Simcere Pharma Follows Diversified Expansion Strategy

| About: Simcere Pharmaceutical (SCR)

Simcere Pharmaceutical Group (NYSE: SCR) has entered an agreement to pay 195.5 million RMB ($28.8 million) for a 37.5% stake in Jiangsu Yanshen Biological Technology Stock Co., Ltd., a vaccine maker. Jiangsu Yanshen's major products include an influenza vaccine and a rabies vaccine (vero cell) for humans. The two products have the second and the fourth largest market shares in China respectively. Simcere did not release annual revenues for Jiangsu Yanshen.

Also, Jiangsu Yanshen has received a new medicine certificate from the SFDA for a freeze-dried human use rabies vaccine (vero cell), and it has completed clinical trials of its purified hepatitis A inactivated vaccine (vero cell). Jiangsu Yanshen is waiting for SFDA approval for the hepatitis A vaccine and GMP certification for the new manufacturing facility that will produce it.

Simcere is following a diversified strategy as it expands. The majority of its current products are hospital-sold first-to-market branded generics. The company’s legacy products are chemotherapies, treatments for stroke, antibiotics and other products.

In the past six months, Simcere has been following a different direction, announcing two deals with monoclonal antibody companies. One week ago, it signed an agreement to acquire 35% of Shanghai Celgen Bio-Pharmaceutical Co., Ltd. for 140 million RMB ($20.6 million). Shanghai Celgen’s major product is a biosimilar drug, etanercept which is marketed outside China as arthritis drug Embrel and is currently awaiting SFDA approval. In December 2008, Simcere agreed to collaborate with Epitomics, a US-based company with a proprietary humanized rabbit monoclonal antibody technology, to develop and produce monoclonal antibodies that treat multiple tumors.

Now, Simcere has bought a stake in a company that focuses on vaccines. Jinsheng Ren, Chairman and CEO of Simcere, called the vaccine market “one of China's key emerging industries.”

Simcere retains much of the cash generated by its 2007 IPO on the New York Stock Exchange. It ended Q1 with $121 million of cash on its books.

Disclosure: none.