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Deals and Transactions

Newsummit Pharmaceutical Group teamed up with the Cleveland Bio Fund in a $100 million effort to help US biomedical device companies to commercialize their products in China. The funds were raised in China, where Newsummit is located. Cleveland Bio Fund will identify Cleveland-area medical device companies with US-approved products. These companies will be small-to-medium sized entities that have not been able to bring their products to China. After all the candidates in the Cleveland area have been examined, the fund will widen its search to include companies from elsewhere in the US.

Cardinal Health (NYSE: CAH), the US drug distribution company, continues to hunt for M&A opportunities in China’s drug distribution sector (see story). Late last year, Cardinal Health made its first purchase in China, paying a sizable $470 million to acquire the China drug distribution business of Zuellig Pharma. In the future, Cardinal wants to combine organic growth with acquisitions to expand its presence in China.

China Resources Sanjiu Medical and Pharmaceutical [SHE: 000999] paid $65.2 million to acquire four small China pharmas. Together, the four companies produced a profit of 20 million RMB ($3.2 million) last year, yielding a purchase price of 20 times net income. The companies are Liaoning Huayuan Benxi SanYao, Hefei Shenlu Shuanghe Pharmaceutical, Beijing Shuanghe Gaoke Pharmaceutical, and Beijing Beimao Pharmaceutical.

Guangdong Zhongsheng Pharma [SHE: 002317] will spend $3.1 million to develop three new drugs to treat pulmonary fibrosis, diabetes and solid-tumor cancers in cooperation with Sichuan University and Guangdong South China Center for Innovative Pharmaceuticals. Zhongsheng Pharma owns the IP for the drugs, which have completed their pre-clinical development.

Big Pharma in China

Merck (NYSE: MRK), known as MSD outside the United States and Canada, selected a member of WuXi PharmaTech’s (NYSE: WX) board as its own Chief Strategy Director (see story). Cuong Viet Do has experience in both healthcare and M&A, in addition to familiarity with China business. From 1989 to 2006, Do was a director and senior partner at McKinsey & Company, where he worked in global healthcare and then high-tech/corporate finance in China and Asia. Because of his extensive experience in Asia, Do’s appointment underscores the significance of China and Asia to Merck.

Nycomed, the Swiss biopharma being acquired by Takeda [TSE: 4502], has bought China marketing rights of an antihistamine from Almirall SA [BMAD: ALM] of Spain. Kestine is a member of the ebastine class of H1 inhibitors that do not cause drowsiness in users. At the same time, Takeda announced the closing of its $13 billion takeover of Nycomed, giving Takeda increased access to emerging markets such as China.

Industry Insights

For the first seven months of 2011, the production value of mainland China’s pharmaceutical industry was up 29.6% compared to the same period last year, according to the National Development and Reform Commission. Total output was 802.4 billion RMB ($125 billion). All the sectors of the industry showed healthy gains. If the industry continues at its present pace, full-year 2011 output would equal 1.375 trillion RMB ($215 billion).

Trials and Approvals

Sinovac Biotech (NSDQ: SVA) received a production license for RabEnd, its inactivated animal rabies vaccine, from China's Ministry of Agriculture, the final step in the approval process for the vaccine (see story). Sinovac has already assembled a sales force to help launch the product. The vaccine will be the first of Sinovac’s planned foray into animal health vaccines.

Disclosure: ChinaBio has a business relationship with Merck.

Source: China Biotech Week In Review: Sinovac Begins Foray Into Animal Health Vaccines