China Biotech in Review: China Releases Official Health Reform Plans

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 |  Includes: BSPM, CSKI, CVD, SNBP, SVA
by: ChinaBio Today

The big news coming out of China life science last week was the official unveiling of the country’s health reform plans, both the long-term plan ending in 2020 and the more immediate three-year program that culminates in 2011. By 2020, China has set a goal of providing a basic health-care system that can provide safe, effective, convenient and affordable health services to urban and rural residents (see story). Significantly, the long-range plan puts financial responsibility for health care on the government, shifting away from the previous model of a profit-making system.

The three-year plan (2009-2011) is more detailed. It specifies the first steps the country will take toward attaining the long-range goals (see story). Although pieces of the plan have been seeping out for months, the latest announcement contains major construction plans for the first time. The three-year plan also contains provisions for 850 billion RMB ($124 billion) of spending that will provide universal health insurance, a system of essential drugs, better primary health care facilities, access to basic public health services for everyone and a pilot program for reformed state-run hospitals.

Meanwhile, government support for technological research is continuing. China will support a stem cell project, helping to build the largest center in Asia dedicated to developing uses for stem cell technology (see story). Minister of Health Chen Zhu said the technology has huge potential, and China would like to be a leader in the new field. The Jiangsu Stem Cell Bank, located in Taizhou and operated jointly by China Medical City and Beike Biotech, can contain stem cells from 100 thousand people currently. The new construction, which will increase capacity to one million sets of stem cells, will cover 20,000 square meters and include a clinic.

BioDuro announced an expansion of its strategic partnership with Roche (Switz: ROG) to support discovery phase research efforts at Roche’s global research sites (see story). BioDuro will provide discovery chemistry and biology services, with the goal of shortening Roche’s drug discovery timelines. Separately, BioDuro noted that the economic crisis has kept companies short of cash, causing them to focus on late-stage projects and putting discovery stage projects on hold. BioDuro says it is well-positioned to weather the downturn, because it isn’t caught in the middle of expensive expansion plans. To counteract the cash squeeze being felt by its clients, BioDuro will strive to be 30% more efficient in its quality and efficiency.

ReSearch Pharmaceutical Services (RPS), a US-headquartered international CRO, will acquire Paramax International for $1 million and 530,973 shares of RPS common stock (see story). Paramax is a Beijing-based CRO that also has offices in other China cities. RPS positioned the acquisition as an expansion of its global CRO business. The company bought three European CROs in late 2008, and it has operations in Central and South America as well. Paramax is the company’s first foray into Asia.

In terms of corporate development, Covance (NYSE:CVD) announced its Shanghai central laboratory has received accreditation from the College of American Pathologists (CAP) (see story). The CAP accreditation, according to Covance, represents the highest standards of excellence in patient safety and efficient drug development. The award puts its Shanghai central laboratory in an exclusive group of international laboratories that are recognized for their excellence.

Sinobiopharma (OTC:SNBP) filed for a China patent covering capsule forms of new drug compounds containing Perindopril, an angiotensin-converting enzyme (ACE) inhibitor (see story). ACE inhibitors are used to treat high blood pressure (hypertension) and heart attack in people with coronary artery disease. Sinobiopharma says it is the first company in the world to manufacture and market Perindopril in capsule form.

Sinobiopharma also announced that it has entered into a two-year export deal with Kingchem, a US-based international marketing organization that specializes in custom manufacturing and sourcing of pharmaceuticals (see story). Kingchem will act as Sinobiopharma’s agent to find a US partner to co-develop Sinobiopharma's China patented version of Cisatracurim besylate, a non-depolarizing pre-surgical skeletal muscle relaxant, for use in the US.

On the earnings front, Sinovac Biotech (NASDAQ:SVA) said revenues from its vaccines rose 39% in 2008 to $46.5 million, while net income increased by a relatively small 5% to $8 million (see story). A full 88% of the company’s 2008 sales came from Healive®, its hepatitis A vaccine that has long been Sinovac’s mainstay product. Sinovac said it expects 2009 revenues to increase a further 20% to a range of $55 million to $60 million.

Biostar Pharmaceuticals (NASDAQ:BSPM) reported that 2008 revenues more than doubled to $33.9 million while net income rose 69% to $6.7 million (see story). That is equal to 22 cents per share, fully diluted. The earnings-per-share figure was only a nominal improvement over last year’s 19 cents. Biostar, which operates in China through Shaanxi Aoxing Pharmaceutical Company, an herb-based medicine company, attributed the revenue gains to its marketing programs.

And finally, China Sky One Medical (OTCPK:CSKI) went public with an announcement intended to reassure investors that the company’s failure to file its most recent financial reports is only a technical issue, and does not imply any fundamental problems with the company (see story). On March 31, 2009, China Sky One asked the SEC for an extension on the deadline to file its Q4 and full-year 2008 financials. The company revealed the problem is a non-cash accounting issue.

Disclosure: none.