China Biotech Week in Review: Merck Plans Big Increase in China Sales

by: ChinaBio Today


Shanghai Pharmaceuticals Holding [SHA: 601607], one of China's two biggest drug distribution companies, is planning to increase the size of its massive Hong Kong IPO by as much as 50%: from $1.2 billion originally to $1.5 billion or $1.8 billion. The price per share remains unchanged, meaning the size of the offering will expand beyond the 25% of capitalization originally proposed.

China YCT International (OTCQB:CYIG) acquired L.Y. [HK] Biotech Ltd., a development stage company with a patent for a botanical flu treatment. To make the acquisition, China YCT transferred 44.26 million newly created shares, representing 60% of its outstanding stock, giving the transaction a value of as much as $44 million.

Shenzhen Kang Sheng Bao Bio-Technology in-licensed the right to develop diagnostic products measuring immune system activity. The company signed an agreement with SuperNova Diagnostics, a Washington DC development stage company, giving KSB the right to use SuperNova’s AmpCrystal platform to measure neopterin. Neopterin is a biomarker of immune system activity.

Big Pharma in China

Merck Serono AG, the biopharma arm of German chemical and pharma giant Merck KGaA (OTCPK:MKGAY), plans to use M&A to grow its presence in China. Although the company will soon announce the construction of its own drug manufacturing facility, Merck Serono hopes to buy local companies involved in manufacturing or distribution, according to Howard Sui, chairman and president of Merck Serono China.

John Lechlieter, CEO of Lilly (NYSE: LLY), said China currently accounts for just 2% of the company’s revenues, a figure that equates to about $230 million. But he believes the opportunities in China are great as the country becomes the second largest market for pharmaceuticals in the world (see story). For that reason, Lilly is investing heavily in China.

Merck (NYSE: MRK) plans to increase its China sales over the next two years to the point where they contribute 25% of the company’s overall revenues, according to Merck’s new CEO, Kenneth Frazier (see story). The company was the fastest growing of any multinational pharma during Q4 in China in terms of the number of units sold, Frazier said.


Hebei Huamin Pharmaceutical Co., a division of North China Pharmaceutical [SHA: 600812], will spend $168 million to build a production facility for 7-aminocephalosporanic acid (7-ACA). As the name implies, 7-ACA is used to synthesize cephalosporin antibiotics.


ICON plc (NSDQ: ICLR), the global clinical-stage CRO based in Ireland, is adding to its China facilities, opening a new office in Shanghai and increasing the space of its Beijing operation (see story). Separately, ICON said a double standard exists in China clinical trials, with different levels of quality separating trials for multinationals from those conducted for local products.


Drug prices for 162 China medications dropped an average 21% Saturday, three weeks after the price cuts were mandated by the PRC’s National Development and Reform Commission [NDRC]. In 17 cases, the reductions were for products, many of them from multinational pharmas, that had previously been free of pricing controls. However, according to research done by ChinaBio, the loss of pricing autonomy affected 17 older dosages/formulations that are no longer produced.

Disclosure: none.