China Biotech Week in Review: Shanghai Pharma Plans $1.2 Billion IPO

by: ChinaBio Today

Shanghai Pharmaceuticals Holding Co. [SHEX: 601607] will stage an IPO in Hong Kong to raise 8 billion RMB ($1.2 billion) that it will use for acquisitions (see story). A state-owned enterprise, Shanghai Pharma is a rival of Sinopharm [HKEX: 1099] in the China pharmaceutical distribution business, and its IPO seeks almost the same amount as Sinopharma’s IPO in Hong Kong one year ago.

Roche Holding AG (OTCQX:RHHBY) will increase both its China investments and headcount, said Severin Schwan, CEO of the company, in an interview with The Wall Street Journal (see story). Schwan was not specific about the dollar amount of its China commitment, but headcount will grow by 25% from its current base of 3,000. As we pointed out last week, the growth in China comes as Roche is cutting back its operations in Europe and the US.

EntreMed (NSDQ: ENMD) raised $5.1 million in a private placement that featured an unusual sweetener for the investors: a 16-month option on the China marketing rights to EntreMed’s lead drug candidate (see story). The funding placed 1,886,662 units at a price of $2.70 (EntreMed closed at $3.00), each unit consisting of 1 share of stock and a three-year warrant for .2 share – the upshot being that outside of the marketing option, the transaction was structured as a normal private placement.

Eisai Pharma [TSE: 4523] announced it has begun China marketing of Glufast, a phenylalanine derived rapid-acting insulin secretagogue that stimulates insulin production (see story). In 2007, Eisai in-licensed rights to sell Glufast in 10 ASEAN countries from Kissei Pharmaceutical Co., which discovered and developed the drug. It was approved by the SFDA in November 2009.

Bayer Schering Pharma [XETRA: BAY] has launched SciLin, its recombinant insulin product, in China (see story). In June 2009, the company paid $43.5 million to Polish biotech Bioton for China rights to the drug over the next 15 years. At the time of the agreement, Bayer forecast that SciLin would generate between $1.5 billion and $2 billion of revenue in China during the life of the agreement.

Skystar Bio-Pharmaceutical Company (NSDQ: SKBI), a veterinary medicine company, expects its recently acquired manufacturing facility in Hubei Province to contribute between $4 million and $6 million in revenue per year (see story). The company paid $3.5 million for the facility, including tooling and other startup costs, in a transaction that closed in August.

China Sky One Medical (NSDQ: CSKI) reduced its guidance for 2010, blaming the shortfall on the loss of several major distributors (see story). The company said the distributors ended their relationship with China Sky One after they discovered their business information was disclosed in SEC filings. This led to increased scrutiny in China, which was enough for them to stop doing business with China Sky One.

Disclosure: none.