entered into a number of strategic alliances with multinational pharmaceutical companies in China including Sanofi-Aventis, Baxter and Meda
NovaMed's services for pharmaceutical multinationals, supported by a network of best-in-class research, development, regulatory, and distribution partners in China, work to accelerate the drug development and approval processes of Western-based drugs to benefit China's patients and medical professionals.
Source: PR Newswire
Position: None
China Nepstar Chain Drugstore Continues Aggressive Expansion 1/2/2008
by Life Science: China
China Nepstar Chain Drugstore Ltd. (NYSE: NPD ), the largest drugstore chain in China, today announced that its total number of drugstores in operation has exceeded 2,000. As of December 31, 2007, China Nepstar had added 556 stores to reach a total of 2,002 stores across 62 cities in mainland China.
In 2007, China Nepstar substantially increased its market penetration in coastal cities with relatively high household disposable income, where it already had a presence. These cities include Shenzhen (from 202 stores as of December 31, 2006 to 311 stores as of December 31, 2007), Dalian (from 127 stores to 174 stores), Guangzhou (from 123 stores to 161 stores), Hangzhou (from 102 stores to 144 stores), Ningbo (from 73 stores to 96 stores), Dong Guan (from 75 stores to 94 stores), Suzhou (from 54 stores to 70 stores), Tianjin (from 23 stores to 66 stores), and Shanghai (from 46 stores to 60 stores).
 Mr. Qian Jiannong, Chief Executive Officer of China Nepstar, commented, ''2007 was an exciting year for us as we continued our growth momentum and market penetration. During the year, we added 556 stores to our national chain drugstore network. In response to the continued and rapid growth of the Chinese urban population and buoyant residential real estate development in urban areas, we have accelerated the average pace of our new store openings from one new store a day in 2006 to nearly one new store every 15 hours in 2007.''
''Compared with developed countries, the retail healthcare industry in China has much room for future growth,'' Mr. Qian added. ''The increasing demand for higher living standards, including greater access to pharmaceuticals, together with the soaring healthcare requirements of an aging population, makes China one of the fastest growing healthcare markets in the world. China Nepstar is dedicated to providing consumers with broader products and service offerings, ensuring the high quality of our products and expanding our geographic reach. Moreover, we continue to focus on maximizing shareholders' value.''
About China Nepstar Chain Drugstore Ltd.

China Nepstar Chain Drugstore Ltd. (NYSE:NPD) is China's largest retail drugstore chain. As of December 31, 2007, the Company had 2,002 stores across 62 cities, one headquarter distribution center and 11 regional distribution centers in China. China Nepstar uses directly operated stores, centralized procurement and a network of distribution centers to provide customers with high-quality, professional and convenient pharmacy services and a wide variety of other merchandise, including over-the-counter ("OTC") drugs, nutritional supplements, herbal products, personal care products, family care products, and convenience products including consumables. China Nepstar's strategy of competitive pricing, customer loyalty programs and private label offerings has enabled it to capitalize on the robust economic growth in China and to take advantage of the demographic trend in China to achieve a strong brand and leading market position.

Source: Xinhua/PRN Newswire
Position: None
WuXi PharmaTech to Acquire AppTec Laboratory Services, Inc. 1/6/2008
by Life Science: China
WuXi PharmaTech (NYSE:  WX ), a Shanghai-based provider of pharmaceutical R&D outsourcing services, has signed a definitive agreement to acquire US-based AppTec Laboratory Services, Inc. The deal, valued at US$151 million including US$11.7 million in AppTec debt . Wuxi expects that the acquisition will be immediately accretive to earnings per share, excluding the amortization of acquired intangible assets and one-time charges related to the acquisition. The deal is expected to close in first quarter of 2008.
With its headquarters in St. Paul, MN and laboratory facilities in St. Paul, Philadelphia, and Atlanta Apptec is an integrated provider of contract research services to the pharmaceutical and medical device industries. With over 400 employees, the firm offers manufacturing and testing services in the areas of biopharmaceuticals, cellular therapeutics,  medical devices and tissue-based products. For 2007 Apptec reports revenues of US$70 to 72 million.
From the acquisition, Wuxi expects to obtain biologics capabilities and expertise, gain a significant U.S. operational footprint, and expand its customer base and addressable market size. It is intended to enable WuXi PharmaTech to provide a full service suite of outsourced chemistry and biology services to global pharmaceutical, biotechnology and medical device clients.
 “We are very excited to announce the combination of WuXi PharmaTech and AppTec Laboratory Services,” said Dr. Ge Li, Chairman and Chief Executive Officer of WuXi PharmaTec. “WuXi’s chemistry services will be complemented by AppTec’s biologics testing and manufacturing capabilities to create a fully integrated service platform, from which we will be able to provide more value-added services to our customers. With an expanded geographic footprint, and a broader and deeper scope of services, we are well positioned to drive growth and continue to increase shareholder value.”
 Dr. Bonita L. Baskin, Chief Executive Officer of AppTec, said, “Combining these two companies creates a unique single source platform that has the ability to transform the outsourced R&D model globally. I, along with the AppTec team, share with Dr. Li our excitement over the prospects of this combination.”
This acquisition marks a new phase in the development of the contract research organizations (CROs) in China. With a recent share price of US$30.30 Wuxi has a P/E ratio of 68.4 and Price/Sales of 15.4, both nearly double industry averages. This rich valuation gives the company considerable leeway in pursuing strategic acquisitions, allowing the company to expand its services and revenues to fend off competition from privately held CROs in China as well as larger rivals in the US and Europe. This type of acquisition also accelerates the company’s ability to provide services in the biologics area, differentiating it from other Chinese CROs that tend to focus on chemistry  services due to relative short supply in China of researchers with expertise in biologics.
The acquisition will be a true test for Wuxi management. Along with ensuring smooth integration of Apptec, the company will need to prove it can maintain the margins associated with the lower cost of research in China. Jinsong Du, a health-care analyst with Credit Suisse in Hong Kong has his doubts. As reported by the Wall Street Journal, Mr. Du said in an interview that the Apptec acquisition is "not optimal" and "will definitely have a drag on the margins." Looking forward , Mr. Du said, “We remain confident on WuXi management's execution capability and do appreciate the synergy from the significantly enlarged customer base."
Position: None
Mindray Medical Announces Preliminary 2007 Results, New Products 1/7/2008
by Life Science: China
Mindray Medical International Limited (NYSE: MR ) , the Shenzhen-based developer, manufacturer and marketer of medical devices  today announced selected preliminary, unaudited results for the fiscal year ended December 31, 2007. The company also updated investors on its product pipeline.
For the year ended December 31, 2007 Mindray expects net revenues to be in the range of RMB2,180 million to RMB2,200 million, compared to RMB1,515 million in 2006, or 43.9% to 45.2% year-over-year growth. The non-GAAP net income is expected in the range of RMB640 million to RMB660 million, compared to RMB416.8 million in 2006, or 53.6% to 58.4% year-over-year growth.  With previous net revenue guidance at RMB2,155 million to RMB2,185 million and net income guidance of RMB600 million to RMB630 million for the year, these preliminary results exceed guidance on both the top and bottom lines.
"We are pleased to announce preliminary results for 2007 that surpass our previously issued guidance for the year," said Mr. Xu Hang, Mindray's chairman and co-chief executive officer. "Well-balanced growth across both our core product segments and worldwide sales geographies continued to drive Mindray's highly profitable performance. We finished 2006 on a strong note, achieving high growth for both domestic and international revenues and setting a new record for quarterly revenue."
"Looking to the year ahead, we are confident that we will be able to execute according to our strategy and grow both top and bottom line results at least 40% year-over-year," added Mr. Li Xiting, Mindray's president and co- chief executive officer. "In addition, we will maintain our disciplined approach to investing in R&D and plan to bring seven to nine high-quality, competitively priced products to market during the year."
Regarding its product pipeline, the company announced a number of new products:
In November 2007, the company released the BS-120, a low-throughput biochemistry analyzer targeted at replacing semi-automatic bio-chemistry analyzers particularly in rural settings in China as well as small hospitals and labs in international markets. It can also serve as a backup machine for large hospitals and labs. The BS-120 has received CE Mark and State Food and Drug Administration (''SFDA'') approval and is available in both domestic and international markets.
In December 2007, the company released the M5, a portable diagnostic ultrasound system for international markets. The M5 will target traditional markets such as radiology and OB/GYN as well as Point-of-Care-Testing  centers such as emergency and operating rooms, intensive care units and general practice offices. The M5 is expected to be launched in the domestic market upon SFDA approval in the first quarter 2008.
The PM-7000, a multi-parameter patient monitoring device received US Food and Drug Administration (''FDA'') 510(k) clearance in the fourth quarter 2007.
The company plans to release its BC-5300 and BC-5380 compact five-part hematology analyzers, targeted for mid-to-high-end hospitals in China and medium-end labs in international markets. The BC-5300 and BC-5380 are expected to receive SFDA approval by the end of January 2008 and CE Mark in the first quarter 2008.
The company expects its DC-3 color ultrasound diagnostic imaging system to be launched in China and international markets upon receiving CE Mark and SFDA clearance in the first quarter 2008. The DC-3 is designed to have wide applications in abdominal, OB/GYN, endovaginal, cardiac, small parts and pediatric markets. The product is suited for hospitals and clinics seeking replacement of B/W ultrasound systems.
The company expects its EX55 and EX65 compact anesthesia machines to receive CE Mark and SFDA approval during the first quarter 2008.
The company will apply for FDA 510(k) clearance for its Beneview T5, T6, T8, PM-60, BS-200 chemistry analyzers and both its M5 and DC-3 diagnostic ultrasound systems. Mindray has to date received FDA 510(k) clearance for a total of 11 products, covering patient monitoring devices, diagnostic laboratory instruments and ultrasound imaging systems.
Position: None
Sinobiomed Wins Grant for Vaccine Research 1/8/2008
by Life Science: China
Sinobiomed Inc. (OTCBB:  SOBM ), a Shanghai-based developer of genetically engineered recombinant protein drugs and vaccines, announced today that its subsidiary Shanghai Wanxing Bio-pharmaceuticals Co., Ltd. has won a Chinese government research grant for vaccine research.  The grant, in the amount of RMB 9 million (US $1.24 million) will allow the company to continue the clinical trial of its recombinant malaria vaccine and advance its development with its research partner Second Military Medical University (SMMU). The grant award is reported to be the largest the Chinese government has ever granted to a biopharmaceutical company.
The grant from China's Ministry of Science and Technology, awarded jointly to Shanghai Wanxing and SMMU, is intended to further develop clinical applications based on the company’s patented PfCP2.9 malaria vaccine. Developed with support from the World Health Organization (WHO) and the Program for Appropriate Technology in Health (PATH), the recombinant vaccine is intended to intended to target the malaria parasite during its replication phase in human blood. By reducing parasite densities in the blood it is hoped that the vaccine can reduce the morbidity and mortality of malaria, particularly in vulnerable populations such as infants and children.
Phase I clinical trials of the vaccine were completed in China in 2004. The company reports that the WHO funded trials showed that PfCP2.9 displayed greater immunogenicity and fewer adverse reactions than other malaria candidate vaccines. Shanghai Wanxing anticipates filing the application to the Chinese Food and Drug Administration (SFDA) for Phase II clinical trials of PfCP2.9 in malaria endemic areas to be submitted by end of 2008.
Two-thirds of the grant will support the planned clinical trials. The balance of the fund will support the joint development by Shanghai Wanxing and SMMU of a multistage, multivalent vaccine based on PfCP2.9. The multistage, multivalent vaccine, which seeks to improve immunogenicity and extend the immune period, is expected to enter into clinical trials in 2009.
Sinobiomed currently has three products on the domestic Chinese market. This includes Wanferon/Wanferin recombinant human interferon for treating hepatitis B hepatitis C, viral infections and other conditions;  Leflunomide, a drug for the treatment of rheumatoid arthritis; and recombinant Acidic Fibroplast Growth Factor (rh-aFGF), a bio-product for the treatment of skin ulcers, wounds and burns. In addition to PfCP2.9 Sinobiomed has additional compounds in development in China:
·         Etheophazine, an anti-tumor agent with indications for malignant lymphoma, lung cancer, and gastrointestinal tumors, is undergoing Phase III clinical trials.
·         Recombinant Batroxobin, intended to prevent and treat surgical bleeding, is in Phase II clinical trials.
·         Recombinant Human Stem Cell Factor, designed to promote blood cell formation in patient who have received radiation therapy for cancer, is in Phase I trials.
·         In preclinical development are a recombinant hepatic regeneration factor for acute liver failure, recombinant Human Type 1 Kallikrein for peripheral vascular disorders, and recombinant Human Urinary Trypsin inhibitor for acute pancreatitis.
Sinobiomed followed a tortuous path to the US public markets, not unusual for Chinese companies. The company was founded as CDoor Corp. in 2004, focusing on the development of a car door safety feature. The company’s name and business purpose changed in January 2007 via a reverse merger with Wanxin Bio-Technology Limited, a British Virgin Islands company. Wanxin is the sole stockholder of Hong Kong based Manhing Enterprises Ltd., and Manhing Enterprises Limited is the registered owner of 82 percent of the capital of Shanghai Wanxing Bio-pharmaceuticals Co., Ltd.
For the nine months ended September 30, 2007 the company reported a net loss of US$5.25 million on US$4.7 million in sales. Research and development expenses were US$942,396 or 20.2% of sales. The company reported US$1.76 million in cash, roughly 3.2 times its average monthly operational loss.

The market has been harsh to Sinobiomed in the past year, with shares falling over 75% from its July 2007 high of US$3.76. Along with the generally difficult market conditions, the share price was pressured by the company’s private placement on September 11, 2007. With the stock at US$3.01 the placement consisted of 5,248,800 units (1 share common, ½ share warrant) at US1$1.25 per unit, raising US$6.56 million. Investors were more favorable today, with shares rising over 5% to US$0.96 on above average volume.
Position: None
Sundia Completes Merger with United Pharmatech 1/9/2008
by Life Science: China
Sundia MediTech (Shanghai) Company Ltd. and Shanghai United PharmaTech Ltd., two Shanghai-based pharmaceutical contract research organizations (CROs) announced yesterday that they have completed their merger. Under the terms of the merger, the two companies have become subsidiaries of Sundia Investment Group, a holding firm based in the British Virgin Islands.
The merger was approved in June 2007 by the individual company shareholders and by International Data Group Venture Capital (IDG), a major Sundia shareholder. The union combines the strengths of Sundia in medicinal chemistry and organic synthesis with United PharmaTech’s expertise in the synthesis of pharmaceutical intermediates and manufacturing.  The combined company boasts a research team of over 200 scientists with 16% having PhDs and  45 pharma company clients in North America, Europe, and Japan.
"The CRO companies and the overall size of the CRO industry in China are still relatively small, and there is huge potential for growth so we can expect that in the following few years there will be many mergers," said Zhang Suyang, a partner at IDG VC. "Companies in this industry will grow very quickly and very soon we will see companies of reasonable size and with good governance emerge as corporations with serious long-term potential."
 
Source: Medical Source World (in Chinese)
Position: None
China’s Biotech Industry: An Asian Dragon is Growing 1/9/2008
by Life Science: China
{Editor’s note:  the following report from the McLaughlin-Rotman Centre for Global Health contains key insights for investors in Chinese life science companies. The full report,  “Chinese Health Biotech and the Billion-patient Market,” for is featured in the Jan. 7 edition of Nature Biotechnology. More information can be found at www.mrcglobal.org.}
China’s Biotech Industry: An Asian Dragon is Growing
Backed by a government intent on promoting innovation and fuelled by the “brain gain” of talented scientists and entrepreneurs returning from abroad, China’s health biotech industry only needs a more favourable investment climate to emerge as a global force in the production of therapies and medicines – both new and low-cost generics – experts say in a new study.

Long considered a skillful product replicator, China today boasts of daring medical science innovation and stunning breakthroughs – including the world’s first commercialized gene therapy product and the sole cholera vaccine tablet. However, Chinese firms face an uphill battle in attracting high-risk venture capital needed to sustain innovative, research-driven projects, says the study published by Nature Biotechnology. Conducted through face to face interviews with management of 22 Chinese firms, the work is the first study of China’s most innovative health biotechnology companies available in the public domain.

It says that despite substantial Chinese government funding to promote an innovative industry and entrepreneurs who will commercialize new health biotech products, the intense interest of potential international investors is typically muted by an uncertain financial system, rigid restrictions on the export of capital that limit the options for exiting investments and continuing doubts about the Chinese government’s approach to quality control and intellectual property rights.

““The Chinese biotechnology industry is like a baby dragon, which will grow quickly and soon become hard to ignore. It’s no longer the case that the industrialized world has hegemony over biotechnology innovation,” says co-author Peter A. Singer, MD, of the McLaughlin-Rotman Centre for Global Health (University Health Network and University of Toronto).
“However, for all its blossoming as an industrial and economic superpower, China still has one foot in the closed society of the past. For the sake of both national and global health, we hope China will embrace the financial and regulatory reforms needed to attract the venture capital required for sustained innovation in the health biotech sector,” he adds.
The report builds on a similar study of India’s private health biotech sector published in April 2007, opening a window on the product development capabilities and strategies used in rapidly growing economies to survive and grow amid developing country challenges. It also recommends policies that could help their biotech firms succeed.
Lead author Sarah Frew, a research associate of the McLaughlin Rotman Centre for Global Health, says the budding of biotech industries in China and India holds major implications for the global industry and for improving both health and prosperity in the developing world. The biotech revolutions in the two countries differ significantly, she says: India’s firms are largely focussed on process innovations to improve affordability and accessibility of medicine among local and global populations; Chinese firms are striving to create novel products in such areas as gene therapy and regenerative medicine.
“Addressing the health needs of 1.3 billion people in China is global health,” says Dr. Frew. “The challenges faced by the private sector, research institutes and universities, and health care providers will be very difficult to meet unless the country’s leaders are prepared to look at new approaches.”
Drs. Singer and Frew, with co-authors Abdallah S. Daar, MD, Stephen Sammut, Alysha Shore, Joshua Ramjist, Sara Al-Bader and Rahim Rezaie, say they found a home-grown Chinese private health biotech sector motivated both financially and morally to develop innovative health products to address local and global health needs.
“The responsibility now lies with both the Chinese government and the international health community to support these companies in their ventures and ensure that these products reach their intended markets,” says Dr. Frew.
The return of the ‘sea turtles’
The report notes a strong focus on encouraging the return of Chinese scientists and entrepreneurs who left the country to study or train abroad – the so-called ‘sea turtles’ who return with scientific talent and international credibility.
“While the ‘sea turtle’ phenomenon is beneficial, the country’s industry might be better served if Chinese residents in the West built transnational companies with a footprint in both China and the West,” says co-author Stephen M. Sammut of Burrill & Company, San Francisco.
“While this practice is already common, regulations and taxation policies to encourage this approach would address many of the concerns of private and public capital, assure prospective alliance partners, and add depth to the pool of experienced managers. Such an approach would also promote China as a co-development partner rather than a purely low-cost venue to international companies to contract services.”
Population a major driving force
China’s 1.3 billion inhabitants (20% of the world’s population) create a significant demand for low-cost products with the result that biogenerics accounted for more than 90% of the $3 billion biopharmaceutical market last year. For some companies, generic products represent a low-risk entry point into the industry.
The same is true for diagnostics. Chinese companies like Beijing Wantai Biological Pharmacy Enterprise and Shanghai Huaguan Biochip Co., Ltd. play an important role in keeping local consumer prices down. Wantai has developed and marketed a large range of blood screening tests for diseases such as HIV, hepatitis B and C, sexually transmitted diseases and rotavirus. Huaguan earns most of its revenue exporting its range of fertility tests and formulations for HIV, tuberculosis, hepatitis C and STDs to other Asian, African and South American countries. The Chinese government, however, remains intent on pushing applied research, driving Chinese firms to develop new therapies in pioneering fields such as gene therapy and stem cells.
The first commercialized gene therapy product approved anywhere in the world was Gendicine, an injection used in the treatment of head and neck cancers developed by Shenzhen SiBiono GeneTech Co., Ltd. More than 5,000 patients have been treated with Gendicine, about 400 of them from overseas. The drug is currently undergoing further clinical trials in China for several new indications, including liver, abdominal and pancreatic cancer.
Several Chinese companies are working in the field of human and animal stem cells. One of them, Beike Biotechnologies, has organized a network of satellite hospitals, clinicians and research laboratories to commercialize its stem cells therapies, which involve harvesting stem cells from the umbilical cord or amniotic membrane, in vitro expansion, and administration to patients either intravenously or by injecting directly into the spinal cord.
Beike has treated more than 1,000 patients, including 60 foreigners, for a variety of conditions including Alzheimer’s disease, autism, brain trauma, cerebral palsy, diabetic diabetic foot arteriosclerosis and spinal cord injury. Because therapies using cells derived from the umbilical cord are considered a clinical technology in China, the State Food and Drug Administration does not require clinical trials before these treatments are approved. This absence of clinical data makes it difficult to evaluate the efficacy of these therapies.
New therapies developed for local and global health problems
The study found that the government’s focus on innovation is also driving development of new therapies to address significant local health needs, including lung fibrosis, liver cirrhosis and various problems associated with an aging population caused in part by the country’s one-child policy.
Lung fibrosis, caused by radiation treatment, is a major cause of death for the more than 275,000 Chinese who die from lung cancer every year. Inflammation and fibrosis of the liver is a side effect from hepatitis B virus infection, which afflicts over 100 million Chinese. Shanghai Genomics Inc. has focused its efforts in this area, developing novel non-steroid anti-inflammatory therapeutics to replace currently available treatments which achieve poor results and have many side effects. The company’s first product on the market, GuBang, is a material for bone void filling that can aid bone growth and serve the growing needs of Asia’s aging citizens.
Chinese firms are also developing vaccines to address both local and global needs. They include Shanghai United Cell Biotech, which is manufacturing and marketing one of only two oral cholera vaccines available worldwide (and the only one available in tablet form). Other firms are working on an oral HIV vaccine and novel vaccines against Japanese Encephalitis, SARS and pandemic avian influenza (H5N1 strain).
Barriers to development
The study found that the lack of favourable conditions for investment in an innovative biotech sector may be actively discouraging its growth. Most Chinese biopharmaceutical companies sell generic drugs and do not invest in R&D.
“Some of the firms that are pursuing innovative R&D have incorporated hybrid business models that dilute resources to include contract services or non-innovative products, to first fund the firm’s survival and then fund R&D activities,” the report says.
These hybrid business models have fallen out of favor in the west, where venture capitalists prefer a well-defined targeted strategy over a mix of models that mitigate commercial risk. As price-based competition among domestic manufacturers continues to put pressure on profit margins, even fewer firms may be able to support in-house R&D programs.
Other barriers to growth
There is a lack of trust among potential international partners, particularly in discussions that involve intellectual property protection. Other barriers to international partnerships involve language, travel, culture, and differences in project management styles.
Slow-moving policy and regulatory processes hinder progress in a fast-paced research environment. Among the major issues China will need to address soon is the need to expand its capabilities in protecting intellectual property by refining civil procedures, developing a body of jurists, and accumulating a body of precedent and custom for assessment of damages.
Sales and distribution are problematic for small Chinese companies; as a result the needs of the large domestic market are unmet. The country’s health system is weak and in many cases clinicians, facilities and products are not reaching rural or isolated regions. Another challenge is the disparity between the high cost of developing an innovative health product and the price the domestic market can pay.
Other lessons learned
The government’s efforts to expand China’s innovative capacity in biotechnology are bearing fruit. According to the country’s Institute of Science and Technology Information, China in 2006 became the world’s second largest scientific research publisher (after only the U.S.), indicating improved research and innovation capacity and deeper involvement of Chinese scientists in the international academic community.
The researchers say Chinese companies need global health organizations to help them increase global access to their products. As well, in addition to incentives to develop domestically novel products that address local health needs, more government-sponsored incentives and procurement programs are needed to ensure that innovative products reach their intended end users.
Recommendations for biotech development in China
  • Reform the financial environment to facilitate exit mechanisms for entrepreneurs and investors in the health biotech sector.
  • Create and promote specialty programs in biotechnology entrepreneurship and management.
  • Leverage the ‘sea turtle’ phenomenon to promote transnational companies that will be attractive to western investors and strategic partners.
  • Promote credibility of domestic firms to the international community by enforcing uniform financial reporting, a transparent regulatory regime and fair business practices.
  • Enact timely legislation and regulations to nurture scientific and economic development.
  • Stimulate rapid development of the IP infrastructure through academic and exchange programs.
  • Strengthen health systems infrastructure and distribution mechanisms in concert with the development of the industry to ensure that innovative health biotech products are available to the entire domestic population.
________________

Genome Canada, through the Ontario Genomics Institute, was primary sponsor of this study, with additional support provided by the Rockefeller Foundation (New York) and BioVentures for Global Health (Washington DC), and in-kind contributions from Burrill & Company (San Francisco) and Wulff Capital (Dallas). Other partners are listed at www.mrcglobal.org.
Position: None
Quintiles Expands in China 1/10/2008
by Life Science: China
Quintiles Transnational Corp. today announced the expansion and consolidation of its Global Central Laboratories and Clinical Development Services (CDS) units in Beijing to accommodate their growing business in China. The new consolidated Quintiles China facility, with more than 17,000 square feet of space, is located at Sun Dong Ann Plaza in Beijing, about one block from the previous lab site in the Peking Union Medical College Hospital (PUMCH).
Quintiles' China central lab is certified by the College of American Pathologists and the National Glycohemoglobin Standardization Program. The new facility expands the lab space by 2,600 square feet. The lab has 13 employees and continues to add staff. CDS occupies 10,000 square feet of the combined office area, a major expansion over its old facility of under 3,000 square feet. The CDS staff strength continues to grow in Beijing and is expected to reach more than 60 people over the next 12 months.
Tom Wollman, Senior VP of Quintiles Global Central Laboratories said, "Quintiles' business is growing at a significant rate, and our larger facility will allow us to efficiently accommodate both the growth and our expanding test menu, which have moved well beyond basic safety testing to include specialized chemistry, PCR testing and complex flow cytometry."
"We would like to thank the Peking Union Medical College Hospital for all that it has done to help Quintiles establish and expand our Central Laboratory in China," Wollman said. "PUMCH is one of the premier tertiary centers in Beijing, and we will continue to foster our close working relationship with key laboratory and scientific staff."
"“The globalization of clinical research is continuing to increase, and China is just beginning to see the rapid growth we have experienced in India, Australia and throughout Asia Pacific. Our clinical development business is poised for rapid acceleration in China, and bringing our CDS and Global Labs businesses together will help our customers,“  said Lai Lee Tan, head of Clinical Operations and General Manager in China . Tan also noted that the consolidation of CDS and Central Lab operations in a single facility will improve coordination and efficiency for Quintiles' customers.

Founded in 1982, Quintiles Transnational Corp. is a privately held international provider of professional services to the pharmaceutical, biotechnology and healthcare industries. With a presence in over 50 countries on six continents, revenues in excess of US$2 billion annually and over 19,000 employees, Quintiles is said to be the largest contract research organization (CRO) in the world. Previously public, Quintile was taken private via a management led buyout in 2004. It’s shareholders currently include Bain Capital, 3i, TPG Capital, and Singapore’s Temasek Holdings.
Position: None
Yanhuang Health Media Attracts Focus Media Investment 1/10/2008
by Life Science: China
Focus Media Holding Limited (NASDAQ: FMCN ) , China's largest digital media group, today announced a strategic investment in Yanhuang Health Media Limited, a Beijing based operator of a liquid crystal display (LCD) based advertising network  for hospitals and healthcare locations in China. Focus Media will make a cash investment of US$5 million to Yanhuang Health Media in return for a 20% equity interest.
In addition to the cash investment, Focus Media will transfer to Yanhuang ownership of Focus Media’s healthcare channel.  With an installed based of approximately 2,461 LCD displays, the healthcare channel covers hospitals and drug chain stores in about 31 cities throughout China.
"There is very significant demand for advertising targeting potential consumers for their healthcare needs. Yanhuang has built a very successful network and operating team to become the leader in the sector," said Jason Jiang, CEO of Focus Media. "We believe this partnership will create value for our shareholders while building a leading player in an attractive media, in which we have a significant stake."
Focus Media’s investment follows on a larger investment announced in October, in which Yanhuang Health Media received US$35 million in venture capital investments from four firms, including Orchid Asia, China Renaissance Capital Investment, investor AB, and HSBC. Yanhuang reported that the investment would be used to expand its nationwide in-hospital LCD network. At the time of the investment the company also announced plans for an overseas IPO in 2008.
Yanhuang Health Media Limited is a leading digital display advertising operator covering healthcare locations in China, including hospitals, drug chain stores and other healthcare locations. Currently, it has an installed based of over 10,000 LCDs in 36 cities throughout China. Founded by Beijing Yanhuang Times Advertising Corp. in 2005, Yanhuang Health Media is reported to own the largest in-hospital television network in China.
With displays located in waiting areas and other public spaces within hospitals, the company generates its revenue from selling advertising air-time on its network. Yanhuang reports its present network coverage includes exclusive agreements with more than 2500 hospitals, with over 10,000 LCD screens throughout 35 provinces in China. With Chinese patients visiting the hospital approximately 10 times per year and hospital waiting times estimated at 1.5 hours, the company estimates an audience of 4.4 million people per day.
 The company’s earlier growth has been backed by an investment of US$5 million from Softbank’s SAIF in 2006. Although Yanhuang does not release financial reports publicly, CEO Zhao Songqing has estimated that the company has the potential to hit revenues of CNY2 billion (US$265 million). This latest investment by Focus Media will assist Yanhuang in its plans to expand its network to 80,000 displays in 6,000 hospitals throughout 60 cities in China by the end of 2008.
Yanhuang appears to be executing well on the Focus Media playbook, and it’s emphasis on healthcare should provide it additional room to grow. China’s hospitals and pharmaceutical companies are under pressure from government efforts to cap drug prices and reduce hospital income from prescriptions. This should provide Yanhuang with a steady supply of hospitals eager to supplement their income, and healthcare suppliers looking to make a favorable impression on Chinese consumers.
Yanhuang’s heritage is also a plus. Its parent, Beijing Yanhuang Times Advertising, is not only one of China’s largest outdoor advertising firms, it is also 50% owned by Tom Group (HK: 2383), a subsidiary of Li Ka Shing’s Hutchison Whampoa (HK: 0013). Yanhuang Health Media will be one IPO to watch for in 2008.
Position: None
Shandong Weigao To Acquire Stake in Biosensors Intl. 1/11/2008
by Life Science: China
In a deal valued at up to US$120 million, Shandong Weigao Group Medical Polymer Co. Ltd. (HKG: 8199 ) has agreed to sell its 50% stake in Chinese cardiac stent maker JW Medical Systems Ltd. to Biosensors International Group, Ltd. (SIN: B20 ). In return Weigao will receive up to 160 million newly issued shares of Biosensors, giving Weigao an equity stake in Biosensors that could exceed 14% of the company.
The deal would allow Biosensors to acquire the remaining 50% stake in JW Medical that it does not already own. Under terms of the deal, Biosensors will first acquire a 30% stake for 120 million shares. Weigao then has the option to put the remaining 20% to Biosensors by July 2009 for 40 million shares. In addition, Weigao also has the right to purchase up to 20 million additional shares in cash, at a price to be negotiated within 60 days from the date of the agreement. Weigao will have a “lock up” period of six months on its ability to transfer the equity stake of Biosensors acquired in the transaction.
The deal will give Biosensors a larger in the market for cardiac stents in mainland China. The Chinese market for drug eluting stents is estimated to be approximately US$400 million. JW currently has a 25-30% share of that market.
Yoh Chie Lu, Chairman and CEO of Biosensors said, “This acquisition symbolizes a mutual commitment between Biosensors and Weigao to forge stronger relationships as long term strategic partners in Asia. The demand for drug-eluting stents continues to grow rapidly in China and having ownership of JW Medical will place us in a strong position to create maximum traction in this important and large market. Additionally, with Weigao now as a strategic shareholder of Biosensors, we will be able to leverage on its strength to become a leader in Asia, particularly in China.”
 “Since commercialization of its drug-eluting stent in early 2006, JW Medical has demonstrated operational excellence and has successfully increased its production capacity to meet rapidly growing demands. We can certainly leverage this experience as we prepare ourselves for commercialization of our BioMatrix® drug-eluting stent. For the nine months ended 30 September 2007, JW Medical reported an impressive net profit of US$11.1 million which is about three times the net profit of US$3.8 million earned in the initial nine months after commercialization of its drug-eluting stent. With completion of the acquisition, we expect JW Medical not only to add sales to our top line but also contribute positively to our profit line when its financial results are consolidated with ours.” Mr. Lu added.
Mr. Chen Xue Li, Chairman of Weigao group said, “China certainly offers explosive growth opportunities for companies with innovative technology and operational excellence. As shareholders of Biosensors now, we can leverage on Biosensors’ leadership in interventional cardiology and enable Weigao to become a leader in the medical device industry in Asia. At the same time, we can also work closely with Biosensors and by utilizing our strengths in sales and marketing and knowledge of the Chinese market we can bring Biosensors’ new products and technology into the fastgrowing market in China more effectively and efficiently. We look forward to becoming a long-term shareholder and strategic partner of Biosensors to grow the business beyond China as well.”
Founded in Singapore in 1990 as a contract medical device manufacturer, Biosensors International Ltd. develops, manufactures and commercializes medical devices used in interventional cardiology and critical care procedures. With global sales of US$34.4 million, the company derived 35% of its sales from drug eluting stents. The company invested US$24.9 million in research and development primarily on stent-related research, including a biodegradable polymer drug-eluting stent. For 2007 the company reported a net loss of US$36.3 million as compared to a net loss of US$22.5 million on US$37.9 million in 2006. With a recent price of S$0.975, Biosensors’ shares have been flat over the year, but have risen over 50% from their August low near S$0.62.
Based in Weihai City of Shandong Province, Weigao focuses on the development, manufacturer and sale of medical devices and products. Its orthopedic products include plates, screws and spinal implants used in the treatment of traumatic injuries. The company also manufacturers an extensive line of medical consumables, including drug-eluting stents, syringes, IV tubing, and equipment for use in renal dialysis and blood donation. The company’s sales network is established in 100 Chinese cities, with service to over 2700 hospitals and over 1100 clinics and blood banks.
Weigao is publicly listed on the Hong Kong Growth Enterprise Market (GEM). For FY 2006 the company reported revenues of over US$100 million, with net margins of 21.7%. For the nine months ended Sept. 30 2007, the company reports sales of US$107 million, up 36.8% over the previous year. Net margins also increased to 27.4%. The company’s stronger performance was due in part to the acquisition of several orthopedic products including spinal implants and artificial joints.

In December, US medical device giant Medtronic, Inc. (NYSE: MDT ) acquired a 15% stake in Weigao for US$221 million. At the same time the company announced a new joint venture with Weigao to market spine and orthopedic therapies in China. Medtronic is a also a major producer of cardiovascular and critical care products. Cardiovascular and critical care related products in 2007 accounted for sales of US$7.2 billion, representing over 58% of the company’s global sales.
Position: None
China to Boost Investment in Drug Development 1/15/2008
by Life Science: China
The Chinese central government will boost its investment in pharmaceutical research, with plans to fund over SU$1.5 billion in innovative drug development over the next fifteen years. As reported by Chemistry World’s Heping Jia,  the scale of the Chinese government effort will be “unprecedented.”
Approved on December 28th by the State Council, the “Key New Drug Creation and Development Programme” is reported to be independent of any existing government funding schemes in the life sciences. According to Lu Xianping, president of Shenzhen-based Chipscreen Biosciences, a participant in the funds planning process, the first batch of the funding will be RMB 4 billion (US$548 million) in the first five years, and an additional RMB 7 billion (US$965.5 million) over the following 10 years.
Although details regarding the funds remain to be settled, Jia reports that the funding will be categorised in accordance with different types of major diseases. In each of the disease categories, there will be projects for small-molecule therapies, larger biomolecules, and traditional Chinese medicine. It has not yet been determined whether the Ministry of Science and Technology (MOST) or the Ministry of Health will manage the majority of the funding.
The Chinese governments previous efforts in support of drug development have been funded via the National High Tech Research and Development Program (863 Program). Established in 1986 and administered by MOST, the 863 Program supports innovation in 8 fields including pharmaceuticals/biotechnology, space research, information technology, lasers, automation, energy, new materials and marine technology. In 2007, the program allotted RMB 400 million (US$55 million) to support biotechnology research.
The Chinese government’s plans are clearly intended to fill a void in the country’s life science industry. Despite annual growth in healthcare spending exceeding 15% annually, venture capital support for the pharmaceutical and biotechnology sectors has been slow in coming.
As detailed in a recent issue of Nature Biotechnology, the majority of Chinese biopharmaceutical companies are selling biogeneric drugs and do not invest in innovative R&D. In part this is because companies lack the technological capabilities to develop an innovative drug or they have limited access to the financial resources to do so.  As price-based competition among domestic manufacturers continues to put pressure on profit margins, even fewer firms may be able to support in-house R&D programs.
“Some of the firms that are pursuing innovative R&D have incorporated hybrid business models that dilute resources to include contract services or non-innovative products, to first fund the firm’s survival and then fund R&D activities,” the report says.These hybrid business models have fallen out of favor in the west, where venture capitalists prefer a well-defined targeted strategy over a mix of models that mitigate commercial risk. Potential investors are also deterred from making substantial investments by the lack of exit strategies and the uncertainty of the financial system.  
Position: None
Yanhuang Health Media: Strong Growth & High Expectations 1/16/2008
by Life Science: China
Following on the recent news regarding the investment by Focus Media Holding Limited (NASDAQ: FMCN ) in Yanhuang Health Media comes further financial details regarding Yanhuang’s current status and future plans. As reported by Fang Jian-chun in China Pharmaceutical News (in Chinese), Yanhuang is showing strong growth and has high expectations for the future.
Yanhuang Health Media Limited is a leading digital display advertising operator covering healthcare locations in China, including hospitals, drug chain stores and other healthcare locations. Currently, it has an installed based of over 10,000 liquid crystal display (LCD) screens in 36 cities throughout China. Founded by Beijing Yanhuang Times Advertising Corp. in 2005, Yanhuang Health Media is reported to own the largest in-hospital television network in China.
As reported by Fang, Yanhuang CEO Zhao Songqing  is anticipating strong growth for the company. In part, he anticipates that the expansion of the Chinese government basic medical insurance program will result in increase demand for pharmaceuticals, and an increased need for hospitals and pharma companies to market directly to their patients.
“The common affinity for media companies and the health industry is in helping patients in medical institutions,” said Zhao. “We hope that by the end of 2008 we will have reached 80,000 liquid crystal display screens in 6,000 hospitals throughout the country.”
Zhao reports that in 2007 Yanhuang had revenues of RMB 120 million (US$17 million) with 2008 revenues expected to come in at RMB 350 million (US$49 million). Profit margins are reported to be in excess of 50%. Zhao reportedly expects revenues and profits in 2009 to be double that of 2008.

Yanhuang continues to anticipate an overseas IPO in 2008. Focus Media  recently invested US$5 million plus assets in the form of Focus Media’s 2,461 screen healthcare channel  in return for 20% of Yanhuang. With Focus Media currently selling at a 12 month forward PE of 24.9, Yanhuang could carry a valuation in excess of US$1.2 billion based on anticipated earnings in 2009.  
Position: None
Beijing Med-Pharm Files Consolidated Financial Results 1/17/2008
by Life Science: China
Beijing Med-Pharm Corporation (NASDAQ: BJGP ), a distributor and marketer of pharmaceuticals in China, announced its financial information for the nine-month period ended September 30, 2007 and for the year ended December 31, 2006. The results showed revenue growth driven by acquisition, but problems on the cost front.
The unaudited pro forma results reflect the pending completion of the acquisition of Hong Kong Fly International Health Care Limited (Hong Kong Health Care), a Hong Kong corporation that holds 51% of the equity interests of Sunstone Pharmaceutical Company Limited (Sunstone). On October 31, 2007, Beijing Med-Pharm acquired a 49% interest in Hong Kong Health Care and anticipates acquiring the remaining 51% in the first quarter of 2008.
For the nine month period the company reports total revenues of US$51.3 million, with gross income of US$22.6 million and gross margins of 44%. Operating income for the period was US$1.1 million with a net loss of US$1.4 million, reflecting margins of 2.1% and -2.7% respectively. The company’s results were clearly buoyed by the inclusion of results from Hong Kong Health Care. These results showed revenues of US$29.5 million, with net income of US$4.7 million and net margins of 15.9%.
Operating expenses continue to drag on Beijing Med-Pharm’s results. At US$7 million operating expenses were 32% of revenues, up from the 30.9% from year-end 2006. Incorporating results from Hong Kong Health Care didn’t help on this front, as combined results showed operating expenses at 42% of revenues.
Acquisitions have fueled Beijing Med-Pharm’s growth. The company started by acquiring pharmaceutical distributor Beijing Wanwei Pharmaceutical Co., Ltd. in 2005. The company has leveraged its distribution by obtaining China market rights to Western pharmaceuticals, predominantly in the women’s health space. This includes Novartis’ Enablex, Cytokine Pharmasciences Propess and Misopress, KV Pharmaceutical Co.’s Clindess, and Taiwan Biotech Co.’s Anpo intravaginal medications. The company has also obtained rights to Lotus Healthcare, Inc.’s Galake, Shanghai Ethypharm’s Ondansetron, and Cephalon Inc.’s Fentora.
In addition to Hong Kong Health Care and its Sunstone subsidiary, the company had several other acquisitions in 2007:
·         In January the company allied with British pharmacy giant Alliance Boots to acquire a 50 percent interest in Guangzhou Pharmaceuticals Corporation, the third largest pharmaceutical wholesaler in China with US$900 million in revenues in 2006. The deal, valued at US$72 million in cash, was approved by the Chinese Ministry of Commerce in August. It will give Beijing Med-Pharm and Alliance Boots access to more than 12,000 hospitals, pharmacies, and other wholesalers from eight distribution facilities located throughout GuangdongProvince and southeast China.
·         In March, Beijing Med-Pharm agreed to to purchase a majority interest in the Shanghai Rongheng Pharmaceutical Co., Ltd. Under the deal, the company will acquire a 63.3% stake in Rongheng. The US$12 million (revenues) Rongheng distributes over 400 pharmaceutical products to more than 250 hospitals in Shanghai. The acquisition is still awaiting Chinese government approval.
·         Also in March, the company signed a letter of intent to acquire a 49% interest in a joint venture with Guangzhou Biodian Medical Information Co., Ltd. (PICO). A healthcare information company, PICO is a subsidiary of the State Food and Drug Administration’s (SFDA) South Economic Research Institute. The deal is anticipated to give the company access to an extensive database of healthcare market information.
Beijing Med-Pharm has been using its publicly traded shares as acquisition currency. For the Hong Kong Health Care acquisition the company paid US$32 million for 49% of the company, and 8 million common shares to acquire the remaining 51% on Sept. 28th. Based on that date's closing price, the acquisition is valued at approximately US$158 million. Beijing Med-Pharm currently trades at a Price to Book ratio of 6.2 and a Price to Sales of 9.9. Applying  these valuations  to Hong Kong Health Care results in valuations of US$126.6 million to US$390 million respectively. With Hong Kong Health Care’s revenues growing over 9% on an annualized basis, Beijing Med-Pharm is clearly looking for the higher valuation by investors.

Cost control continues to be a major factor in Beijing Med-Pharm’s results. The company needs to demonstrate the abililty to integrate its acquisitions and consolidate operations to drive down general and administrative expenses. In addition the company must leverage its distribution system to promote sales growth in excess of sales and marketing growth. In a tough market investors will be watching closely; shares today fell over 8% to close at US$8.64.
Position: None
BASF Builds Development Base in China 1/17/2008
by Life Science: China
German chemicals giant BASF (OTC ADR: BASFY) announced Jan. 16th the inauguration of three new Application and Development center in China. The centers, to be located in Shanghai, are meant to bring together a wide range of technical services and solutions in the fields of personal care, pharmaceuticals, and beverages.
 “The opening of the care chemicals centers underlines BASF’s commitment to growing its innovation expertise in China,” said Johnny Kwan, Chairman of BASF China Country Board. “We now have over 200 people working in our laboratories in Greater China who are providing innovative products and solutions to help improve the standards of China’s chemical industries.”
The new centers are meant to tailor BASF’s existing products and develop new products to meet the growing needs of its Chinese customers.  BASF is one of the biggest foreign investors in the China chemical industry. The company currently has more than 5,500 employees and operates 29 wholly-owned subsidiaries and nine joint ventures. In 2006, BASF achieved sales of over EUR 3.6 billion (US$5.3 billion) in Greater China.
Position: None
Merck to Establish Techology Center in Taiwan 1/22/08
by Life Science: China
Merck Ltd. (NYSE: MRK ) and Taiwan’s Development Center for Biotechnology (DCB) jointly announced today the cooperation agreement to establish an Asia Technology Training Center (ATTC) in Taiwan. The newly established Merck ATTC will be located on the DCB campus located in a science park in eastern Taipei, in proximity to the Nankang Biopark, the National Genome Research Center, and the main campus of the Academia Sinica..
Under the agreement, DCB will provide the space, facilities, consultant and supplies for the ATTC. Merck will leverage DCB’s expertise in the commercialization of R&D results to help build up Merck’s biopharmaceutical pipeline through ATTC clienteles. In return, Merck will share with DCB its cooperation model with customers, and partner with DCB in its global R&D efforts.
The Development Center for Biotechnology of Taiwan is a nonprofit organization established in 1984 with the support of the Taiwanese government’s  Ministry of Economic Affairs, Department of Industrial Technology. Its main mission is to help shape and develop Taiwan’s biotechnology industry through R&D, infrastructure-building and training programs.
The center currently has approximately 400 employees (including 59 PhDs) and operates three contract service facilities: the GPCR Drug Screening Facility, the Center of Toxicology and Preclinical Sciences , and the cGMP Biopharmaceutical Pilot Plant Facility. The main offices and laboratories of DCB are
The DCB focuses its R&D efforts on  environmental biotechnology,  herbal medicines, pharmaceuticals, small-molecule drugs and new formulations of existing drugs, and biologics including monoclonal antibodies, recombinant proteins and vaccines.  At present, the therapeutic areas selected for drug development at DCB are cancers, diabetes and infectious diseases.
Commenting on the announcement, Dr. Shu-Ming Wu, the Chairman of DCB, said the fact that Merck chose Taiwan over the competing Asian countries reconfirmed the competitiveness of Taiwan in the regional biotech industry. The passing of “Statute for the Development of Biotechnology New Drug Industry”(生技製藥產業發展條例) last year, in part through our effort, has greatly improved Taiwan’s overall biotech industrial environment. In addition, Merck can share with DCB its outstanding biotech and pharmaceutical R&D capabilities and the resources from its well- established biopharmaceutical CGMP pilot plant. This collaboration is a true win-win situation for both parties.”
Source: Taiwan Development Center for Biotechnology
Position: None
Chindex and NBC Enter into Healthcare Services Agreement 1/23/2008
by Life Science: China
Chindex International Inc. (NASDAQ:  CHDX ), a US-based healthcare company that provides healthcare services and supplies medical capital equipment, instrumentation and products to the Chinese marketplace announced today an agreement with US broadcaster NBC to provide healthcare services to NBC employees. The agreement adds NBC to the long list of organizations Chindex will provide with healthcare services in Beijing during the 2008 Beijing Olympics.
The agreement between NBC and Chindex's United Family Hospitals and Clinics is for the provision of medical coverage to NBC's personnel while in China preparing for and covering the 2008 Olympic Games in Beijing.
"We are delighted and honored to be chosen to provide medical services to NBC during this event. The healthcare services and support will include the use of the doctors, nurses, and staff of United Family Hospitals and Clinics," says Roberta Lipson, CEO of Chindex and Chairman of United Family Hospitals and Clinics. "Our hospitals are open to the public and we are prepared to provide support not just to NBC but to anyone in need of healthcare services regardless of their nationality or corporate affiliation."
Established in China in 1981, Chindex initially focused on the distribution of Western medical devices and supplies in China. With the opening of Beijing United Family Hospital in 1997 the company’s revenues have been increasingly driven by its Healthcare Services division and the development of private international standard hospitals. Starting with the Beijing facility, the company subsequently has opened a second inpatient/outpatient facility in Shanghai along with satellite outpatient facilities in Beijing and Shanghai. A long-planned 3rd facility in Guangzhou is reportedly in progress. In the future the company anticipates developing facilities in Wuxi and Xiamen.
Chindex’s ongoing investment in developing a network of healthcare facilities in China is changing the nature of the company’s business. For the six months ending Sept. 30, 2007 healthcare service revenues accounted for US$30.7 million or 52% of total revenues, up from 44% for the same period in 2006. Operating margins for the quarter were 8%, with healthcare service margins of 13.5% and medical products margins of 1.7%. The upcoming Beijing Olympics and increased Western tourism to China should only boost this trend, and bodes well for the company in upcoming quarters.
Source: Chindex
Position: None
PPD Expands Lab Services into China 1/23/2008
by Life Science: China
PPD, Inc. (Nasdaq:  PPDI ) announced that that it has signed an exclusive agreement with Peking Union Lawke Biomedical Development Limited (PUL) to expand its global central lab services into China. The agreement allows PPD to begin immediately providing biopharmaceutical clients with its full range of highly customized central lab services in China.
"Chinese law makes it extremely difficult to export lab samples to other countries for testing," said Agostino L. Fede, Ph.D., senior vice president of PPD and head of PPD's global central labs. "Our agreement with PUL expands our global central lab capabilities in a high growth clinical research market. It also saves our clients time and money by providing lab results more quickly without incurring expenses for exporting shipments."
Located in Beijing Zhongguancun Life Sciences Park, the expanded laboratory will be overseen by Jian Ho, M.D., Ph.D., medical director at PUL. The laboratory platform is identical to those located at PPD central labs in Kentucky and Brussels, and assays performed have been extensively cross validated and precisely calibrated to match instruments at these labs. Data from the PUL laboratory will be directly combinable with data from PPD’s existing labs.
PUL will conduct chemistry, hematology, urinalysis and hemoglobin A1c tests to support PPD's clinical trials business in China.  In return, PUL will have rights to use the equipment to conduct central lab testing for Chinese clients running clinical trials in China. The PUL central lab participates in the College of American Pathologists (CAP) external proficiency testing program and has applied for CAP accreditation.
"PUL provides reference testing services to hospitals, clinics and is the largest reference lab in Beijing," said Dr. Ho. "We are pleased to use our experience across numerous lab platforms to support PPD's global central labs."
PPD is a leading global contract research organization (CRO) providing discovery, development and post-approval services as well as compound partnering programs to pharmaceutical, biotechnology, medical device, academic and government organizations. With 45 top pharmaceutical and 250 biotechnology companies as partners, PPD reports it is the second largest Phase II through IV CRO.
For the fiscal year 2006 PPD reported revenues of US$1.25 billon with net income of US$156.7 million, up 20.3% and 30.7% respectively from FY 2005. Overseas revenues accounted for approximately 30% of the total. Although only a small fraction of revenues come from the Asian Pacific region, the company reports that demand in the region is grew 155% year over year.
Position: None
In Hospital Advertising Heats Up in China 1/27/2008
by Life Science: China
HealthMedia (China) Co. Ltd., the Beijing based operator of digital advertising systems in healthcare facilities, has announced that it will soon launch a third funding round with the intent of raising US$60 million. As reported by ChinaVenture.com, the financing will be used 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,  the company’s 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.
In addition to spot advertising the company provides customized educational and instructional content for hospitals and healthcare companies including General Electric (NYSE: GE ). In the coming year, the company plans to expand to 40 large and medium-sized cities in China and to increase the number of displays to 50,000, either through growth or acquisition. HealthMedia’s ultimate goal is to cover more than 90% of China’s large and medium-sized hospitals and large chain pharmacies and ultimately to expand display counts to 100,000 or more.
HealthMedia’s growth plans place it in square competition with Yanhuang Health Media, particularly in the wake of Focus Media’s (Nasdaq: FMCN ) recent investment in Yanhuang. Both companies are benefitting from strong trends emerging in China’s healthcare services sector. 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. This includes not only hospitals, pharmaceutical companies and medical device makers but other companies looking to connect with urban consumers. For example, insurance advertising is growing at approximately 60% per year, and consumer electronics firms have found success advertising digital cameras to families following the birth of a child.
With healthcare trends in their favor and investor dollars flowing into the sector, both HealthMedia and Yanhuang look to be favorably positioned for continued growth. The upcoming IPOs of both are likely to attract significant attention.
Position: None
Coke’s Chinese Medicine Research Center: An Update 1/28/2008
by Life Science: China
In October, Coca-Cola Co. (NYSE: KO) announced the official opening of The Coca-Cola Research Center for Chinese Medicine at the China Academy of Chinese Medical Sciences in Beijing. A reader has requested an update on the center, and Life Science: China is happy to oblige.
This research center builds on Coke’s 15 year collaboration agreement with the China Academy of Chinese Medical Sciences, signed in 2005. Funded through the company’s Beverage Institute For Health & Wellness, the research center will be directed by Huaying Zhang, MD, Director of Health & Wellness for Asia for the institute. Previously Dr. Zhang served with the Chinese Ministry of Health, and she also has been responsible for Coke’s collaboration with the Sports Medicine Institute of General Administration of Sport in China to develop sports beverages for Chinese athletes.
As of December 2007, reports indicate that the research center has established an office for Dr. Zhang in the China Academy of Chinese Medical Sciences. Maurice Arnaud, Executive Director of the institute, is slated to join the advisory board of the Experimental Research Center at the academy. Information regarding funding for the center has not been made public by either the company or the institute. However, a year-end report from China’s State Administration for Traditional Chinese Medicine (SATCM) indicates that Coca-Cola has committed to providing US$250,000 annually to support collaboration efforts between the center and the academy.
"The center will focus on basic theory regarding the medical and pharmacy aspects in the principle of joint development of a Chinese medicine health drink, and associated scientific research," said Director Yu Youhua of SATCM.  The research collaboration "will be helpful for TCM going global. It will promote the industrialization of TCM for making modern products."
Position: None
BioSphere Medical Receives Chinese Government Approval 1/28/2008
by Life Science: China
BioSphere Medical, Inc. (Nasdaq:  BSMD ), a medical device company that has pioneered the use of bioengineered microspheres to treat uterine fibroids, hypervascularized tumors, and vascular malformations by a minimally invasive, image-guided medical procedure called embolotherapy, today reported that the Medical Device Department of the State Food and Drug Administration of the People’s Republic of China has approved BioSphere’s Embosphere Microspheres for clinical use for vascular embolizations, arteriovenous malformations, hypervascularized tumors, and symptomatic uterine fibroids. BioSphere expects to commence shipments of Embosphere Microspheres to China in the first quarter of 2008.
Richard Faleschini, President and Chief Executive Officer of BioSphere, commented, "China, of course, has a very large population, and our in-country partners estimate that currently approximately 200 million Chinese have health coverage. We believe that among these covered lives are a large number of patients who have and are being treated for benign and malignant hypervascularized tumors, such as uterine fibroids and hepatocellular carcinoma, respectively. Therefore, we believe that China has the potential to be an attractive market for us, and a catalyst for potential future revenue growth.”
In China, the annual incidence of hepatocellular carcinoma (HCC or primary liver cancer) is approximately 350,000, roughly half of the total worldwide incidence. The high occurrence of HCC in Asia in general and China in particular is attributed to a high historical prevalence of the hepatitis B and C viruses. These viruses damage the liver and can contribute in time to the development of primary liver cancer. As the cancer progresses, physicians may embolize the resulting tumors, and may often perform multiple procedures on each patient.
BioSphere Medical seeks to pioneer and commercialize minimally invasive diagnostic and therapeutic applications based on proprietary bioengineered microsphere technology. The Company's core technologies, patented bioengineered polymers and manufacturing methods, are used to produce microscopic spherical materials with unique beneficial properties for a variety of medical applications. BioSphere's principal focus is the treatment of symptomatic uterine fibroids using a procedure called uterine fibroid embolization, or UFE.
For the six months ended June 30, 2007, the company had revenues of US$13.6 million, an increase of over 24% from the same period last year. The company had a net loss of US$1.6 million, improving on a loss of US$2.1 million from June 2006. Research and development expenses were US$1.2 million or 9.2% of revenues. Biosphere Medical’s product sales outside of the US and Europe are small but growing, accounting only for 5% of revenues but growing 82% from 2006.
 
Source: Business Wire
Position: None
Wuxi Pharmatech to Increase Spending, Add Capacity 1/28/2008
by Life Science: China
Wuxi Pharmatech Inc. (NYSE: WX ), the Shanghai-based provider of pharmaceutical R&D outsourcing services, announced today that it will increase spending on equipment and materials by 50 to 100 percent this year. The expenditures are intended to expand research capacity and facilitate its acquisition of US-based AppTec Laboratory Services Inc.
As reported in the Jan. 29th edition of Shanghai Daily, the company plans to increase total spending on laboratory equipment and reagents to RMB 300 million to 400 million (US$42 million to 56 million) this year. The plans, attributed to Li Ge, Chairman and CEO of Wuxi, and Samuel Li, senior director of international operations, were disclosed during a meeting of Wuxi management and suppliers at Wuxi’s headquarters in Shanghai.
Along with the increased spending, Wuxi plans to streamline its supply chain. With a client base of several  multinational drug companies and a reputation for high quality, Wuxi sources much of its equipment and supplies from outside China. The company intends to begin collective sourcing of supplies, and has asked suppliers for lower prices, longer payment periods and quality guarantees.
"What we want is a win-win cooperation for us and our suppliers," said Li Ge.
Earlier this month Wuxi announced its plan to acquire AppTec Laboratory Services, Inc.  Apptec is an integrated provider of contract research services to the pharmaceutical and medical device industries. With over 400 employees, the firm offers manufacturing and testing services in the areas of biopharmaceuticals, cellular therapeutics, medical devices and tissue-based products. For 2007 Apptec reports revenues of US$70 to 72 million. The deal, valued at US$151 million including US$11.7 million in AppTec debt, is expected to be immediately accretive to earnings per share.
For the nine months ending Sept. 30 2007, Wuxi reported net revenues of US$98.1 million, up 108% from the same period in 2006. Gross profit was US$46.9 millon or 48% of sales. Laboratory services expenses were 37% of revenues, including labor costs, rising 111%.
Management did not detail the impact of the Apptec acquisition on the company’s spending plan, but it is clear that the acquisition along with aggressive expansion plans in China will continue to push spending upward. The challenge for Wuxi is to continue driving revenue growth at the breakneck pace expected by investors and maintaining its fat margins. At a forward PE of 34, Wuxi trades at a premium to its peers. Any stumble in regards to revenue growth or margins will likely be treated harshly.

Jinsong Du, a health-care analyst with Credit Suisse in Hong Kong has his doubts. As reported by the Wall Street Journal, Mr. Du said in an interview that the Apptec acquisition is "not optimal" and "will definitely have a drag on the margins." Looking forward , Mr. Du said, “We remain confident on WuXi management's execution capability and do appreciate the synergy from the significantly enlarged customer base."
Position: None
Happy Man Pharmacy Chain Plans for Growth & IPO 1/29/2008
by Life Science: China
Nikko Cordial Group, the Tokyo-based asset management and investment bank controlled by Citigroup (NYSE: C ), has announced that it will invest up to US$50 million for a minority stake in Chinese drugstore chain Happy Man Drug Stores. Happy Man says it will use the funds to fuel further growth and prepare for a 2009 IPO.
Happy Man, based in Nanchang in Jiangxi Province, is reported to be the sixth largest drugstore chain in China. The company has developed a reputation for low prices due a simplified system of sourcing and direct purchasing from manufacturers. With 120 stores primarily in large cities, the company reports sales in 2007 of RMB 1.26 billion (US$176 million).
Nikko Group’s planned investment of US$30 million to 50 million over two years follows on a previous investment of RMB 100 million (US$14 million). Happy Man is using the initial investment to expand its store count, with plans to open 200 new stores in Beijing, Shanghai, Tianjin and other large cities. The company is also considering acquiring smaller scale chain pharmacies, and management anticipates that store count in 2008 could reach nearly 400 stores.
Looking forward, the company sees further growth. Management reports that it plans to reach the 1000 store level in three years, and anticipates sales of more than RMB 10 billion (US$1.4 billion) within the next five to 10 years. The company also is planning for an IPO as early as 2009, although the location of the IPO has not been determined.
Happy Man and its investors are clearly looking to emulate the success of China Nepstar Chain Drugstore (NYSE:  NPD ). With 1,791 drugstores and revenues of US$242 million, Nepstar raised over US$330 million when it debuted on the NYSE in November of last year. Goldman Sachs (NYSE: GS ), an early investor in Nepstar, saw its investment increase 10-fold on Nepstar’s IPO. A gain like that can go a long way in explaining why Nikko Group is looking to get happy with Happy Man.
Position: None
Alliance Boots Completes China JV 1/30/2008
by Life Science: China
Alliance Boots, the UK-based international pharmaceutical wholesaler and retailer, announced the completion of the formation of its 50:50 joint venture company with Guangzhou Pharmaceutical Company Ltd. The announcement comes following the completion of the approval process with central and local government agencies. The joint venture company, Guangzhou Pharmaceuticals Corporation ("GP Corp") received a total consideration of approximately £41 million (US$81.6 million). Alliance Boots has made its investment through its subsidiary company, Alliance BMP Limited.
GP Corp is the fourth largest pharmaceutical wholesaler nationally with around a 3% market share, and is the leader in its home province of Guangdong with a market share of approximately 16%. Guangdong has a population of some 80 million and enjoys one of the fastest growing GDP per capita in China. GP Corp reported revenue of around £515 million for 2006, operates eight depots and has around 2,000 employees.
"We are delighted to announce completion of this deal now that we have received all final approvals from the relevant authorities,” Stefano Pessina, Executive Chairman of Alliance Boots. China is an exciting market for us to enter and this joint venture is in line with our strategy of growing our international presence by penetrating important new geographical territories. Bringing together the experience of Alliance Boots with GP Corp's excellent local knowledge and market position will make GP Corp a powerful business, well placed to benefit from both the rapid expansion of the Chinese healthcare market and further consolidation opportunities as they arise."
China is the seventh largest pharmaceutical market in the world. It is experiencing rapid economic growth which is driving even higher growth rates for healthcare expenditure. As a result, China is expected to be the fifth largest pharmaceuticals market by 2010. The Chinese pharmaceutical wholesale and distribution market is fragmented and largely regionally-based and principally involves supply to hospital pharmacies.
Guangzhou Pharmaceutical Company Ltd is principally engaged in the manufacture and sale of Chinese patent medicine; wholesale, retail, import and export of western and Chinese pharmaceutical products and medical apparatus; and research and development of natural medicine and biological medicine. Guangzhou Pharmaceutical Company Ltd is a state-owned pharmaceutical enterprise under the Guangzhou municipal government, the H shares of which were listed on the Hong Kong Stock Exchange in 1997 and the A shares of which were listed on the Shanghai Stock Exchange in 2001.
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. Alliance BMP Limited is a UK-based investment vehicle 80%-owned by Alliance Boots and 20%-owned by Beijing Med-Pharm (Nasdaq: BJGP ), a US-listed pharmaceutical marketing and distribution company that offers services in China.
Position: None
VC Funds Flow to China’s Healthcare Sector 1/31/2008
by Life Science: China
2007 proved to be a banner year for venture capital investing in China’s healthcare sector. As reported in ChinaVenture’s China Venture Capital Market Report, the medical and health sector led all other technology sectors in attracting venture funds in the fourth quarter.
For Q4 2007, there were 12 investments in the medical and health sectors, up from 10 investments made in Q3. With an average investment of US$14.25 million the sector brought in US$171 million, a five-fold increase from the previous quarter. With more than US$765 million invested across all sectors, medical and health investments accounted for 22.4% of all VC investment activity in the quarter.
For the full year the sector had a total of 32 venture investments, nearly double the 18 investments logged in 2006. A total of US$266.1 million was invested for an average investment of US$8.3 million. Total and average were up appreciably from 2006, rising 214% and 76% respectively.
Several trends are seen as driving growth in the medical and health sector and thus attracting venture capital, includingl:
  • Health care policy reforms intended to foster development in healthcare are allowing for increased private investment and competition.
  • Rapid economic is attracting foreign healthcare firms, including multinational pharmaceutical and medical device companies, and foreign capital along with them.
  • Improved living standards, an aging population and a growing consumer market is increasing domestic demand for drugs, medical devices, health management and medical services.
  • Increasing acceptance of Chinese healthcare companies on international public markets is increasing exit opportunities and returns for early investors.
Source: ChinaVenture.com.cn
Position: None
BioMerieux and Shanghai Kehua Form Joint Venture 1/31/2008
by Life Science: China
BioMerieux Inc. (PA: BIM ), the French maker of in-vitro diagnostic systems  for medical and industrial use, and Shanghai Kehua Bioengineering (SHE: 002022) announced today the creation of a Shanghai-based joint venture. BioMerieux will transfer microplate immunoassay manufacturing currently located at its Boxtel site in the Netherlands to the joint venture, with manufacturing overseen by Kehua.
The alliance is intended to brings together BioMerieux’s expertise in immunoassays and infectious disease diagnostics with Kehua’s strong manufacturing and development capabilities.  BioMerieux will hold 60% of the capital in the joint venture and Kehua will hold 40% of the capital in the joint venture. The microplate line manufactured by the joint venture will be distributed by BioMerieux in the Europe, Middle East and Africa, Asia Pacific (including China) and Latin America regions. The two companies are also exploring opportunities for BioMerieux to distribute Kehua’s diagnostics through its global network as part of a broader, long-term partnership.
Founded in 1998, Kehua is one of the largest manufacturers of diagnostic test kits, medical instruments and software in China. Its products include enzyme immunoassay and nucleic acid test kits, rapid detection tests for HIV and hepatitis, reagents, clinical lab equipment and recombinant Human EPO for research use. For the nine months ending Sept. 30 2007, the company reported RMB 289 million (US$40.5 million) of revenues on total assets of RMB 572 million (US$80 million). Net profits were RMB 90.7 million (US$12.7 million) with net margins of 31.4%. Revenues and net profits grew 19.8% and 57% respectively from the same period in 2006.
"BioMerieux is a world famous company in the field of diagnostics, with extensive experience and strong global reputation,” said Tang Wei Guo, Board Chairman of Kehua. “The cooperation will benefit both parties from brand image, sales network and complementary products pipeline."
Stephane Bancel, Chief Executive Officer of BioMerieux, said "Kehua is the market leader in Chinese diagnostics, with a proven track record of providing high quality, cost-efficient products. Microplate immunoassays play an important role in public health. The alliance with Kehua will enable bioMerieux to provide this product line to our customers at a competitive price, thanks to an improved cost structure.”
Position: None
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