Biopharmaceuticals China News Sample - Published by CCM International Ltd

Copyright © CCM International Limited

Biopharmaceuticals China News

Vol.1 Issue 1. 2010


Vol. 1 Issue 1. 2010 Publication date: 4 May, 2010

Investment Focus 1 Potential investment opportunity in China’s vaccine industry2 Resources (holding) integrates Beijing Pharmaceutical Group

Govermental Policies3 Updated Pricing Drug List by NDRC comes into force3 Procurement and Distribution Rules of Essential Drugs to issue in 2010

Market Dynamics4 Hualan’snetprofitsoars229.10%in20095 Huge potential in China’s diabetes treatment market7 China Securities Pharmaceutical Index hits record high7 TotaloutputofCeftriaxoneSodiumhitarecordhighin20099 BeijingOriGenewonUSD16millionventurecapital9 Lilly’sMulti-DrugResistantTuberculosisPlaninChina10 Hepalinkratifiedtobelisted

Technology&NewProduct11 CephalosporinOxazineAmidineproducedbyBaiyunshanPharmaceuticalobtainsUSP

NewsinBrief12 Sanofi-AventisbuildsresearchcenterinChina12 Novartis(China)publicizesdiabetestreatmentbreakthrough12 Fosun’snetprofitup91.3%inQ1201012 Bayer Schering Pharma (China) upgrades 12 Biopharmaceutical output value in Jiangsu to exceed USD73 billion in 2012

CONTENTS

Despiteofglobalfinancialcrisiswhichresultedinnegativeeffect on most industries in the world,China’spharmaceuticalindustrywitnessedsounddevelopmentin2009,thankstoimplementationofnationwideHealth Care Reform. Some biopharmaceutical enterprises achieved splendid performance in2009,suchasHualanBiological Engineering Inc., the largest blood product and

Welcometo theApril issueof Biopharmaceuticals China News,speciallypublishedbyCCM International.

vaccine producer in China, achieved net profitgrowthofUSD89.1million,up229.40%yearonyear.

In order to guide health and sustainable development of China’s pharmaceutical industry, Chinese government successively issued related policies, such as Pricing Drug List by National Development and Reform Commission, Procurement and Distribution Rules of Essential Drugs, etc. These policies are bound to facilitate the progress of pharmaceutical industry, especially biopharmaceutical industry. China’spharmaceuticalindustrywillcontinue its development momentum and boominthefollowingseveralyears.


Vol. 1 Issue 1. 2010 Publication date: 4 May, 2010

■ TheconfidencebankruptcytowardChina’svaccinesafetyafteraseriesofincidentsbrokeoutinrecent months provided great potential investment opportunity for foreign pharmaceutical companies in China’s vaccine industry.

■ CooperatedwithBeijinggovernment,Recources(holding) integratedpharmaceuticalassetofBeijingPharmaceuticalGroupCo.,Ltd.onApr.2nd,2010.

■ TheupdatedPricingDrugListbyDevelopmentandReformCommissioncameintoforceonApr.1st , 2010.

■ StipulationsforProcurementandDistributionofEssentialDrugsinChinawillbeissuedin2010.

■ Hualanrealizednetprofitgrowthof229.40%in2009,mainlyaidedbyincreasedplasmadosageinbloodproductsandrisingdemandforvaccineinQ32009.

■ Huge potential market exists in China’s diabetes treatment market as China has the largest numbersofdiabetespatientsthroughouttheworld.

■ Aidedbyexcellentperformanceofbiopharmaceuticalcompanies,ChinaSecuritiesPharmaceuticalIndex,onApr.12th,2010,hitrecordhigh,closeto6125.0.

■ ExportquantityandpriceofCeftriaxoneSodiumhashitarecordhighsince2008, thankstothriving clinical demand, improving of total CS output and intensifying the efforts on oversea markets exploitation.

■ OnMar.17th,2010,BeijingOriGenewonUSD16millionventurecapital for itsTrueMABTMproject.

■ CooperatingwithZhejiangHisun,LillystartedtoimplementitsglobalMDR-TBplaninChinaonMar. 23rd, 2010.

■ InApr.2010,Hepalinkhasbeenformallyratifiedtobe listedbyChinaSecuritiesRegulatoryCommission.

■ OnApr.11th,2010,CephalosporinOxazineAmidinedevelopedbyBaiyunshanPharmaceuticalsuccessfully obtained USP.

BiopharmaceuticalChinaNewsataglance

Main companies mentioned in this issue

BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010

CCM International Limited www.cnchemicals.com1

Investment Focus

Potential investment opportunity in China’s vaccine industry

TheconfidencebankruptcytowardChina’svaccine

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. For instance, nearly

100 children in Shanxi Province died from the

unqualified vaccine injected; another case is that

unqualified vaccine produced by Jiangsu Ealong

Biotech. Co., Ltd., the first vaccine producer in

Jiangsu Province, flooded in Jiangsu’s vaccine

market.

These incidents result in the absence confidence

ofChinesepeople towardshomemadevaccine

safety and governmental credibility, and quality

assured vaccines are urgently needed in China.

Thus, foreignpharmaceutical companies,with

theadvantageof superior technology,won the

potential investment opportunities in China’s

vaccine industry, such as exporting qualified

vaccines toChina, cooperatingwithdomestic

p h a r m a c e u t i c a l p r o d u c e r s b y p r o v i d i n g

technology, etc.

In the future,vaccinebasicsmarketwhichwas

monopolized by state-owned enterprises is

likelytobeco-sharedbyforeignpharmaceutical

companies, such as some foreign pharmaceutical

companies have invested into BCG vaccine and

PoliovaccinewhichbelongtocatalogueofChina’s

immunizationprograms,accordingtotherevised

industrial Catalog Guiding Foreign Investment in

2007.

Chinese government has a l lowed fore ign

pharmaceutical companies to co-investwith

domestic vaccine producers in China’s vaccine

industry. InSep.2009,GlaxoSmithKline, the

second largest pharmaceutical company in

theworld, cooperatedwith JiangsuWatoson

BiotechnologyLtd.which focuses onhuman

vaccine R&D, production and sales in China, to

haveinvestedUSD53.97millioninChina’schildren

vaccine industry and established a joint venture in

China,withGlaxoSmithKlineholding65%stocks.

Accordingtothe investmentplan,theplantwill

manufacturemeasles-rubella-mumpscombined

vaccines,akindofchildrenvaccine,whichfallinto

the catalogue of National Vaccination Program, as

wellasotherchildren’svaccine.

InNov.2009,NovartisPharmacyLtd., thesecondlargestflu

vaccineproducer in theworld,alsoenteredChinesevaccine

industryby expendingUSD124.63million topurchase85

%stocksofZhejiangTianyuanBioPharmaceuticalCo.,Ltd.

(Tianyuan), the second largest flu vaccine supplier in China. ’

Atpresent,Chinaisthethirdlargestpharmaceuticalmarketin

theworld.Inthefuture,NovartiswillprovideTianyuanvaccine

technology includingtechnologyof influenzavaccine,rabies

vaccine, etc., for the purpose of Novartis’s vaccine production

localization,andNovartis’sstrategictargetistobecomealeader

inthefast-growingvaccineindustryinChina.’saidMr.Vasella,

CEOofNovartisinNov.2009.

Theabove-mentionedfactsindicatethatinvestmentrestriction

for foreign pharmaceutical companies in China’s vaccine

industry have been gradually relaxed, and policy barriers

restraining foreign pharmaceutical companies to enter China’s

vaccineindustrywillbeeliminatedstepbystep.

Notes: Vaccine basics refer to vaccines supplied by Chinese government for free, including: 1.Vaccines belong to the catalogue of National Immunization Program.2.Extra vaccines when provinces, autonomous regions and municipalities implement the National Immunization Program.3.Vaccines used for emergent vaccination or mass preventive vaccination organized by government at or above the county level or relevant administrative department in charge of health.

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Resources (holding) integrates Beijing Pharmaceutical Group

OnApr. 2nd, 2010, cooperatedwith the Beijing

government, China Resources (holding) Co., Ltd.

Resources(holding), one of the leading conglomerates

inHongKong andChineseMainland, integrated

pharmaceutical assets of Beijing Pharmaceutical Group

Co., Ltd.( Beijing Pharmaceutical Group) (PICTURE 1).

TheintegrationwillbeimplementedbyChinaResources

Medications Group Co., Ltd. (Resources Medications), a

subsidiaryofResources(holding).Aftertheintegration,

Beijing governmentwill hold 30% stocks of the

integrated company, andResources (holding)will

relocate the headquarter of Resources Medications,

usedtobeinShenzhen,toBeijing.

Resources (holding) and Beijing government signed a

strategiccooperationframeworkagreementregarding

pharmaceuticalandmicroelectronicssectors.According

to this agreement, Resources (holding)’s investment into

pharmaceutical industryinBeijingwillbeencouraged

and supported by Beijing government, such as enjoying

reductionandexemptionoftaxes,financialassistance,

etc., and Beijing governmentwill also facilitate

Resources (holding)’s integration of biopharmaceutical

resources in order to found a leading pharmaceutical

enterprise in Beijing. Through cooperationwith

Resources(holding),Beijinggovernmentwill further

promote the development of pharmaceutical industry.”

said Mr. Guo Jinlong, Mayor of Beijing on the signing

ceremony.

Resources Medications’s target of this integration is to

set up platform for pharmaceutical enterprises under

directjurisdictionofcentralgovernment.Andafterthis

assetreorganization,BeijingPharmaceuticalGroupwill

get listed in overall.

ResourcesMedicationswill formacomplete industry

chain of pharmaceutical industry covering Chinese

medicine, chemical medicine, biopharmaceutical,

medicalequipmentandpharmaceuticalbusiness,which

will largelyheighten itsposition inpharmaceutical

industry. Resources Medications has achieved total

revenueofUSD4.94billion in2009,andbecomethe

second largest pharmaceutical company in China.

Resources Medications is a wholly-owned subsidiary of Resources (holding), engaged in Resources (holding)’s domestic pharmaceutical business, with total assets of around USD3.81 billion and turnover of USD3.96 billion in 2009. Beijing Pharmaceutical Group, with total turnover of USD3.9 billion in 2009, is a wholly-owned company of Beijing government. It has about 20 subsidiaries, among which Wandong Medical Equipment and Beijing Double-Crane Pharmaceutical are listed in Shanghai and Shenzhen Stock Exchange.

PICTURE 1: Signing ceremony of Beijing government

and Resources (holding)

Source: http://info.crc.com.cn/internet/news/xwfbny/201004/

t20100403_111966.htm



Govermental Policies

Updated Pricing Drug List by NDRC comes into force

The updated Pricing Drug List by National Development and

ReformCommissionNDRCcameintoforceonApr.1st,2010,

indicating thatChinesegovernmentwill further strengthen

management and supervision of prescription drugs prices and

decentralizemorepricingpowertolocalgovernment, inorder

toachievestandardizationindrugsmarketandrationalpricing

authority division.

AccordingtothenewList,allprescriptiondrugsintheSocialized

MedicineCatalogpublishedin2009andallnationalessential

drugs are added into Pricing Drug List. Besides, prices of

narcotic drugs and psychotropic substances in Pricing Drug List

areguidedbywiththehighestex-factorypriceandtheirhighest

retail price, instead of government referential price in previous

time.

UnderthebackgroundofpublishmentofOnEstablishmentof

ImplementationAdvicesofNationalEssentialDrugsSystem

inAug.2009,NDRCupgradesthePricingDrugList issuedin

2005.ThenewListwillexertinfluenceondrugpricing,market

behavior, etc. of related pharmaceutical enterprises. Some

expertsairtheirownopinionsonthisupgradedList.

“Thoughmain prescription drugswith patent protection

belong to multinational companies, their patent protection

willhaveexpiredoneafteranotherby2013,whichwill leave

great development opportunity for domestic prescription

drugs producers. Thus, in order to effectively guide China’s

pharmaceutical industry’s health development, NDRC upgrades

Pricing Drug List.” disclosed by a director from a multinational

enterprise in Shanghai.

“In the lightof thispolicy, thereare556kindsofover-the-

counter drugs priced by provinces, autonomous regions and

municipalities pricing departments, implying that Chinese

governmentwill decentralizemorepricingpower to local

government.”disclosedbyaninsiderinApr.2010.

Wangming,ManagerofGuangzhouPharmaceuticalHoldings

Ltd.said“AftertheupdatedPricingDrugListcameintoforce,

pharmaceuticalcompaniesmayshowmoreconcernonhowto

winapreponderantpriceintheprocessofdrugtender.“

Note: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

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 drugs with government referential price were referred to retail price by local government, according to actual local condition. To OTC drugs, local government constitute retail price, according to actual local condition.

Procurement and Distribution Rules of Essential Drugs to issue in 2010

OnApr.8th,2010,theforumonhowtoactively

manage the procurement and distribution of

essential drugs after the issuance of National

BasicMedicineSystemwasheldinBeijing,in

whichruleforprocurementanddistributionof

essential drugs in China to be issued in 2010

wasinformed,indicatingthatassomerelative

policies and stipulations perfect, production

and supply of basic drugs will bemore

reasonableandscientificundergovernmental

management.

Accord ing to Mr . Zheng , D i rec to r o f

Department of Essential Drug of the Ministry

of Health, by the end of Feb. 2010, there have

beenabout30%primary care institutions

implementing National Basic Medicine

System, and the proportion is expected to

climbtomorethan60%in2010.Duringthe

implementation of National Basic Medicine

System for about one year, various defects like

skimble-scamblepriceofdrugs,commercial

bribe, etc., have been exposed. Thus, it is

necessary and urgent to constitute a unified

standard for procurement and distribution of

essential drugs

Regardinghowtoeffectively implement the

rule, some experts air their viewson this

forum. Mr. Liao, Deputy Director of Health

Department of Sichuan Province, said, “In poor

regions like Sichuan Province, government

shouldpermitrelevantqualifiedcompaniesto

participate in distribution, in order to ensure

availability of essential drugs.”



Mr.NiuZhengqian,DeputySecretaryofChineseMedicineEntrepreneurAssociation,viewed“Weshouldtakemarket

mechanism into full play; and let hospitals, manufacturers and distribution companies be engaged in free competition; only

bythiswaycantheruleofprocurementanddistributionofessentialdrugstakegreatereffectandbringmorebenefits.”.

“AftertheNationalBasicMedicineSystemhasbeenimplemented,governmentshouldconstituteanationalunifiedstandard

for procurement and distribution of essential drugs, in order to avoid the commercial bribe in the tender process.” said Li

Zhenjiang,ChairmanofShinewayPharmaceuticalGroup,thelargestmanufacturerofmodernChinesemedicineinjections,

soft capsules and granules.

Regardinghowtocarryoutthisrule,CCMalsoputforwardsomesuggestions.Firstly,thereshouldbeacomplete,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

governmentalsupervisionshouldbemadeinthewholetenderprocessandenterprisesshouldbegivenmorerights,suchas

howtodistributedrugs,etc.

Market Dynamics

Hualan’snetprofitsoars229.10%in2009

Accordingtoannualreportforfiscalyear2009onMar.

9th,2009,HualanBiologicalEngineeringInc.(Hualan),

the largest blood product and vaccine producer in China

withcapacityof1,500t/aforplasmaprocessingand29.74

million doses per year for vaccine, achieved net profit

growthof229.40%, thanks to significantly increased

plasma dosage in blood products, and rising demand for

vaccineinQ32009.

Thoughunderthecontextofglobalfinancialcrisis,Hualan

stillmadeconsiderableachievementsin2009.

.

Theachievementfirstlysourcedfromvaccine,whichwas

neededwith largenumberswhen influenza suddenly

happened inQ32009.Revenue fromvaccinerealized

USD104.52million in2009,up887.84%over2008.

Besides, the company is responsible for 52.25 million

doses vaccine for national H1N1 storage task, among

which29.46millionhavebeenshippedtothelocations

designatedbygovernment,andtherestwillbereleased

beforetheendofthisyear.Inthefuture,itwillaccelerate

the process of overseas registration for H1N1 bacteria and

seasonal influenzavaccinessoastofurtherenhanceits

vaccinebusiness(TABLE1).

Development of blood products business also contributed

tothenetprofitgrowth.Thecompanyachievedrevenue

ofUSD74.19million frombloodproducts,withgross

profitrateof63.63%in2009,respectivelyup26.09%and

4.88%against2008.Revenues fromhumanalbumin,

intravenous immunoglobulin (IVIG) and other blood

TABLE1:Hualan’sbusinesssituation,2008&2009

Item

2009 2008

Value, million USD

Up YOY, %

Value, million USD

Up YOY, %

Revenue 178.00 160.39 68.00 48.25

Net profit 89.00 229.40 27.00 70.35 Source: Annual report of Hualan in 2009



productsreachedUSD38.56million,USD21.11million,

USD14.51million,up 15.53%, 10.74%and 127.27%

separatelyover2008.Takingtherisingmarketdemand

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.

Thisstructureoptimizationishelpfulforimprovement

ofplasmautilizationrateandgrossprofitrateofblood

products (FIGURE 1).

Hualan is estimated to get sound development in 2010,

asaseriesofvaccinessuchasseasonalinfluenzavaccine,

hansenulahepatitisB vaccine, etc.will beput into

marketthisyear.Additionally,aidedbythe increased

plasmadosage,couplewiththeprice increaseofIVIG

fromUSD60.41/dosetoUSD87.97/dose inShanghai,

whichisalsolikelytoincreaseinotherregionsofChina,

thecompany’snetprofitisestimatedtoriseby30%~50%

year on year. The company’s much better performance in

stock market is a strong proof for its fastest development

in recent years.

FIGURE1:Hualan’sstockperformance,Jan.2006~Apr.2010

�

Source: google finance

Note: SCI refers to Shanghai Composite Index

Huge potential in China’s diabetes treatment market

China,withmorethan92millionadultdiabetesandabout150

million potential diabetes, has the largest numbers of diabetes

patients in theworld, according toNewEnglandJournalof

MedicineinMar.2010,inwhichnewmedicalresearchfindings,

reviewarticles,andeditorialopiniononawidevarietyoftopics

of importance to biomedical science and clinical practice are

published. Besides, total direct medical expenditure of diabetes

(maleandfemalediabetespatientswithageofover20inChina)

and its complicationshas reachedUSD2.8billionand itwill

witnessuptrendinthefuture,disclosedintheHighBloodSugar

DiabetesForumsponsoredbyUSAAbbottLaboratoriesinApr.

2010.

ThisshowsthathugepotentialexistsinChina’sdiabetestreatment

market. Some multinational pharmaceutical enterprises, like

NovoNordisk,EliLillyandSanofi-Avetishavecapturedabout

90%marketshareofChina’sdiabetestreatmentmarketoftop

firstclasshospitals.Andtheyhaveenlargedorwillenlargetheir

investmentsinthisfieldinChina.

For instance, in order to consolidate its leadership in China’s

diabetes market, Novo Nordisk, the largest human insulin

producer in theworld, inputUSD381million toestablish the

world’slargestinsulinpreparationandbottlingplantinChinaat

theendof2008,whichisthelargestinvestmentforthecompany

afteritsfoundationfor80years.Atpresent,NovoNordiskseizes

above60%marketshareofhumaninsulininChina.

AnothercaseisSanofi-Aventis,adiversifiedhealthcarecompany

in theworld.To furtherenlarge itsmarketshare inChina, it

announcedinApr.2009thatitwouldinvestUSD87.9millionto

expanditsLantuspre-fillingproductionlineinitsinsulinfactory

inBeijingEconomicandTechnologicalDevelopmentZone,which

is expected to be launched in 2012. By then the company’s Lantus

capacitywillreach50millionunitsperyear.

Atpresent,domesticapprovedantidiabeticdrugsmainlyrefer

to insulinsecretion(glinidesandsulphonylurea),non-insulin

secretion(biguanides,α-glucosidase inhibitorandglitazones)

and human insulin. What is the situation of prescription status of

patientswithdiabetesinmainhospitalsofChina’smediumand



large cities? (FIGURE 2)

In the light of a market research study, surveying diabetes

prescription status in main hospitals of China’s medium and

largecitieswith4500prescriptionsofpatientswithdiabetes

by Cegedim Strategic Data, a leading market research company

dedicatedtothehealthcareindustry,inMar.2010,inthefieldof

oral drugs treating diabetes, the class of Biguanide, accounting for

37.6%prescriptionshare,isstillthemostwidelyusedantidiabetic

drugfordiabetestreatment,andrecommendedasfirst-linedrug

for diabetes treatment and listed in Catalogue of National Basic

Medicines.

However, in the class ofα-glucosidase inhibitor,Acarbose

produced byGermany Bayer Group captures about 30%

prescription share, aided by its being under patent protection

statusandsuccessfulpromotionindiabetestreatmentfield.

In the field of injective drugs treating diabetes, human insulin

occupiesabout38.6%prescriptionshare.KeyproductsofNovolin

30RofNovoNordisk inDemark takesup12.3%prescription

share.

FIGURE2:Structureofprescriptionsharebydifferentclassesandbrandsofdiabetesdrugsin2009

Nateglinide3.40%

MetforminHydrochloride

10.20%Kaboping

4.10%Gliquidone

3.50%Avandia4.10% Avandamet

0.20%

Novolin R3.80%

Novolin N3.30%

Novolin 30R12.30%

Lantus2.90%

Repaglinide7.50%

Metformin22.50%

Acarbose29.40%

Glipizide9.30% Others

6.10%Others2.40% Others

1.50%

Humulin70/30 6.10%

Others0.40%

Others1.50%

Others4.90% Others

1.10%

Diamicron8.30%

Others5.80%

Glimepiride4.50%

Others8.10%

Glinides

s

α-glucosidase inhibitor

Glinides andBiguanides

Biguanide

Glitazones

Sulphonylurea

Short-actinghuman insulin

Intermediate-eff icacyhuman insulin

Premix human insulin

Long-actinghumaninsulin

12.4% 37.6% 24.1% 0.2% 10.2% 33.7% 34.6% 4.8% 6.4% 3.3%Distribution of prescription share

Source: Cegedim Strategic Data



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

PharmaceuticalIndex(CSPI,399933)hasbeen

performing strongly since early 2010, and hit

recordhighof6125.0onApr.12th,2010.

AsofApr.7th,2010,88BChavereleasedtheir

fiscal2009annual reports in succession,and

achievedtotalnetprofitofUSD231.95million,

up67.58%comparedwith2008,mainlythanks

to sound development and promising prosperity

in this industry, reform of Health Care system,

issuance of the Catalog of National Basic Drugs,

reorganizedassetsofBC,etc.

It is aided by the excellent performance of

biopharmaceutical companies that CSPI has

become the strongest securities industry index in

China.OnApr.12th,ShanghaiStockExchange

CompositeIndex(SSECI)performeddowntrend,

whileCSPIhit thehistoricallyhigh level and

closedatpointsof6125.0.Asof thatday,CSPI

has continuously advanced for 11 market days,

reflectingthepromisingprosperityinthisindustry

(FIGURE 3).

W h e n C S P I r e a c h e d r e c o r d h i g h , m a n y

pharmaceutical stocks’ price also jumped to a

newhighpoint.Apart fromthepharmaceutical

stocks listed this year, 45 pharmaceutical stocks

have hit record high since early 2010, accounting

for32.85%ofthetotalcomparablestocks.And12

pharmaceutical stocks have achieved the highest

sinceApr.2010,suchasShanghaiRAAS,Jiangsu

Yuyue,PkucareSouthwestPharmaceuticals,etc.

Eyeing this excel lent performance of BC,

institutionalinvestorssignificantlyincreasedtheir

BCstocks.AsofQ42009,their totalBCstocks

reached3.20billionshares,up70.6%overthat

asofQ32009,indicatingtheiroptimismtowards

biopharmaceutical industry.

Notes: CSPI is an index to reflect the overall performance of biopharmaceutical stocks in Shanghai and Shenzhen stock markets, which is indexed with all biopharmaceutical shares by China Securities Index Co. , Ltd. , a professional company specializing in creation and management of indices and index-related services.

Total output of Ceftriaxone Sodium hitarecordhighin2009

Total output of Ceftriaxone Sodium, the third generation cephalosporin

andabroad-spectrumcephalosporinwitha longplasmaelimination

half-lifeofapproximately8hours innormaladults,hitarecordhigh

in2009reaching3768tonnesin2009,up29%yearonyear,thanksto

thriving clinical demand, significantly increasing number of producers

of Ceftriaxone Sodium and their efforts to intensify exploitation of

overseas market. Besides, the export price of Ceftriaxone Sodium reached

USD127.3/kginFeb.2010,up35.8%comparedwiththatinMay.2009.

ClinicaldemandofCeftriaxoneSodiumisgrowingsteadilyalongwith

thedevelopmentofprimarycare.AccordingtoareportissuedbyChina

AssociationofPharmaceuticalCommerce (CAPC) inApr.2010, the

expenditure of Ceftriaxone Sodium in hospitals of 22 major cities in

ChinawasUSD39million,up35.1%comparedwiththatin2007,andits

marketsharehasachieved42%inChina’scephalosporinmarketin2009,

up11.5%comparedwiththatin2004.Besides,astotheannualgrowth

rateoverthepastfewyears,onlyCeftriaxoneSodiumhasachieved106%

comparedwithothercephalosporinslikeCefazolinSodium,Cefotaxime

Sodium,CefoperazoneSodium,CefurozimeSodium.Asanactof the

reformofhealth-carein2009,ChinesegovernmentwillinvestUSD124.6

billion to improve primary care over the next three years. Therefore, it is

expectedthattheclinicaldemandofCeftriaxoneSodiumwillcontinuethis

uptrend in the future.

Figure:CSPIandSSECIperformance,Jan.2009~Apr.2010

Source: Baidu Finance



Inthepast fewyears, totalnumberofCeftriaxoneSodium

producers significantly increased.According to a report

issuedbyCAPCinApr.2010,thenumberoftotalproducers

ofCeftriaxoneSodiumwas3 intheearlystagebutreached

36atendof2009.Meanwhile,mainproducers likeShanxi

WeiqidaPharmaceuticalCo.,Ltd.,ShanghaiAsiaPioneer

PharmaceuticalCo.,Ltd., etc., capturedabout80% total

capacity of Ceftriaxone Sodium in China.

Ceftriaxone Sodium producers have been intensifying

exploitation of overseasmarket. In the past few years,

the export of Ceftriaxone Sodium has been amounted to

30%~40%ofitstotalcapacity,whichachieved899tonnesin

2009,up14.1%yearonyear.India,SouthKorea,Europe,and

SoutheastAsiaarethemajorexportdestinations.Since2007,

Ceftriaxone Sodium producers has exported cephalosporin

includingCeftriaxoneSodium,cefoperazone,etc.,achieving

atotalvalueofUSD236milliontoRussiaandBelarus,whose

cephalosporin production technology lags behind (FIGURE 4).

However,therearesomeuncertaintiesforCeftriaxoneSodium

exportsinthefuture.InOct.2008,theMinistryofCommerce

and Industry of India formally determined that the export of

CeftriaxoneSodiumtoIndiafromChinawasdumping,andthe

Indiangovernmentlevied108%~120%anti-dumpingduties

on Ceftriaxone Sodium imported from China. Thus, many

ChineseCeftriaxoneSodiumexportersareforcedtowithdraw

form Indian market. Besides, some member countries in

European Commission like Italy and Spain begin to investigate

the dumping cases of Chinese Ceftriaxone Sodium, disclosed

by some insiders in China.

FIGURE4:ExportvolumeandexportgrowthrateofCeftriaxoneSodium,2007~2009

658

788

899

19.33% 19.76%

14.09%

-

100

200

300

400

500

600

700

800

900

1,000

2007 2008 2009

tonn

e

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Export Quantity Export Grow th Rate

Source: China Customs



BeijingOriGenewonUSD16million venture capital

OnMar.17th,2010,BeijingOriGeneTechnologies,

Inc.(Beijing OriGene) announced it has won

USD16millionSeriesBventurecapital fromIDG-

Accel, SBI&THVentureCapitalManagement

Co.,Ltd.,andZero2IPOCapital,and itsprevious

investors, Morningside Venture Investments and

President International Development Corp. also

participated.Theventurecapitalwillbemainlyused

to continuously build the largest collection of next

generationmonoclonalantibodies (TrueMABTM)

covering the majority of human proteome in the

world.

“Thiscapitalwill facilitate theaccomplishmentof

building the largest monoclonal antibody collection

intheworldcoveringtheentirehumangenomeof

approximately 20,000 genes.” said Mr. He, Beijing

OriGene’sChairmanandCEO.

BeijingOriGenehasdedicatedtobuildthe largest

collectionofhumanfull-lengthcDNAclonessince

lastdecade.Theprojectwillbedevelopedwiththe

mostup-to-date antibody technologies andwill

beusingauthentichuman full-lengthproteinsas

immunogens during the manufacturering process.

TrueMABTMmonoclonalantibodiesarecurrently

available in themarket andwill be utilized by

commercial partners for various applications

like flowcytometryandMultiplesenzyme-linked

immunosorbent assays. Itwasestimatedbysomeinsidersthatasof2020,therewillbeabout3,000

kindsofnewdrugsproducedbybiopharmaceutical

technology, and gross output value of drugs produced

by biotechnology will reachUSD396 billion,

disclosed by Liu Yanhua, Undersecretary of Ministry

of Science and Technology in Jun. 2007. Therefore,

the promising prospect of biopharmaceutical

industry attracts venture investors’ capital.

AccordingtostatisticfromZero2IPO,aninformation

and consultation for venture capital (VC) and private

equity(PE),in2009,thereweretotal49casesofVC

and PE to have been invested in the pharmaceutical

industrywithtotal investmentofUSD320million,

amongwhich31casesareinvestedintodevelopment

and expansion of pharmaceutical companies. “It

is estimated that in 2010, investors of VC and PE

willbefurtheractive inpharmaceutical industry.”

saidZhengyufen,seniorprojectmanagerofmedical

healthdepartmentinZero2IPO.

Note:

Beijing OriGene Technologies, Inc. is a gene centric life sciences tool company dedicated to support academic, pharmaceutical and biotech companies in their research of gene functions and drug discovery. OriGene’s novel product line includes the world’s largest cDNA and shRNA clone collection, over 5,000 purified human proteins, high quality monoclonal antibodies, 100,000 highly validated human tissues, and Lumines Multiplex Assay products. OriGene also provides a broad range of antibody validation products including genome-wide tagged antigen standards and extensive IHC slides derived from the company’s tissue collection.

Lil ly ’s Mult i -Drug ResistantTuberculosis Plan in China

CooperatingwithZhejiangHisunPharmaceuticalCo.,

Ltd. (ZhejiangHisun), a well-known anti-infection

pharmaceutical enterprise in China, Eli Lilly Company (Lilly)

in theUS,aglobalR&D-basedpharmaceuticalcompany,

started to implement its globalmulti-drug resistant

tuberculosisplan(MDR-TB)inChinaonMar.23rd,2010.

ThisMDR-TBprojectexists to save livesbypreventing

and treatingMDR-TB–a terribledisease that afflicts

millions of people in some poor regions throughout the

world.AccordingtoMr.Lai,Lilly’sCEOinChina,Lilyhas

cooperatedwithZhejiangHisunbytransferringtechnology

of capreomycin for free, training relevant technicians, as

wellasprovingamplefunds,besides,inordertoeffectively

controlthespreadofMDR-TB,thecompanywillalsocarry

out a series of health education, such as training medical

personnel,popularizingpreventionknowledge,etc.

Lily has successfully transferred a series of production

technologyofcapreomycintoHisuntillnow,andHisunhas

launchedcapreomycinproductionlineforthisprojectwith

totalcapacityof5milliondoses/year.

By far,Lillyhas investedUSD135million for thisMDR-

TB project. In Jan. 2010, contributed by this project,

Lillywon “2009MultinationalCorporations inChina

ContributionAward“.“Thisawardfutureindicatesthelong-

term commitment for preventing and treating tuberculosis

inChina,especially forMDR-TB,” saidMr.EricBaclet,

RegionalCEOofLillyinChinainJan.2010.

MDR-TBpreventionand treatment isaustere inChina.

AccordingtoareportissuedbyChineseMinistryofHealth,



therewereabout4.5millionpatientswithactivetuberculosisinChinaasofMar.2009,80%ofwhichwereinruralareas.Besides,

accordingtoaWHOresearchin2006,about130,000newMDR-TBpatientsincreaseannuallyinChina,accountingfor28%ofthe

world’stotalnewlyMDR-TBpatients.Atthesametime,hightreatmentexpenditureforMDR-TB,usually100timeshigherthan

that for normal tuberculosis, also restricts patients’ treatment.

GreatconcernfortreatmentofMDR-TBhasbeenshowninChina,wheresymptomssuspiciousoftuberculosisarechecked,anda

unifiedfreetreatmentforfreeprogramforpatientsdiagnosedisalsoprovided.Duringtheyear2001to2008,therewere642,000

MDR-TBpatientshealed.

Capreomycinismainlyappliedformycobacterium-causedtuberculosispatientswhoaren’thealedwithfirst-lineanti-drugssuchas

streptomycin,isoniazid,rifampicinandethambuto,etc.,andforthepatientswhoarenotapplicabletotheabovementionedfirst-

lineanti-drugs,attributedtotoxicityorbacteriaresistance.Itwillbeacquiredbacterialresistancewhenusedseparately,thusonly

withcombinationofantibacterialdrugscanitcureTB.

Hepalinkratifiedtobelisted

In Apr. 2010, ShenzhenHepalink

Pharmaceutical Co., Ltd. (Hepalink),

the biggest suppl ier of heparins

sodium’s Act ive Pharmaceut ica l

Ingredients API in theworld, has

been formally ratified to be listed in

ShenzhenStockExchangebyChina

Securities Regulatory commission.

Thecompanywill issue40.1million

stocks,withaboutUSD21.7pershare,

to raise about USD869.5million,

amongwhichaboutUSD70.8million

will be used for its new heparins

sodium’sAPIproduction lineswith

capacityof830t/a,andaboutUSD56.2

millionwillbeusedasfloatingcapital

ofthisproject.Theproductsofthisnew

productionlineareinaccordancewith

authentication standards of U.S. Food

andDrugAdministration (FDA)and

Certificate of Suitability for European

Pharmacopeia (CEP).

Hepalink has been developing rapidly

since2007.In2009, itsrevenueand

netprofit reachedUSD32.8million

andUSD11.9million,respectivelyup

411.2%and387.8%yearonyear. Its

revenue and net profit respectively

realizedaCAGRof172.6%and244.5%

from2007to2009.

The company’s rapid achievement

is mainly thanks to its technical

superiority inR&Dandproduction.Atpresent, ithasbecomethe largestheparins

sodium’sAPIproductionandsaleenterpriseintheworld.Accordingtostatisticsfrom

ChinaCustoms in2009,Jan.2009~Sep.2009,Hepalink’sexportvaluereached

USD175.8million,accountingfor39.5%ofnationaltotalexportvalueofthisproduct.

Currently,supplyofheparinssodium’sAPI fallsshortofdemandand inadequate

capacity has become the bottleneck for its further development in future. The launch of

thisnewproductionlinewilleffectivelysolvethisproblem,disclosedbyinsiderinApr.

2010.

AfteritislistedinShengzhenStockExchange,stockholderofthecompanywillbenefit

alot.LiliandLitancouple,Hepalink’sfactocontrollerholding288.0millionHepalink’s

stockshares,willbecometherichestperson inChinesemainlandvaluingUSD6.3

billion.AndstockvalueofGoldmanSachs,afull-serviceglobalinvestmentbankingand

securitiesfirm,whoinvestedUSD4.9milliontoHepalinkin2007,andholding12.5%

stocksofthecompany,willreachUSD966.2million,93timesofitsinitialinvestment.

AccordingtoHapalin’sProspectusissuedinApr.2010,itisestimatedthatasof2010,

demandforheparinssodium’sAPIwillreach6142tonnes,achievingaCAGRof10.2%

year on year.

However,Hepalinkmayalso facesomeuncertainties in future. Itsprofitmargin

willdecline in the future, since theproductioncostof rawmaterialofheparins

sodium’sAPI,whichaccountsfor85%productioncost,mayincreaseinthefuture,

whileheparinssodium’sAPIpricewilldeclineduetotheexpandedcapacityofother

companiesinrecentyears(TABLE2).

TABLE2:Hepalink’sheparinssodium’sAPIexportvalue,Jan.2006~Sep.2009

Year　

Total export value (million USD)

Hepalink’s export value

(million USD) Market share

(%)Jan. 2009~Sep. 2009　 444.2 175.8 39.5

2008 226.1 63.5 28.1

2007 137.5 27.6 20.1

2006 103.3 29.4 28.5Marketshare=Hepalin’sexportvalue/totalexportvalue

Source: Hapalin’s Prospectus issued in Apr. 2010



Technology&NewProduct

OnApr.11th,2010,CephalosporinOxazineAmidine

developedbyGuangzhouBaiyunshanPharmaceutical

Co., Ltd.( Baiyunshan Pharmaceutical) successfully

achieved the US Patent(USP), and Baiyunshan

Pharmaceuticalwill cooperatewith the South

ChinaCenterforInnovativePharmaceutical,anon-

business scientificorganizationengaged innew

pharmaceuticals creation and public services, to

developthisnewdrug,revealedMr.Chen,General

ManagerofGuangzhouBaiyunshanPharmaceutical

Co., Ltd. (000522, one of the leading pharmaceutical

manufacturer in Guangdong Province).

Thenewlydevelopeddrugenjoysgoodantibacterial

activitytogram-positivebacteria.Mr.Zhu,Deputy

Director of Baiyunshan Pharmaceutical, said

”CephalosporinOxazineAmidinehasanentirely

newchemicalstructurewhichisobtainedthrough

molecular modification of cefathiamidine, and has

shorterhalf-lifeandlesstoxicitythancefathiamidine,

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,especiallyforpharmaceutical

companies. Thus, the achievement of obtaining USP

CephalosporinOxazineAmidinep r o d u c e d b y B a i y u n s h a n Pharmaceutical obtains USP

ofCephalosporinOxazineAmidinecanfurtherenhance

thecompany’shi-tech innovationcapability,which is in

accordancewith itsstrategy–patent first,distribution

followsinoverseasmarket.Throughthisway,Baiyunshan

Pharmaceutical’sCOAwillparticipate in international

competition.”

WithaccessiontoWTO,Chinesegovernmenthasissueda

seriesofpoliciessuchasMeasuresfortheAdministration

ofDrugRegistration,tosupportR&Dofnewdrugswith

independent intellectual property rights. Mr. Liu Xuebin,

oneof thekey researchers forCephalosporinOxazine

Amidine, said”Aidedbyrelativesupportingpoliciesof

government, pharmaceutical companies have changed the

disjunction of drugs R&D and market demand, and have

been takingmore important role in innovationofnew

drugs as they are fully informed of market demand. ”

Mr.Chen also showedhis confidence in themarket

prospectof thisnewdrug.According tostatistics from

ChinesePharmaceuticalAssociation,nationalorganization

of pharmaceutical professionals, total consumers of

cephalosporin in 22 major cities in China have reached

USD101.5millionin2008,up27.0%comparedwith2007.

Besides,exemplifiedbycefathiamidine,withsalesrevenue

ofUSD44.0millionin2009,coupledwithrichexperience

forpromotionofproducts,CephalosporinOxazineAmidine

isboundtowingoodprosperousmarketinthefuture.



Sanofi -Aventisbuildsresearchcenter in China

OnApril6th,Sanofi -AventisGroup(Sanofi -Aventis),

the largest drug manufacturer in Europe, announced that

itwouldsetup itsR&DcentersofAsiaPacific inChina

to accelerate the development of drugs and therapies

innovation.TheR&DwillradiateregionsincludingJapan,

Russia and India.

Novart is (China) publ ic izesdiabetes treatment breakthrough

OnApril21st,Novartis(China)andtheMinistryofHealth

joined hands to issue the largest diabetes treatment

breakthroughon"SecondSino-UShigh-levelexchangeof

Cardiovascular Summit" held in Shanghai. The breakthrough

ofNAVIGATORattractgreatconcernfromcardiovascular

experts,sinceitshowedthatRASinhibitorsValsartancan

effectivelypreventdiabetesoccurrenceforpre-diabetes.

Fosun’snetprofitup91.3%inQ12010

OnApril29th,FosunPharmaceutical(Fosun)announcedits

firstQuarterReportin2010,accordingtowhichitsrevenue

increasedby27.34%andnetprofit by91.3%aidedby

excellent performance of key pharmaceutical business, and

benefitfromstocktransfer.

NewsinBrief

Bayer Schering Pharma (China) upgrades

Since this year, Bayer Schering Pharma (China) upgraded

to be a separate district and reported directly to

headquarters.ItwillinvestUSD132.92milliontoglobalR

&DcenterinBeijinginnext5yearsandlaunchfournew

varieties to speed up the exploitation of Chinese market. It

achieved USD704.53 million sales revenue last year, up by

28%yearonyear.

Biopharmaceutical output value in Jiangsu to exceed USD73 billion in 2012

Recently, Science and Technology Department of

Jiangsu Province published Development Plan of

NewBiotechnology andPharmaceutical Industry in

JiangsuProvince (2009~2012).Theplanshows that

Biopharmaceuticaloutputvalue inJiangsuwillexceed

USD73billion in2012 comparedwithUSD29billion

currentlyanditwillpushJiangsutobethemostactivearea

ofnewbiotechnologyandpharmaceuticalindustryallover

theworld.

BiopharmaceuticalsChinaNews


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