China Biotech Week in Review: VC Investment to Hit New High in 2010

by: ChinaBio Today

“Venture capital investment in China life science in 2010 will reach new highs,” said Greg Scott, CEO and Founder of ChinaBio LLC, “reaching almost $700 million. More than half of that will go towards drug development,” he added (see story). To put that in context, the prior high was $400 million in reported fundings in 2007. In between 2007 and 2010, the financial crisis reduced activity. Scott made his comments in his address “The State of China Biotech,” which he delivered to the third BioBay Investor Forum, held November 3-4 in the BioBay life science park in Suzhou, China.

Yunnan Walvax Biotechnology completed its IPO on the Shenzhen ChiNext Exchange, pricing 25 million shares at 95 RMB each ($14.32) (see story). The offering raised 2.375 billion RMB ($358 million). In open market trading, investors pushed the shares substantially higher. Walvax opened at 150 RMB and closed at 136.35, a gain of 44% for those who participated in the offering. The rise gives Walvax a market capitalization of 13.6 billion RMB ($2 billion).

Merck (NYSE: MRK) wants to be either number one or two in China’s healthcare market within the next five to seven years (see story). Much like all the major multinational pharmas, Merck is de-emphasizing its old business model, based on patented blockbuster drugs for Western markets, and turning to emerging markets for its future growth. The company wants emerging markets to generate one-fourth of all revenue by 2013, up from 18% currently.

Hutchison MediPharma, a subsidiary of Chi-Med [AIM: HCM], announced a $12.5 million investment from Mitsui & Co., which received convertible Preference Shares that convert into 12.2% of Hutchison MediPharma (see story). The transaction implies a $100 million valuation for the company, which is the drug discovery arm of Chi-Med. MediPharma said the money would support its various drug development programs.

China Cord Blood Corporation (NYSE: CO) priced a secondary issue of 8,050,000 ordinary shares at $4.50 per share, a steep 20% discount to the previous close of $5.66 (see story). Shareholders didn’t like the size of the discount and reacted by selling off their holdings of the company. The shares plunged $1.69 lower to $3.97, a 30% loss on very heavy volume.

Huifeng Bio-Pharmaceutical Technology (OTC:HFGB) raised $3.9 million in financing for a new Diosmin processing plant (see story). Diosmin is a TCM nutritional supplement given to treat chronic venous insufficiency and hemorrhoids. The new facility will have the capacity to produce 500 tons of Diosmin each year, raising the company’s capacity to 600 tons, and generating up to $20 million in revenue annually.

WuXi PharmaTech (NYSE: WX) reported impressive Q3 results, showing that the Shanghai-based CRO is continuing to prosper on all fronts (see story). The company said its revenues were 20% higher than the year-earlier quarter at $83.8 million, and non-GAAP net income rose 27% to $22.4 million. GAAP numbers were even higher as WuXi booked a $30 million breakup fee from Charles River Labs (NYSE: CRL), which decided in Q2 not to proceed with its acquisition of WuXi PharmaTech.

Bayer Schering Pharma (OTC:BYERF) signed an agreement to conduct joint research on a biodegradable injection drug delivery system with the National Pharmaceutical Engineering Research Center (see story). NPERC is a subsidiary of the Shanghai Institute of Pharmaceutical Industry (SIPI). Financial terms were not disclosed.

A malaria drug manufactured by Guilin Pharmaceutical Co. was added to the list of WHO Prequalification drugs (see story). Artesunate 60mg powder for injection is given to patients with severe forms of malaria who may be either unconscious or likely to vomit an orally administered drug.

China Medical Technologies (NSDQ: CMED) was granted approval by the SFDA for its real-time PCR-based Epidermal Growth Factor Receptor Assay (see story). The EGFR PCR Assay is used to detect the 28 most common mutations in the EGFR gene in patients with non-small cell lung cancer, predicting the efficacy of targeted cancer drugs. EGFR abnormalities have been found in approximately 85% of NSCLC patients who responded to Iressa or Tarceva.

MicroConstants China Inc., a Beijing CRO that specializes in bioanalytical and pharmacokinetics research, reported that the China National Accreditation Service for Conformity Assessment (CNAS), has accredited its laboratory based on ISO-17025 guidelines (see story). Established in 2007, MicroConstants China has been GLP-compliant since April 2009.

Disclosure: none.