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Deals and Financings

Stryker Corporation (NYSE: SYK), a US medical device company, will acquire a China orthopedic maker, Trauson Holdings (HK: 0325), for $764 million in cash (see story). Trauson's major shareholder, Luna Group with 62% of the outstanding shares, has agreed to the offer. Trauson makes orthopedic products for trauma and spine fixation. It has been manufacturing instrumentation sets for Stryker under an OEM agreement since 2007.

China Resources Sanjiu Medical & Pharma (SHE: 000999) acquired a 97% interest in Guilin Tianhe Pharmaceutical Co., a company that makes OTC patch products. The purchase price was estimated to be $94 million. Sanjiu's patch products use TCM ingredients to treat orthopedic conditions, provide pain relief, lessen allergy problems or address other disorders.

China National Biotec, the largest biotech in China, is once again reported to be planning a Hong Kong IPO. So far, however, the company has not made a formal announcement of the transaction. According to sources, the IPO will raise $1.5 billion. The tentative scheduling is for CNBG to file by the end of March, with the actual transaction taking place in Q2 or Q3. The mammoth IPO has been a feature of the rumor mill for well over a year.

Yunnan Walvax Biotech (SHE: 300142) paid $49.2 million to acquire a 58% stake in Shanghai Zerun Biotech, a fellow vaccine company. Walvax bought the stake by buying Wison (China) Investment's equity in Zerun for $20.8 million, and then investing another $28.4 in Zerun directly. For Walvax, the deal improves its R&D capability in recombinant vaccines, and brings with it one marketed vaccine and seven others in various stages of development.

Nanjing Micro-Tech, a China medical device maker, has received an equity investment from Actis, a private equity company that invests in emerging countries. Without releasing specific details, the company called the capital infusion "significant" while also disclosing that the equity purchased a minority stake. Founded in 2000, Nanjing Micro-Tech is the largest domestic company in China's endoscopy consumable sector.

Government and Regulatory

China's SFDA is considering far-reaching changes to its drug approval process. The proposals would replace the present system, which evaluates requests on a first-come, first-serve basis, moving to a system that prioritizes need. Innovative drug candidates, especially those that address unmet diseases, would be processed under new fast-track procedures. On the other hand, requests for approval of generic drugs that have multiple suppliers would be discouraged. In other words, the SFDA would respond much like the market itself, rather than treating each drugmaker request as equally important.

Trials and Approvals

Shenzhen Neptunus Bioengineering (SHE: 000078) has filed an application for a US Phase II clinical trial of Polydatin Injection. Polydatin is a Class I innovative traditional Chinese that aids microcirculation of the blood and is expected to be tested as a treatment for myocardial ischemia, cerebral ischemia, shock and other cardiovascular diseases.

Sihuan Pharmaceutical Holdings (HK: 0460) received SFDA approval to begin producing Nalmefene Hydrochloride, a generic version of the "next generation" opioid receptor inhibitor Naloxone/Naltrexone. Nalmefene hydrochloride is used to counteract opioid overdose and to protect from drug relapse. Sihuan said the drug is also effective for treating heart failure, spinal cord injuries and cerebral protection following stroke. Sihuan Pharma specializes in cardio-cerebral vascular drugs.

Disclosure: none.

Source: China Biotech In Review: Stryker Pays $764 Million For China Orthopedic Maker