CSPC Pharmaceutical Group (石药集团) leverages Alapis SA to develop Europe market

China Biotech Week in Review: Merck to Partner With Sun Pharma on Generics

April 19, 2011 Shanghai Pharmaceuticals Holding (SH-601607) received a go-ahead for its Hong Kong IPO from the China Securities Regulatory Commission (CSRC). It must still secure permission from the Hong Kong Stock Exchange. The offering, which is expected to raise between $1.5 billion and $1.8 billion, has been pushed back to May from April, presumably because of bureaucratic delays. Greek pharma Alapis SA (APSHF.PK) signed a MoU with CSPC Pharmaceutical Group (石药集团有限公司), one of China's largest drug makers (see story). The two companies are planning to set up two-way collaboration in a broad range of activities. Alapis makes generic and brand-name drugs that it distributes in Greece, Southeast Europe, Turkey and the U.K. Standard Chemical and Pharmaceutical Co. of Taiwan announced plans to set up a China joint venture with DIA Pharmaceutical Co. of Japan. The JV, to be located in China Medical City in Jiangsu Province, will produce DIA's water-based fever patch for sale in China. In its first year, the JV is expected to produce 60 million patches, generating an impressive $383 million of revenue. Merck (MRK), known as Merck, Sharp and Dohme in most of the ex-U.S. world, will partner with Sun Pharma (BY-524715) of India in a venture aimed at "innovative branded generics" (see story). Sun will both develop and manufacture the drugs. Merck will help Sun with clinical development, registration and marketing.

Investments  Roche (RHHBY.PK) completed a $75 million expansion of its Shanghai operations center, located in Zhangjiang High-Tech Park. The new facilities include two new office buildings, a quality-control center and warehouses. Roche said it is making Shanghai, which is headquarters for its Asia-Pacific territory, the company's third global strategic operations center, along with Basel, Switzerland and San Francisco. Cachet Pharmaceutical (SHE-002462) will use $9.2 million from its 2010 IPO to build the third phase of a drug distribution logistics center (see story). The center will cover 30,000 square meters and have the ability to handle 10 billion RMB of drugs per year, which Cachet says will be the largest in China. Cachet is a major player in Beijing's wholesale/retail drug distribution market.

Featured Companies  Aoxing Pharma (AXN), a U.S.-headquartered drugmaker with China operations in Hebei province, is a company with a lot of promise, but its actual performance has been an exercise in patience. The company has a very rare license to produce narcotics and other pain medications, one of just 13 PRC pharmas to possess one. So, Aoxing ought to be doing well, right? But the company reported just $3.8 million of revenue during the first months of its fiscal year. And costs of selling its products rose at a faster rate than its revenues.

Regulatory China's Ministry of Health has established a three-part ranking for antibiotics – restricted, unrestricted and special management – as the country cracks down on the overuse of the medications. Sophisticated healthcare institutions will be granted access to all levels of antibiotics, while lower-level institutions will be restricted to more basic anti-bacteria treatments. Also, the MOH put the responsibility for curtailing antibiotic over-prescription on the individual directors of medical institutions.