Sinovac Closes Deal on New Manufacturing Facility

| About: Sinovac Biotech, (SVA)
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Sinovac Biotech (NSDQ: SVA) has finalized a deal to acquire a medical manufacturing site and land use rights in the Changping area of Beijing. The site, which includes five buildings previously used to produce medical products, is about a half-hour’s drive from Sinovac’s existing Beijing facility. Sinovac will pay 120 million RMB ($17.6 million), of which 56.5 million RMB ($8.3 million) is due before February 20, 2010 with the balance to be paid over three years.

Although Sinovac said the purchase will be paid from working capital, the company closed a secondary offering earlier this month that raised $54 million.

Sinovac’s financial fortunes took a remarkable upswing in the second half of 2009. The H1N1 flu outbreak transformed the company’s flu vaccines from marginal revenue-producers to major contributors, giving the company a new revenue stream while sales of its traditional products, vaccines for hepatitis A and B, remained level.

The five existing buildings in the new purchase total 32,323 square meters of floor space on 29,000 square meters of land. Sinovac will build two new production lines with a combined annual production capacity of approximately 40 million doses, a filling and packaging line, a warehouse and an animal house. The company said it will take two to three years before the new facility is operational and approved.

In the new plant, Sinovac plans to manufacture its flu vaccines along with a newly developed vaccine for enterovirus 71 (EV71), which causes hand, foot, and mouth disease (HFMD). Sinovac filed in December 2009 for SFDA permission to begin clinical trials of the vaccine.

Also in late 2009, Sinovac announced a new JV with Dalian Jin Gang Group that will help the company expand its product portfolio. The new entity, Sinovac (Dalian) Vaccine Technology Co., will research, develop and produce attenuated vaccines and vero cell cultured vaccines for rabies, mumps, varicella, and rubella. The JV’s facility will have capacity for 20 million doses of vero cell cultured vaccines and 20 million doses of live attenuated vaccines.

Disclosure: none.