Eli Lilly intends to close research center in Singapore and then scramble to China

The Week in Review: Making Deals

publication date: Oct 30, 2010Sanofi-Aventis (NYSE: SNY) will acquire BMP Sunstone (NSDQ: BJGP) for $520.6 million or $10 per share (see story). The move gives Sanofi two recognized consumer healthcare brands in China, but just as importantly, it includes Sunstone's well-established distribution network. Sanofi, the world's fifth largest OTC healthcare company, has stated it wants to expand in emerging markets by acquiring consumer healthcare companies, adding to its portfolio of patented drugs.
aTyr Pharma completed a $23 million Series C round, which it will use to develop its pre-clinical pipeline, based on physiocrine drugs. The company is headquartered in San Diego. It also has operations in Shanghai and collaborates with China organizations in drug development. In addition, aTyr's Hong Kong subsidiary, Pangu BioPharma, which operates in partnership with Hong Kong University of Science and Technology (HKUST), assists in aTyr's pre-clinical drug development.
Sihuan Pharmaceutical Holdings (HKEX: 0460) jumped 25% to HK$5.77 (US$.73) in the first day of trading following its IPO, giving more evidence that Hong Kong is the current worldwide center for warm receptions to pharmaceutical stock offerings (see story). The company's IPO was priced at HK$4.60, representing a forward P/E ratio of 27, and it hit a high of HK$6.05 in pre-market activity.
According to sources, China's 12th Five-Year Plan will be published by the end of October (see story). Although we aren't privy to the details of how China will support the life science industry in 2011-15, the general outline is known. We publish what we expect to see when the official plan surfaces later this week, or as often happens, some time after that. We will follow up with details as they become known.
In a surprising move, Eli Lilly (NYSE: LLY) said it will close its Singapore Center for Drug Discovery by the end of 2010 (see story). Established in 2002, the center had 130 employees. In 2008, Lilly committed another $150 million in 2008 to expand the operation. There are rumors that Lilly will make a significant announcement about its R&D activities in China in the next month or so.
Zhejiang Jingxin Pharmaceutical has in-licensed the China rights to an insomnia drug candidate from Evotec AG (Frankfurt: EVT) of Germany (see story). Jingxin Pharma will have exclusive China rights to the EVT 201, a novel, clinical-stage insomnia treatment. Evotec will receive a small upfront payment, plus commercial milestones and royalties that Evotec called "significant."
Aoxing Pharma (NYSE Amex: AXN) reported its JV, which will produce narcotic drug APIs, has passed a GMP inspection conducted by the SFDA (see story). The company expects its newly renovated facility to earn full GMP certification by the end of 2010, allowing manufacturing to begin in 2011. The JV will receive a capital investment of $15 million over 5 years. Initially, the entity will develop eight narcotic API products for the China market, but its potential product portfolio could exceed 30 products.
China Sky One Medical (NSDQ: CSKI) has asked the SFDA to approve production licenses for 15 new externally applied TCM medical products (see story). The company expects to receive permission to manufacture the products by the end of the year and begin marketing the products next year. The 15 products were developed by Heilongjiang Traditional Chinese Medical University, which also sponsored the production request.
Sinovac Biotech (NSDQ: SVA) lowered its financial guidance for 2010 by a full 33%, saying it now expects revenues to be $40 million to $45 million (see story). Earlier, the company expected 2010 sales to fall in a $60-67 million range. The company blamed the shortfall on a vaccine scare in China, caused by media reports of severe side effects of a vaccine administered in Shanxi province.