China Sky One Shifts Emphasis to Generic Western Products

| About: China Sky (CSKI)

China Sky One Medical (NSDQ: CSKI) has announced a shift in corporate direction. The company said one of its subsidiaries, Heilongjiang Tianlong Pharmaceutical Company, will change its R&D focus from its traditional emphasis on external use medicines to concentrate instead on injected generic western pharmaceuticals, developing antibiotics and cardiac drugs.

China Sky One acquired Heilongjiang Tianlong in February 2008. At the time, the company was heavily involved in topical formulations of drugs, though it was already working on an injectable cardiac drug.

China Sky One paid $8.3 million to buy Heilongjiang Tianlong, which had a portfolio of 69 approved drugs (in 98 forms), plus 38 new drugs that were awaiting approval from the SFDA. China Sky One estimated that 2008 revenues for the company would be $7.5 million.

In announcing the new strategy for its subsidiary, China Sky One said the change was a response to healthcare reform. By extending insurance to more people, the reform is expected to increase demand for pharmaceutical products. Heilongjiang Tianlong hopes to supply prescription pharmaceuticals to help meet that segment of the demand.

China Sky One said antibiotics are the largest drug category in China, comprising 20% to 25% of the total expenditure for western medicines. Cancer drugs are next, and treatments for cardiac diseases are third, accounting for 15% of chemical medicines in China.

The five new antibiotics in development are:

•Cefmetazole Sodium for injection,

•Cefodizime Sodium for injection,

•Aztreonam for injection,

•Teicoplanin for injection, and

•Voriconazole Powder Solution for infusion.

The two cardiac drugs are Amrinone for injection and Milrinone for injection.

China Sky One declared it has mastered the production technology for all of the products and that it will sign up a qualified company to distribute and sell them. It hopes to obtain SFDA approval for the seven drugs “as soon as possible.”

Disclosure: none.