Biopharmaceuticals China News

                                       Vol.1 Issue 1. 2010

    Copyright © CCM Interna...
Biopharmaceuticals China News
                                    Vol. 1 Issue 1. 2010           Publication date: 4 May, ...
Biopharmaceuticals China News
                                          Vol. 1 Issue 1. 2010              Publication date...
Biopharmaceuticals	China	News                                                                                             ...
Biopharmaceuticals	China	News                                                                                      Vol. 1 ...
Biopharmaceuticals	China	News                                                                                             ...
Biopharmaceuticals	China	News                                                                                          Vol...
Biopharmaceuticals	China	News                                                                                             ...
Biopharmaceuticals	China	News                                                                                             ...
Biopharmaceuticals	China	News                                                                                             ...
Biopharmaceuticals	China	News                                                                                             ...
Biopharmaceuticals	China	News                                                                                    Vol. 1 Is...
Biopharmaceuticals	China	News                                                                                             ...
Biopharmaceuticals	China	News                                                                                Vol. 1 Issue ...
Biopharmaceuticals	China	News                                                                                            V...
Biopharmaceuticals	China	News

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Biopharmaceuticals China News Sample - Published by CCM International Ltd


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Biopharmaceuticals China News is a monthly report with 12 issues per annum published by CCM International Limited. It's your gateway to know what is happening in China Market. Key columns include Investment Focus, Governmental Policies,Market Dynamics,and Technology & New Products,etc. If you are interested in this newsletter or ask for the latest sample, please contact or 86-20-38767072.

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Biopharmaceuticals China News Sample - Published by CCM International Ltd

  1. 1. Biopharmaceuticals China News Vol.1 Issue 1. 2010 Copyright © CCM International Limited
  2. 2. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 Publication date: 4 May, 2010 CONTENTS Investment Focus 1 Potential investment opportunity in China’s vaccine industry 2 Resources (holding) integrates Beijing Pharmaceutical Group Govermental Policies 3 Updated Pricing Drug List by NDRC comes into force 3 Procurement and Distribution Rules of Essential Drugs to issue in 2010 Market Dynamics 4 Hualan’s net profit soars 229.10% in 2009 5 Huge potential in China’s diabetes treatment market 7 China Securities Pharmaceutical Index hits record high 7 Total output of Ceftriaxone Sodium hit a record high in 2009 9 Beijing OriGene won USD16 million venture capital 9 Lilly’s Multi-Drug Resistant Tuberculosis Plan in China 10 Hepalink ratified to be listed Technology & New Product 11 Cephalosporin Oxazine Amidine produced by Baiyunshan Pharmaceutical obtains USP News in Brief 12 Sanofi - Aventis builds research center in China 12 Novartis (China) publicizes diabetes treatment breakthrough 12 Fosun’s net profit up 91.3% in Q1 2010 12 Bayer Schering Pharma (China) upgrades 12 Biopharmaceutical output value in Jiangsu to exceed USD73 billion in 2012 Welcome to the April issue vaccine producer in China, achieved net of Biopharmaceuticals China profit growth of USD89.1 million, up News, specially published by 229.40% year on year. CCM International. In order to guide health and sustainable development of China’s pharmaceutical Despite of global financial crisis industry, Chinese government successively which resulted in negative issued related policies, such as Pricing effect on most industries in the Drug List by National Development and world, China’s pharmaceutical Reform Commission, Procurement and industry witnessed sound Distribution Rules of Essential Drugs, development in 2009, thanks to etc. These policies are bound to facilitate implementation of nationwide the progress of pharmaceutical industry, Health Care Reform. Some especially biopharmaceutical industry. biopharmaceutical enterprises China’s pharmaceutical industry will achieved splendid performance continue its development momentum and in 2009, such as Hualan boom in the following several years. Biological Engineering Inc., the largest blood product and
  3. 3. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 Publication date: 4 May, 2010 Biopharmaceutical China News at a glance ■ The confidence bankruptcy toward China’s vaccine safety after a series of incidents broke out in recent months provided great potential investment opportunity for foreign pharmaceutical companies in China’s vaccine industry. ■ Cooperated with Beijing government, Recources(holding) integrated pharmaceutical asset of Beijing Pharmaceutical Group Co., Ltd. on Apr. 2nd, 2010. ■ The updated Pricing Drug List by Development and Reform Commission came into force on Apr. 1st , 2010. ■ Stipulations for Procurement and Distribution of Essential Drugs in China will be issued in 2010. ■ Hualan realized net profit growth of 229.40% in 2009, mainly aided by increased plasma dosage in blood products and rising demand for vaccine in Q3 2009. ■ Huge potential market exists in China’s diabetes treatment market as China has the largest numbers of diabetes patients throughout the world. ■ Aided by excellent performance of biopharmaceutical companies, China Securities Pharmaceutical Index, on Apr. 12th, 2010, hit record high, close to 6125.0. ■ Export quantity and price of Ceftriaxone Sodium has hit a record high since 2008, thanks to thriving clinical demand, improving of total CS output and intensifying the efforts on oversea markets exploitation. ■ On Mar. 17th, 2010, Beijing OriGene won USD16 million venture capital for its TrueMABTM project. ■ Cooperating with Zhejiang Hisun, Lilly started to implement its global MDR-TB plan in China on Mar. 23rd, 2010. ■ In Apr. 2010, Hepalink has been formally ratified to be listed by China Securities Regulatory Commission. ■ On Apr. 11th, 2010, Cephalosporin Oxazine Amidine developed by Baiyunshan Pharmaceutical successfully obtained USP. Main companies mentioned in this issue
  4. 4. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 Investment Focus In Nov. 2009, Novartis Pharmacy Ltd., the second largest flu vaccine producer in the world, also entered Chinese vaccine industry by expending USD124.63 million to purchase 85 Potential investment opportunity % stocks of Zhejiang Tianyuan Bio Pharmaceutical Co., Ltd. in China’s vaccine industry (Tianyuan), the second largest flu vaccine supplier in China. ’ At present, China is the third largest pharmaceutical market in the world. In the future, Novartis will provide Tianyuan vaccine The confidence bankruptcy toward China’s vaccine technology including technology of influenza vaccine, rabies safety after a series of incidents broke out in recent vaccine, etc., for the purpose of Novartis’s vaccine production months provided great potential investment localization, and Novartis’s strategic target is to become a leader opportunity for foreign pharmaceutical companies in the fast-growing vaccine industry in China.’ said Mr. Vasella, in China’s vaccine industry. For instance, nearly CEO of Novartis in Nov. 2009. 100 children in Shanxi Province died from the unqualified vaccine injected; another case is that The above-mentioned facts indicate that investment restriction unqualified vaccine produced by Jiangsu Ealong for foreign pharmaceutical companies in China’s vaccine Biotech. Co., Ltd., the first vaccine producer in industry have been gradually relaxed, and policy barriers Jiangsu Province, flooded in Jiangsu’s vaccine restraining foreign pharmaceutical companies to enter China’s market. vaccine industry will be eliminated step by step. These incidents result in the absence confidence Notes: of Chinese people towards homemade vaccine Vaccine basics refer to vaccines supplied by Chinese safety and governmental credibility, and quality government for free, including: assured vaccines are urgently needed in China. 1.Vaccines belong to the catalogue of National Immunization Thus, foreign pharmaceutical companies, with Program. the advantage of superior technology, won the 2.Extra vaccines when provinces, autonomous regions and potential investment opportunities in China’s municipalities implement the National Immunization Program. vaccine industry, such as exporting qualified 3.Vaccines used for emergent vaccination or mass preventive vaccines to China, cooperating with domestic vaccination organized by government at or above the county pharmaceutical producers by providing level or relevant administrative department in charge of technology, etc. health. In the future, vaccine basics market which was monopolized by state-owned enterprises is likely to be co-shared by foreign pharmaceutical companies, such as some foreign pharmaceutical companies have invested into BCG vaccine and Polio vaccine which belong to catalogue of China’s immunization programs, according to the revised industrial Catalog Guiding Foreign Investment in 2007. Related Market Report this Month: C h i n e s e g o v e r n m e n t h a s a l l o w e d f o r e i g n Future of Red Biotechnology in pharmaceutical companies to co-invest with China domestic vaccine producers in China’s vaccine industry. In Sep. 2009, Glaxo Smith Kline, the second largest pharmaceutical company in A comprehensive industry report with 178 the world, cooperated with Jiangsu Watoson pages, please click the title to see the main Biotechnology Ltd. which focuses on human content and sample pages. vaccine R&D, production and sales in China, to have invested USD53.97 million in China’s children To purchase or need more details, please vaccine industry and established a joint venture in contact us at China, with Glaxo Smith Kline holding 65% stocks. According to the investment plan, the plant will manufacture measles-rubella-mumps combined vaccines, a kind of children vaccine, which fall into the catalogue of National Vaccination Program, as well as other children’s vaccine. CCM International Limited 1
  5. 5. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 Resources (holding) integrates Beijing Pharmaceutical Group On Apr. 2nd, 2010, cooperated with the Beijing Resources Medications’s target of this integration is to government, China Resources (holding) Co., Ltd. set up platform for pharmaceutical enterprises under Resources(holding), one of the leading conglomerates direct jurisdiction of central government. And after this in Hong Kong and Chinese Mainland, integrated asset reorganization, Beijing Pharmaceutical Group will pharmaceutical assets of Beijing Pharmaceutical Group get listed in overall. Co., Ltd.( Beijing Pharmaceutical Group) (PICTURE 1). Resources Medications will form a complete industry The integration will be implemented by China Resources chain of pharmaceutical industry covering Chinese Medications Group Co., Ltd. (Resources Medications), a medicine, chemical medicine, biopharmaceutical, subsidiary of Resources (holding). After the integration, medical equipment and pharmaceutical business, which Beijing government will hold 30% stocks of the will largely heighten its position in pharmaceutical integrated company, and Resources (holding) will industry. Resources Medications has achieved total relocate the headquarter of Resources Medications, revenue of USD4.94 billion in 2009, and become the used to be in Shenzhen, to Beijing. second largest pharmaceutical company in China. Resources (holding) and Beijing government signed a Resources Medications is a wholly-owned subsidiary of strategic cooperation framework agreement regarding Resources (holding), engaged in Resources (holding)’s pharmaceutical and microelectronics sectors. According domestic pharmaceutical business, with total assets to this agreement, Resources (holding)’s investment into of around USD3.81 billion and turnover of USD3.96 pharmaceutical industry in Beijing will be encouraged billion in 2009. Beijing Pharmaceutical Group, with and supported by Beijing government, such as enjoying total turnover of USD3.9 billion in 2009, is a wholly- reduction and exemption of taxes, financial assistance, owned company of Beijing government. It has about etc., and Beijing government will also facilitate 20 subsidiaries, among which Wandong Medical Resources (holding)’s integration of biopharmaceutical Equipment and Beijing Double-Crane Pharmaceutical resources in order to found a leading pharmaceutical are listed in Shanghai and Shenzhen Stock Exchange. enterprise in Beijing. Through cooperation with Resources (holding), Beijing government will further promote the development of pharmaceutical industry.” said Mr. Guo Jinlong, Mayor of Beijing on the signing ceremony. PICTURE 1: Signing ceremony of Beijing government and Resources (holding) Source: t20100403_111966.htm CCM International Limited 2
  6. 6. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 Govermental Policies referential price. That is to say, in the reimbursement of drugs, the price of prescription drugs was constituted by the National Development and Reform Commission, and Updated Pricing Drug List by drugs with government referential price were referred to retail price by local government, according to actual local NDRC comes into force condition. To OTC drugs, local government constitute retail price, according to actual local condition. The updated Pricing Drug List by National Development and Reform Commission NDRC came into force on Apr. 1st, 2010, indicating that Chinese government will further strengthen management and supervision of prescription drugs prices and decentralize more pricing power to local government, in order to achieve standardization in drugs market and rational pricing authority division. Procurement and Distribution Rules of Essential Drugs to issue in 2010 According to the new List, all prescription drugs in the Socialized Medicine Catalog published in 2009 and all national essential On Apr. 8th, 2010, the forum on how to actively drugs are added into Pricing Drug List. Besides, prices of manage the procurement and distribution of narcotic drugs and psychotropic substances in Pricing Drug List essential drugs after the issuance of National are guided by with the highest ex-factory price and their highest Basic Medicine System was held in Beijing, in retail price, instead of government referential price in previous which rule for procurement and distribution of time. essential drugs in China to be issued in 2010 was informed, indicating that as some relative Under the background of publishment of On Establishment of policies and stipulations perfect, production Implementation Advices of National Essential Drugs System and supply of basic drugs will be more in Aug. 2009, NDRC upgrades the Pricing Drug List issued in reasonable and scientific under governmental 2005. The new List will exert influence on drug pricing, market management. behavior, etc. of related pharmaceutical enterprises. Some experts air their own opinions on this upgraded List. A c c o r d i n g t o M r . Z h e n g , D i r e c t o r o f Department of Essential Drug of the Ministry “Though main prescription drugs with patent protection of Health, by the end of Feb. 2010, there have belong to multinational companies, their patent protection been about 30% primary care institutions will have expired one after another by 2013, which will leave implementing National Basic Medicine great development opportunity for domestic prescription System, and the proportion is expected to drugs producers. Thus, in order to effectively guide China’s climb to more than 60% in 2010. During the pharmaceutical industry’s health development, NDRC upgrades implementation of National Basic Medicine Pricing Drug List.” disclosed by a director from a multinational System for about one year, various defects like enterprise in Shanghai. skimble - scamble price of drugs, commercial bribe, etc., have been exposed. Thus, it is “In the light of this policy, there are 556 kinds of over-the- necessary and urgent to constitute a unified counter drugs priced by provinces, autonomous regions and standard for procurement and distribution of municipalities pricing departments, implying that Chinese essential drugs government will decentralize more pricing power to local government.” disclosed by an insider in Apr. 2010. Regarding how to effectively implement the rule, some experts air their views on this Wangming, Manager of Guangzhou Pharmaceutical Holdings forum. Mr. Liao, Deputy Director of Health Ltd. said “After the updated Pricing Drug List came into force, Department of Sichuan Province, said, “In poor pharmaceutical companies may show more concern on how to regions like Sichuan Province, government win a preponderant price in the process of drug tender. “ should permit relevant qualified companies to participate in distribution, in order to ensure Note: availability of essential drugs.” The Pricing Drug List issued in 2005 by National Development and Reform Commission showed that the pricing drugs were divided into following two categories: part of drugs are priced by the government; the rest are guided by government CCM International Limited 3
  7. 7. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 Mr. Niu Zhengqian, Deputy Secretary of Chinese Medicine Entrepreneur Association, viewed “We should take market mechanism into full play; and let hospitals, manufacturers and distribution companies be engaged in free competition; only by this way can the rule of procurement and distribution of essential drugs take greater effect and bring more benefits.”. “After the National Basic Medicine System has been implemented, government should constitute a national unified standard for procurement and distribution of essential drugs, in order to avoid the commercial bribe in the tender process.” said Li Zhenjiang, Chairman of Shineway Pharmaceutical Group, the largest manufacturer of modern Chinese medicine injections, soft capsules and granules. Regarding how to carry out this rule, CCM also put forward some suggestions. Firstly, there should be a complete, objective and fair standard system for drugs tender; secondly, government should establish reasonable entrance thresholds for pharmaceutical industry in order to guarantee drugs quality; thirdly, as for pricing, combination of market mechanism and governmental supervision should be made in the whole tender process and enterprises should be given more rights, such as how to distribute drugs, etc. doses vaccine for national H1N1 storage task, among Market Dynamics which 29.46 million have been shipped to the locations designated by government, and the rest will be released before the end of this year. In the future, it will accelerate Hualan’s net profit soars 229.10% the process of overseas registration for H1N1 bacteria and in 2009 seasonal influenza vaccines so as to further enhance its vaccine business (TABLE 1). Development of blood products business also contributed According to annual report for fiscal year 2009 on Mar. to the net profit growth. The company achieved revenue 9th, 2009, Hualan Biological Engineering Inc. (Hualan), of USD74.19 million from blood products, with gross the largest blood product and vaccine producer in China profit rate of 63.63% in 2009, respectively up 26.09% and with capacity of 1,500t/a for plasma processing and 29.74 4.88% against 2008. Revenues from human albumin, million doses per year for vaccine, achieved net profit intravenous immunoglobulin (IVIG) and other blood growth of 229.40%, thanks to significantly increased plasma dosage in blood products, and rising demand for vaccine in Q3 2009. TABLE 1: Hualan’s business situation, 2008 & 2009 Though under the context of global financial crisis, Hualan 2009 2008 still made considerable achievements in 2009. Value, Value, . million Up YOY, million Up The achievement firstly sourced from vaccine, which was Item USD % USD YOY, % needed with large numbers when influenza suddenly Revenue 178.00 160.39 68.00 48.25 happened in Q3 2009. Revenue from vaccine realized Net profit 89.00 229.40 27.00 70.35 USD104.52 million in 2009, up 887.84% over 2008. Besides, the company is responsible for 52.25 million Source: Annual report of Hualan in 2009 CCM International Limited 4
  8. 8. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 products reached USD38.56 million, USD21.11 million, USD14.51 million, up 15.53%, 10.74% and 127.27% FIGURE 1: Hualan’s stock performance, Jan. 2006 ~ Apr. 2010 separately over 2008. Taking the rising market demand for IVIG into consideration, the National Development and Reform Commission raised IVIG price, thus revenue from IVIG increased, and revenue proportion of human serum albumin declined accordingly in blood products. This structure optimization is helpful for improvement of plasma utilization rate and gross profit rate of blood products (FIGURE 1). Hualan is estimated to get sound development in 2010, as a series of vaccines such as seasonal influenza vaccine, � hansenula hepatitis B vaccine, etc. will be put into market this year. Additionally, aided by the increased plasma dosage, couple with the price increase of IVIG from USD60.41/dose to USD87.97/dose in Shanghai, which is also likely to increase in other regions of China, the company’s net profit is estimated to rise by 30%~50% year on year. The company’s much better performance in stock market is a strong proof for its fastest development in recent years. Source: google finance Note: SCI refers to Shanghai Composite Index Huge potential in China’s diabetes treatment market China, with more than 92 million adult diabetes and about 150 diabetes market, Novo Nordisk, the largest human insulin million potential diabetes, has the largest numbers of diabetes producer in the world, input USD381 million to establish the patients in the world, according to New England Journal of world’s largest insulin preparation and bottling plant in China at Medicine in Mar. 2010, in which new medical research findings, the end of 2008, which is the largest investment for the company review articles, and editorial opinion on a wide variety of topics after its foundation for 80 years. At present, Novo Nordisk seizes of importance to biomedical science and clinical practice are above 60% market share of human insulin in China. published. Besides, total direct medical expenditure of diabetes (male and female diabetes patients with age of over 20 in China) Another case is Sanofi-Aventis, a diversified healthcare company and its complications has reached USD2.8 billion and it will in the world. To further enlarge its market share in China, it witness uptrend in the future, disclosed in the High Blood Sugar announced in Apr. 2009 that it would invest USD87.9 million to Diabetes Forum sponsored by USA Abbott Laboratories in Apr. expand its Lantus pre-filling production line in its insulin factory 2010. in Beijing Economic and Technological Development Zone, which is expected to be launched in 2012. By then the company’s Lantus This shows that huge potential exists in China’s diabetes treatment capacity will reach 50 million units per year. market. Some multinational pharmaceutical enterprises, like Novo Nordisk, Eli Lilly and Sanofi-Avetis have captured about At present, domestic approved antidiabetic drugs mainly refer 90% market share of China’s diabetes treatment market of top to insulin secretion (glinides and sulphonylurea), non-insulin first class hospitals. And they have enlarged or will enlarge their secretion (biguanides, α-glucosidase inhibitor and glitazones) investments in this field in China. and human insulin. What is the situation of prescription status of For instance, in order to consolidate its leadership in China’s patients with diabetes in main hospitals of China’s medium and CCM International Limited 5
  9. 9. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 large cities? (FIGURE 2) Medicines. However, in the class of α-glucosidase inhibitor, Acarbose In the light of a market research study, surveying diabetes produced by Germany Bayer Group captures about 30% prescription status in main hospitals of China’s medium and prescription share, aided by its being under patent protection large cities with 4500 prescriptions of patients with diabetes status and successful promotion in diabetes treatment field. by Cegedim Strategic Data, a leading market research company dedicated to the healthcare industry, in Mar. 2010, in the field of In the field of injective drugs treating diabetes, human insulin oral drugs treating diabetes, the class of Biguanide, accounting for occupies about 38.6% prescription share. Key products of Novolin 37.6% prescription share, is still the most widely used antidiabetic 30R of Novo Nordisk in Demark takes up 12.3% prescription drug for diabetes treatment, and recommended as first-line drug share. for diabetes treatment and listed in Catalogue of National Basic FIGURE 2: Structure of prescription share by different classes and brands of diabetes drugs in 2009 Biguanide α-glucosidase inhibitor Sulphonylurea Others 4.90% Others 1.10% Premix human insulin Others 8.10% Intermediate-efficacy human insulin Glimepiride Metformin 4.50% Others 22.50% 5.80% Long- Glinides Acarbose Short-acting acting Diamicron 29.40% human insulin human 8.30% Glitazones Humulin70/30 insulin 6.10% Glinides and Others1.50% Biguanides Glipizide Repaglinide Metformin Others Others 9.30% Others Novolin 30R 7.50% Hydrochloride 6.10% 2.40% Others 1.50% 12.30% 10.20% 0.40% Kaboping Gliquidone Avandia Novolin R Novolin N Lantus Nateglinide 4.10% 3.50% 4.10% Avandamet 3.80% 3.30% 2.90% 3.40% 0.20% Distribution of prescription share 12.4% 37.6% 34.6% 33.7% 10.2% 0.2% 6.4% 4.8% 24.1% 3.3% s Source: Cegedim Strategic Data CCM International Limited 6
  10. 10. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 China Securities Pharmaceutical Index hits record high A i d e d b y e x c e l l e n t p e r f o r m a n c e o f biopharmaceutical companies, China Securities Figure: CSPI and SSECI performance, Jan. 2009 ~ Apr. 2010 Pharmaceutical Index (CSPI, 399933) has been performing strongly since early 2010, and hit record high of 6125.0 on Apr. 12th, 2010. As of Apr. 7th, 2010, 88 BC have released their fiscal 2009 annual reports in succession, and achieved total net profit of USD231.95 million, up 67.58% compared with 2008, mainly thanks to sound development and promising prosperity in this industry, reform of Health Care system, issuance of the Catalog of National Basic Drugs, reorganized assets of BC, etc. It is aided by the excellent performance of biopharmaceutical companies that CSPI has become the strongest securities industry index in Source: Baidu Finance China. On Apr. 12th, Shanghai Stock Exchange Composite Index (SSECI) performed downtrend, while CSPI hit the historically high level and closed at points of 6125.0. As of that day, CSPI has continuously advanced for 11 market days, reflecting the promising prosperity in this industry (FIGURE 3). Total output of Ceftriaxone Sodium When CSPI reached record high, many hit a record high in 2009 pharmaceutical stocks’ price also jumped to a new high point. Apart from the pharmaceutical Total output of Ceftriaxone Sodium, the third generation cephalosporin stocks listed this year, 45 pharmaceutical stocks and a broad-spectrum cephalosporin with a long plasma elimination have hit record high since early 2010, accounting half-life of approximately 8 hours in normal adults, hit a record high for 32.85% of the total comparable stocks. And 12 in 2009 reaching 3768 tonnes in 2009, up 29% year on year, thanks to pharmaceutical stocks have achieved the highest thriving clinical demand, significantly increasing number of producers since Apr. 2010, such as Shanghai RAAS, Jiangsu of Ceftriaxone Sodium and their efforts to intensify exploitation of Yuyue, Pkucare Southwest Pharmaceuticals, etc. overseas market. Besides, the export price of Ceftriaxone Sodium reached USD127.3/kg in Feb. 2010, up 35.8% compared with that in May. 2009. Eyeing this excellent performance of BC, institutional investors significantly increased their Clinical demand of Ceftriaxone Sodium is growing steadily along with BC stocks. As of Q4 2009, their total BC stocks the development of primary care. According to a report issued by China reached 3.20 billion shares, up 70.6% over that Association of Pharmaceutical Commerce (CAPC) in Apr. 2010, the as of Q3 2009, indicating their optimism towards expenditure of Ceftriaxone Sodium in hospitals of 22 major cities in biopharmaceutical industry. China was USD39 million, up 35.1% compared with that in 2007, and its market share has achieved 42% in China’s cephalosporin market in 2009, Notes: up 11.5% compared with that in 2004. Besides, as to the annual growth CSPI is an index to reflect the overall performance rate over the past few years, only Ceftriaxone Sodium has achieved 106% of biopharmaceutical stocks in Shanghai and compared with other cephalosporins like Cefazolin Sodium, Cefotaxime Shenzhen stock markets, which is indexed with Sodium, Cefoperazone Sodium, Cefurozime Sodium. As an act of the all biopharmaceutical shares by China Securities reform of health-care in 2009, Chinese government will invest USD124.6 Index Co., Ltd., a professional company billion to improve primary care over the next three years. Therefore, it is specializing in creation and management of expected that the clinical demand of Ceftriaxone Sodium will continue this indices and index-related services. uptrend in the future. CCM International Limited 7
  11. 11. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 In the past few years, total number of Ceftriaxone Sodium a total value of USD236 million to Russia and Belarus, whose producers significantly increased. According to a report cephalosporin production technology lags behind (FIGURE 4). issued by CAPC in Apr. 2010, the number of total producers of Ceftriaxone Sodium was 3 in the early stage but reached However, there are some uncertainties for Ceftriaxone Sodium 36 at end of 2009. Meanwhile, main producers like Shanxi exports in the future. In Oct. 2008, the Ministry of Commerce Weiqida Pharmaceutical Co., Ltd., Shanghai Asia Pioneer and Industry of India formally determined that the export of Pharmaceutical Co., Ltd., etc., captured about 80% total Ceftriaxone Sodium to India from China was dumping, and the capacity of Ceftriaxone Sodium in China. Indian government levied 108%~120% anti-dumping duties on Ceftriaxone Sodium imported from China. Thus, many Ceftriaxone Sodium producers have been intensifying Chinese Ceftriaxone Sodium exporters are forced to withdraw exploitation of overseas market. In the past few years, form Indian market. Besides, some member countries in the export of Ceftriaxone Sodium has been amounted to European Commission like Italy and Spain begin to investigate 30%~40% of its total capacity, which achieved 899 tonnes in the dumping cases of Chinese Ceftriaxone Sodium, disclosed 2009, up 14.1% year on year. India, South Korea, Europe, and by some insiders in China. Southeast Asia are the major export destinations. Since 2007, Ceftriaxone Sodium producers has exported cephalosporin including Ceftriaxone Sodium, cefoperazone, etc., achieving FIGURE 4: Export volume and export growth rate of Ceftriaxone Sodium, 2007~2009 1,000 25.00% 899 900 788 800 19.33% 19.76% 20.00% 700 658 600 15.00% 14.09% tonne 500 400 10.00% 300 200 5.00% 100 - 0.00% 2007 2008 2009 Export Quantity Export Grow th Rate Source: China Customs CCM International Limited 8
  12. 12. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 Beijing OriGene won USD16 Beijing OriGene Technologies, Inc. is a gene centric life sciences tool company dedicated to support academic, million venture capital pharmaceutical and biotech companies in their research of gene functions and drug discovery. OriGene’s novel On Mar. 17th, 2010, Beijing OriGene Technologies, product line includes the world’s largest cDNA and shRNA Inc.(Beijing OriGene) announced it has won clone collection, over 5,000 purified human proteins, high USD16 million Series B venture capital from IDG- quality monoclonal antibodies, 100,000 highly validated Accel, SBI & TH Venture Capital Management human tissues, and Lumines Multiplex Assay products. Co., Ltd., and Zero2IPO Capital, and its previous OriGene also provides a broad range of antibody validation investors, Morningside Venture Investments and products including genome-wide tagged antigen standards President International Development Corp. also and extensive IHC slides derived from the company’s tissue participated. The venture capital will be mainly used collection. to continuously build the largest collection of next generation monoclonal antibodies (TrueMABTM) covering the majority of human proteome in the world. “This capital will facilitate the accomplishment of building the largest monoclonal antibody collection in the world covering the entire human genome of approximately 20,000 genes.” said Mr. He, Beijing L i l l y ’ s M u l t i - D r u g R e s i s t a n t OriGene’s Chairman and CEO. Tuberculosis Plan in China Beijing OriGene has dedicated to build the largest Cooperating with Zhejiang Hisun Pharmaceutical Co., collection of human full-length cDNA clones since Ltd. (Zhejiang Hisun), a well-known anti-infection last decade. The project will be developed with the pharmaceutical enterprise in China, Eli Lilly Company (Lilly) most up-to-date antibody technologies and will in the US, a global R&D-based pharmaceutical company, be using authentic human full-length proteins as started to implement its global multi-drug resistant immunogens during the manufacturering process. tuberculosis plan (MDR-TB) in China on Mar. 23rd, 2010. TrueMABTM monoclonal antibodies are currently This MDR-TB project exists to save lives by preventing available in the market and will be utilized by and treating MDR-TB – a terrible disease that afflicts commercial partners for various applications millions of people in some poor regions throughout the like flow cytometry and Multiples enzyme-linked world. According to Mr. Lai, Lilly’s CEO in China, Lily has immunosorbent assays. It was estimated by some cooperated with Zhejiang Hisun by transferring technology insiders that as of 2020, there will be about 3,000 of capreomycin for free, training relevant technicians, as kinds of new drugs produced by biopharmaceutical well as proving ample funds, besides, in order to effectively technology, and gross output value of drugs produced control the spread of MDR-TB, the company will also carry by biotechnology will reach USD396 billion, out a series of health education, such as training medical disclosed by Liu Yanhua, Undersecretary of Ministry personnel, popularizing prevention knowledge, etc. of Science and Technology in Jun. 2007. Therefore, the promising prospect of biopharmaceutical Lily has successfully transferred a series of production industry attracts venture investors’ capital. technology of capreomycin to Hisun till now, and Hisun has launched capreomycin production line for this project with According to statistic from Zero2IPO, an information total capacity of 5 million doses/year. and consultation for venture capital (VC) and private equity (PE), in 2009, there were total 49 cases of VC By far, Lilly has invested USD135 million for this MDR- and PE to have been invested in the pharmaceutical TB project. In Jan. 2010, contributed by this project, industry with total investment of USD320 million, Lilly won “2009 Multinational Corporations in China among which 31 cases are invested into development Contribution Award “. “This award future indicates the long- and expansion of pharmaceutical companies. “It term commitment for preventing and treating tuberculosis is estimated that in 2010, investors of VC and PE in China, especially for MDR-TB,” said Mr. Eric Baclet, will be further active in pharmaceutical industry.” Regional CEO of Lilly in China in Jan. 2010. said Zhengyufen, senior project manager of medical health department in Zero2IPO. MDR-TB prevention and treatment is austere in China. According to a report issued by Chinese Ministry of Health, Note: CCM International Limited 9
  13. 13. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 there were about 4.5 million patients with active tuberculosis in China as of Mar. 2009, 80% of which were in rural areas. Besides, according to a WHO research in 2006, about 130,000 new MDR-TB patients increase annually in China, accounting for 28% of the world’s total newly MDR-TB patients. At the same time, high treatment expenditure for MDR-TB, usually 100 times higher than that for normal tuberculosis, also restricts patients’ treatment. Great concern for treatment of MDR-TB has been shown in China, where symptoms suspicious of tuberculosis are checked, and a unified free treatment for free program for patients diagnosed is also provided. During the year 2001 to 2008, there were 642,000 MDR-TB patients healed. Capreomycin is mainly applied for mycobacterium-caused tuberculosis patients who aren’t healed with first-line anti-drugs such as streptomycin, isoniazid, rifampicin and ethambuto, etc., and for the patients who are not applicable to the above mentioned first- line anti-drugs, attributed to toxicity or bacteria resistance. It will be acquired bacterial resistance when used separately, thus only with combination of antibacterial drugs can it cure TB. superiority in R&D and production. At present, it has become the largest heparins Hepalink ratified to be sodium’s API production and sale enterprise in the world. According to statistics from listed China Customs in 2009, Jan. 2009 ~ Sep. 2009, Hepalink’s export value reached USD175.8 million, accounting for 39.5% of national total export value of this product. In Apr. 2010, Shenzhen Hepalink Pharmaceutical Co., Ltd. (Hepalink), Currently, supply of heparins sodium’s API falls short of demand and inadequate the biggest supplier of heparins capacity has become the bottleneck for its further development in future. The launch of s o d i u m ’ s A c t i v e P h a r m a c e u t i c a l this new production line will effectively solve this problem, disclosed by insider in Apr. Ingredients API in the world, has 2010. been formally ratified to be listed in Shenzhen Stock Exchange by China After it is listed in Shengzhen Stock Exchange, stock holder of the company will benefit Securities Regulatory commission. a lot. Lili and Litan couple, Hepalink’s facto controller holding 288.0 million Hepalink’s stock shares, will become the richest person in Chinese mainland valuing USD6.3 The company will issue 40.1 million billion. And stock value of Goldman Sachs, a full-service global investment banking and stocks, with about USD21.7 per share, securities firm, who invested USD 4.9 million to Hepalink in 2007, and holding 12.5% to raise about USD869.5 million, stocks of the company, will reach USD966.2 million, 93 times of its initial investment. among which about USD70.8 million will be used for its new heparins According to Hapalin’s Prospectus issued in Apr. 2010, it is estimated that as of 2010, sodium’s API production lines with demand for heparins sodium’s API will reach 6142 tonnes, achieving a CAGR of 10.2% capacity of 830t/a, and about USD56.2 year on year. million will be used as floating capital of this project. The products of this new However, Hepalink may also face some uncertainties in future. Its profit margin production line are in accordance with will decline in the future, since the production cost of raw material of heparins authentication standards of U.S. Food sodium’s API, which accounts for 85% production cost, may increase in the future, and Drug Administration (FDA) and while heparins sodium’s API price will decline due to the expanded capacity of other Certificate of Suitability for European companies in recent years (TABLE 2). Pharmacopeia (CEP). Hepalink has been developing rapidly since 2007. In 2009, its revenue and TABLE 2: Hepalink’s heparins sodium’s API export value, Jan. 2006~Sep. 2009 net profit reached USD32.8 million Hepalink’s export and USD11.9 million, respectively up Year Total export value value Market share 411.2% and 387.8% year on year. Its   (million USD) (million USD) (%) revenue and net profit respectively Jan. 2009~Sep. 2009   444.2 175.8 39.5 realized a CAGR of 172.6% and 244.5% from 2007 to 2009. 2008 226.1 63.5 28.1 2007 137.5 27.6 20.1 The company’s rapid achievement 2006 103.3 29.4 28.5 is mainly thanks to its technical Market share=Hepalin’s export value/total export value Source: Hapalin’s Prospectus issued in Apr. 2010 CCM International Limited 10
  14. 14. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 of Cephalosporin Oxazine Amidine can further enhance Technology & New Product the company’s hi-tech innovation capability, which is in accordance with its strategy – patent first, distribution Cephalosporin Oxazine Amidine follows in overseas market. Through this way, Baiyunshan Pharmaceutical’s COA will participate in international produced by Baiyunshan competition.” Pharmaceutical obtains USP With accession to WTO, Chinese government has issued a On Apr. 11th, 2010, Cephalosporin Oxazine Amidine series of policies such as Measures for the Administration developed by Guangzhou Baiyunshan Pharmaceutical of Drug Registration, to support R&D of new drugs with Co., Ltd.( Baiyunshan Pharmaceutical) successfully independent intellectual property rights. Mr. Liu Xuebin, achieved the US Patent(USP), and Baiyunshan one of the key researchers for Cephalosporin Oxazine Pharmaceutical will cooperate with the South Amidine, said ”Aided by relative supporting policies of China Center for Innovative Pharmaceutical, a non- government, pharmaceutical companies have changed the business scientific organization engaged in new disjunction of drugs R&D and market demand, and have pharmaceuticals creation and public services, to been taking more important role in innovation of new develop this new drug, revealed Mr. Chen, General drugs as they are fully informed of market demand. ” Manager of Guangzhou Baiyunshan Pharmaceutical Co., Ltd. (000522, one of the leading pharmaceutical Mr. Chen also showed his confidence in the market manufacturer in Guangdong Province). prospect of this new drug. According to statistics from Chinese Pharmaceutical Association, national organization The newly developed drug enjoys good antibacterial of pharmaceutical professionals, total consumers of activity to gram-positive bacteria. Mr. Zhu, Deputy cephalosporin in 22 major cities in China have reached Director of Baiyunshan Pharmaceutical, said USD101.5 million in 2008, up 27.0% compared with 2007. ”Cephalosporin Oxazine Amidine has an entirely Besides, exemplified by cefathiamidine, with sales revenue new chemical structure which is obtained through of USD44.0 million in 2009, coupled with rich experience molecular modification of cefathiamidine, and has for promotion of products, Cephalosporin Oxazine Amidine shorter half-life and less toxicity than cefathiamidine, is bound to win good prosperous market in the future. thus it enjoys good application prospect.” Baiyunshan Pharmaceutical has been always attaching great importance to independent R&D of drugs. Mr. Chen also viewed ”Independent intellectual property can strengthen company’s core-competitiveness, especially for pharmaceutical companies. Thus, the achievement of obtaining USP CCM International Limited 11
  15. 15. Biopharmaceuticals China News Vol. 1 Issue 1. 2010 News in Brief Sanofi - Aventis builds research Bayer Schering Pharma (China) center in China upgrades On April 6th, Sanofi - Aventis Group (Sanofi - Aventis), Since this year, Bayer Schering Pharma (China) upgraded the largest drug manufacturer in Europe, announced that to be a separate district and reported directly to it would set up its R & D centers of Asia Pacific in China headquarters. It will invest USD132.92 million to global R to accelerate the development of drugs and therapies & D center in Beijing in next 5 years and launch four new innovation. The R&D will radiate regions including Japan, varieties to speed up the exploitation of Chinese market. It Russia and India. achieved USD704.53 million sales revenue last year, up by 28% year on year. N o v a r t i s ( C h i n a ) p u b l i c i z e s diabetes treatment breakthrough Biopharmaceutical output value in Jiangsu to exceed USD73 On April 21st, Novartis (China) and the Ministry of Health billion in 2012 joined hands to issue the largest diabetes treatment breakthrough on "Second Sino-US high-level exchange of Recently, Science and Technology Department of Cardiovascular Summit" held in Shanghai. The breakthrough Jiangsu Province published Development Plan of of NAVIGATOR attract great concern from cardiovascular New Biotechnology and Pharmaceutical Industry in experts, since it showed that RAS inhibitors Valsartan can Jiangsu Province (2009 ~ 2012). The plan shows that effectively prevent diabetes occurrence for pre-diabetes. Biopharmaceutical output value in Jiangsu will exceed USD73 billion in 2012 compared with USD29 billion Fosun’s net profit up 91.3% in Q1 currently and it will push Jiangsu to be the most active area of new biotechnology and pharmaceutical industry all over 2010 the world. On April 29th, Fosun Pharmaceutical (Fosun) announced its first Quarter Report in 2010, according to which its revenue increased by 27.34% and net profit by 91.3% aided by excellent performance of key pharmaceutical business, and benefit from stock transfer. CCM International Limited 12
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