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Three broad China biopharma themes made their appearances in the pages of ChinaBio Today again last week: IP law, healthcare reform and growth in China biopharma facilities. Our legal experts took a look at the latest draft for a new patent law, the National Reform Commission released its proposal for changes in China’s healthcare delivery systems, and there were a remarkable number of new facilities opened or announced. In addition, deals continue to get done in individual China biopharmas, as the industry continues to grow.

For three years now, China has been considering the third revision of its patent law. The second revision has been in force since the year 2000. The fourth proposal for this third revision, issued in August 2008, aims to raise the bar on patent requirements and tighten patent enforcement. In undertaking this rewriting, the ultimate goal of the government is to encourage innovation by providing the right level of patent protection. Charles C. Liu, PhD, JD, and Jeanne J. Liu, who have analyzed the government’s IP ideas by examining each draft, will discuss the most recent iteration in three installments. In this first one, they cover two specific areas: novelty and inventiveness, and secrecy check and foreign filing license (see story). Succeeding installments of the series will be issued weekly.

The National Reform Commission (NDRC) of China has proposed sweeping changes in the country’s healthcare policy, establishing the policy goal of covering all 1.3 billion of China’s citizens with medical insurance by 2020 (see story). 90% of the population will be insured within just two years. In the past twenty years, China’s healthcare has swung from government-controlled to market-oriented. As an unintended result of the new policy, rural citizens currently suffer from much lower levels of medical care delivery, and all of the population, urban and rural, is upset about its cost. The report addresses four major problems: soaring medical fees, lack of access to affordable medical service, poor doctor-patient relationships and low rates of medical insurance coverage. Not surprisingly, the new plan was met with some criticism. Commentators charged that the plan is not understandable, and to the extent that it can be understood, that it lacks specificity. Without saying how much money it will allocate to the various initiatives, the government did not clearly show its commitment to solving China’s healthcare problems.

A third theme is the tremendous proliferation of biopharma activity in China over the past 20 years, particularly in and around the biopharma-rich area of Shanghai’s Zhangjiang Hi-Tech Park. Within a seven day period, the area achieved a remarkable series of milestones, as major players have opened new facilities or announced plans to expand. Here’s a rundown: (1) Three CROs – MPI/Medicilon, PharmaLegacy, Charles River (NYSE:CRL)/Shanghai BioExplorer – celebrated Grand Openings for their new Shanghai laboratory facilities; (2) Lilly (NYSE:LLY) opened its R&D operation in Shanghai, an office that oversees activity in its network of R&D relationships in China; and (3) Sanofi-Aventis (NYSE:SNY) announced it would expand its Shanghai R&D facility, establish a biometrics center in Beijing, and partner with the Shanghai Institutes for Biological Sciences to discover new drugs for neurological diseases, diabetes and cancer (see story).

American Oriental Bioengineering (AOB) completed two acquisitions while, at the same time, announcing it had declined to pursue a third (see story). AOB will pay $39.5 million to buy drug distributor Nuo Hua Investment Company, a company that AOB expects to produce revenues of $80 million and net income of $2.3 million during 2009. AOB will spend an additional $13.6 million to purchase GuangXi HuiKe Research and Development Company, a drug development company. However, AOB will not move forward on a deal, announced in August, with an unnamed drug distributor. In that proposed purchase, AOB would have paid $110 million for a company with $550 million in annual revenues. AOB’s trailing 12-month revenues are $199 million. 

Beijing Chemclin Biotech completed a healthy-sized $16.5 million Series B round that the company will use to further its diagnostics reagents business (see story). The financing was led by a new investor, China Healthcare Partnership (managed by MC China), and included existing investors, WI Harper, Siemens Venture Capital, and SB China Venture Capital. Formed in 1999, Chemclin markets radioimmunoassay (RIA) kits, ELISA and chemiluminescent (CLIA) reagents. In November 2007, Red Herring included Chemclin in its Fast 100 list of up and coming China technology companies. The company’s marketing and sales network has a presence in 30 provinces, more than 2000 local districts and 30,000 towns.

Fosun Enterprises Ltd., a subsidiary of Fosun Pharmaceuticals (SHEX: 600196), bought 1.8 million ADSs of Tongjitang Chinese Medicines (NYSE:TCM) on the open market, paying $7.4 million (see story). That works out to an average price of $4.09 per share. Tongjitang was selling for about $4 per share during July and August, but has fallen further since that time. After the purchase, Fosun holds about 5.4% of the outstanding stock of Tongjitang. Fosun said it may continue to increase its stake in Tongjitang Chinese Medicines, either through more open market purchases or agreements with major shareholders. Tongjitang’s stock price has been in virtual freefall this year, after management withdrew its buyout offer for the publicly held shares of the company.

China Sky One Medical (OTCPK:CSKI) signed an agreement with Shaanxi Xintai Pharmaceutical Company under which Shaanxi Xintai will distribute China Sky One’s newly approved Asthma Patch product (see story). China Sky One focuses on OTC patch products for the China market. The Asthma Patch is the second product that Shaanxi Xintai is distributing for China Sky One. It has also been in charge of marketing China Sky One’s Slim Patch products since early this year. Shaanxi Xintai has greater penetration of rural markets, where the incidence of asthma and bronchitis is high. China Sky One’s distribution network is centered in metropolitan areas. 

Disclosure: none.

Source: China Bio in Review: Broad Themes and Deals