The healthcare market in China is certainly growing, and so are the companies that serve the market, though the parameters used to measure that growth may differ for each biopharma. For public companies, the quarterly earning statement delivers a significant analysis of a biopharma’s measure of success, and last week, China biopharmas continued to roll out Q1 reports that were remarkable for their uniformly positive news. But for private companies, the metrics have to be different. In ChinaBio Today last week, we published examples of both types of stories.
GenePharma, a young and growing private company that provides research tools to the hot siRNA market, was the subject of a profile that included an exclusive interview with its founder and CEO, Dr. Peter Zhang (see story). GenePharma has recently made two announcements that testify to its ambitious plans: the company is opening a new manufacturing a facility in BioBay Park near Suzhou, and it acquired a patent license from Alnylam (NSDQ: ALNY). The patent license allows GenePharma to sell its siRNA products worldwide. Combining low prices with excellent service – and an explosive market for siRNA products – GenePharma is well-positioned for growth. The company is also a textbook example of the sea turtle phenomenon, the convergence of recent historical and economic trends that has made China a preferred location for siting biopharma enterprises.
No fewer than four China-based, American-listed biopharmas disclosed their Q1 financial reports during the last week. Each announced revenue growth of at least 39%, and two were able to say their sales had more than doubled.
China Sky One (OTCPK:CSKI), with a remarkable 140% jump in revenue ($12.4 million) and a 170% climb in net income ($3.9 million), wins the Most Improved award for companies reporting this week (see story). To continue its growth, China Sky One completed two acquisitions in the beginning of Q2 that will continue its growth. One acquisition, Heilongjiang Tianlong Pharma, is a competitor of China Sky One in the niche of externally-applied (patches, sprays, ointments) drugs, and the other addition, Heilongjiang Haina Pharma, has a Good Supply Practice license that allows distribution of drugs. Meanwhile, China Sky One continues to expand its in-vitro diagnostic test offerings, and the company is applying for listing on the American Stock Exchange. Presently, China Sky One is listed on the OTC Bulletin Board.
For vaccine maker Sinovac Biotech (AMEX: SVA), revenues climbed 123% to $8.9 million (see story). Profits were almost as strong: they came in 106% higher at $1.6 million. In Q1, Sinovac’s success was dependent upon the success of its hepatitis A vaccine, Healive. The company also tantalized investors with news that its future revenues could receive a boost from upcoming sales of its avian flu vaccine to China’s stockpile and progress of a more-effective pandemic flu vaccine in clinical trials.
3SBio (NSDQ: SSRX) reported that its revenues moved 57% higher ($7.9 million), which was accompanied with a much smaller 22% increase in net income ($2 million) (see story). 3SBio is largely dependent on just two biotech products: recombinant human erythropoietin and recombinant human thrombopoietin. Because it spent heavily to promote these products, profits suffered. The company is developing a second-generation EPO product while it conducts clinical trials of a high-dose EPO drug and a new indication for its TPO product. In mid-March, 3SBio began a $20 million share buy-back, which has helped the price of its shares.
China Medicine Corp. (OTCPK:CHME) announced a 39% increase in revenues ($7.1 million) while net income rose 57% to $1.2 million (see story). The company attributed its improved results to deeper penetration of rural markets in its home base of Guangdong Province and its success in online bidding processes. The company has two products in development, one for chronic obstructive pulmonary disease and the other an animal feed additive. Management of China Medicine, pointing out that Q1 is traditionally the slowest quarter of the year, predicted year-over-year growth of at least 30%, which would equal revenues of $55 million.
There were other news announcements last week in China biopharma that also point toward continued growth:
• Simcere Pharma (NYSE: SCR) was granted SFDA approval for a first-to-market generic Biapenem injection (see story). The antibiotic, a member of the carbenicillin family, will have four years of protection from competition under China rules.
• Sinobiomed (OTC:SOBM.OB) is set to begin a Phase II trial of its malaria vaccine candidate in Thailand (see story). The cost of the trial is being underwritten by a government program that seeks to promote innovative products in China.
• Tianyin Pharma (TYNP.OB) won official tenders in four China provinces for its Ginkgo Mihuan Oral Solution, a traditional Chinese medicine indicated for sequelas of cerebral thrombosis, coronary heart diseases and myocardial infarction (see story).
And finally, one China biopharma reported a negative consequence of Monday’s hugely destructive earthquake in China. Tongjitang Chinese Medicines Company (NYSE: TCM) of Shenzhen said that the water system of its Guiyang manufacturing facility was compromised in the earthquake, leaving the company uncertain of its purity (see story). The Guiyang factory produces Xianling Gubao [XLGB], a traditional Chinese medicine for osteoporosis that is Tongjitang’s main source of revenue. Until purity of water can be assured, the company will cease production at the facility.