During the last week, we confirmed that China will shorten its IND approval time by more than one half, reducing the target for approval to four months from a range of eight to twelve months. Also confirmed was that the US FDA will start accepting all-China data as a basis for approval of drugs (see story). The news will have the effect of increasing the allure of conducting clinical trials in China.
In light of those announcements, it is not surprising that Parexel International (NASDAQ:PRXL), the CRO powerhouse, increased its presence in the China CRO market by acquiring Apex International Clinical Research Co., Ltd of Taiwan. Parexel paid $50.9 million for 93.9% of the outstanding shares. The Massachusetts company has owned a minority stake in Apex for the past four years. Apex has established offices throughout the Asia-Pacific region, including mainland China and Hong Kong. Parexel is a worldwide CRO, but it now has upped its in-house facilities in Taiwan, China and the Asia-Pacific region.
In a press release, Josef von Rickenbach, Chairman and Chief Executive Officer of Parexel, said clients were demanding services in the Asia-Pacific region because of the markets there, plus the sophisticated healthcare systems and highly trained professionals in the region. He did not mention the cost savings. In a recent interview published in BioSpectrum, Albert Liou, Chairman and CEO of Apex International, said that each country has its strengths and weaknesses as a site for clinical trials, but China has the best outlook overall. Within three to five years, it will be one of the top five markets in the world, he said, so companies will develop products in China to meet the needs of its vast population. In its fiscal 2007, ended June 30, Parexel reported revenues of $742 million, up 21%, and net income of $37.3 million, an increase of 53%. Its CRO revenues were $549 million. Although Apex will be part of Parexel for only three weeks of its first quarter, Parexel said the new division would add $1 million in revenue in that quarter and up to $17 million for the 2008 fiscal year.
In other news, Shengtai Pharmaceutical (OTCPK:SGTI) reported record results for its 2007 year, which ended June 30. Shengtai is trading at a cheap earnings multiple while growing quickly. But the financial history of the company may give investors pause (see story).
Laiyang Jiangbo Pharmaceuticals of Shandong will execute a reverse merger with Genesis Technology Group [GTEC.OB]. In its fiscal 2007 (ended June 30, 2007), Laiyang Jiangbo was very profitable, earning $22 million on $76 million of revenue. Shareholders of Laiyang Jiangbo Pharma will be issued stock equivalent to 75% of the new Genesis Technology, making the transaction worth $81 million to them (see story).
WEX Pharmaceuticals [WXI.TO], a Vancouver-based company with most of its operations in China, reported it will publish a post hoc analysis of a Tectin trial in a peer-reviewed journal. Tectin (tetrodotoxin), which was discovered in China and bought by one of WEX’s China subsidiaries, is a highly toxic substance, derived from the puffer fish. It seems to be useful in small quantities to treat addiction withdrawal and to relieve pain. The drug has not performed well in clinical trials, however, forcing WEX to depend on the post hoc analysis. Unfortunately, WEX has run out of money so that it cannot begin the trial (see story).
Ranbaxy Laboratories of India is seeking a joint venture partner in China. The new enterprise will supply active pharmaceutical ingredients (APIs) to Ranbaxy in an effort to cut costs. The company says it is talking to two or three API manufacturers, but it is not planning an outright acquisition. Although Ranbaxy has three facilities in India to supply APIs, it sources some of its APIs in China and apparently wants to create a facility to increase its China sourcing (see story). Next week, China gets back to work after taking the last week off for National Day.