China Biotech Week In Review: Avenue Capital Starts $313 Million Fund For China Medical City

Includes: MDT, MKGAF, MRK, SHP
by: ChinaBio Today

Deals and Financings

Avenue Capital Group, a New York-based hedge fund and private equity investor, has teamed up with China Medical City in Taizhou to form a healthcare industry investment fund. It plans to raise $313 million, half of which will be available by the end of this year. The PE fund will invest in CROs, biopharmas, drug distributors, medical device makers and hospital companies – all of them located in China Medical City.

Merck (NYSE: MRK), known as MSD outside North America, has formally launched a collaboration with BGI, the Shenzhen-based genomics powerhouse (see story). The two companies will seek to discover and develop biomarkers as a means toward drug discovery, drug development and diagnostics applications. In September 2010, the two entities signed an agreement to explore ways to work together, and this partnership is the result.

ShangPharma (NYSE: SHP), a Shanghai CRO, announced it will partner with Jiangsu Hengrui Medicine Co. to develop novel therapeutic monoclonal antibodies (mAbs) (see story). The partnership will focus on a specific therapeutic area, which was not disclosed. The agreement was signed between Hengrui and ChemPartner, a ShangPharma subsidiary that also has staff dedicated to pharma projects with Lilly (NYSE: LLY).

Merck Serono [XE: MRK], the biopharma division of Germany’s Merck KGaA (OTCPK:MKGAF), announced a strategic partnership with Pharmaron, the US-China CRO. Pharmaron has opened a new Beijing facility that will be Merck Serono’s China R&D lab. It will be tasked with developing new drugs for cancer and neurodegenerative diseases. Pharmaron is supplying Merck Serono with staff, as well as the physical facilities.

HealthLinx [ASK: HTX], an Australian IVD company, has struck a deal with China CRO CytogenDx to seek SFDA approval for OvPlex, a HealthLinx clinical-stage diagnostic test for ovarian cancer. OvPlex measures plasma levels of anterior gradient protein 2 (AGR2), a new ovarian cancer biomarker. In a recent test, OvPlex was more accurate than CA125, the current IVD tool for ovarian cancer.

Company News

Covidien (NYSE: COV) will build a medical device R&D center in Shanghai’s Caohejing Hi-Tech Park that will be operational by July 2012 (see story). The company’s R&D staff in China will jump from 25 at present to over 300 when the 100,000 square foot facility is finished. Covidian, which is headquartered in Dublin, but has most of its managing operations in the US, is comprised of three life science divisions: medical devices, pharmaceuticals and medical products.


Dr. YouYou Tu of the China Academy of Chinese Medical Sciences in Beijing was given the 2011 Lasker Award for work that led to the discovery of artemisinin, the world’s foremost treatment for malaria. Dr. Tu’s investigations, conducted 40 years ago, scoured ancient literature for TCM recipes that would be effective against the deadly disease. One of these, described originally 2000 years ago, seemed especially promising. It became the world's most effective treatment for malaria, artemisinin.

Government and Regulatory

China’s policy of forcing drug costs lower has caused a major problem: shortages. The price of an important drug used following cardiac surgery, protomine sulfate, dropped to the point where companies could not make a profit. Not surprisingly, pharmas stopped producing protomine sulfate, and several areas of China are in short supply of the vital medication. Even though the situation first surfaced three months ago, it still persists.

Disclosure: ChinaBio has relationships with Pfizer (NYSE:PFE) and Merck.

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