China Biotech in Review: A Designated Hotspot

by: ChinaBio Today

The day-to-day news emanating from the China biomedical world is usually fairly company-specific – product advancements, in- and out-licensing, quarterly earnings announcements and, once in a while, an IPO. PriceWaterhouseCoopers cut through all of that to ask a really big question: which Asian country should you choose as the most advantageous as an outsourcing partner or to place a new biomedical facility? (see story). Cost is certainly a major consideration, but as PWC points out, it’s not the only one. Certainly, any biomedical company needs to consider the country’s market. It also must look into the harder-to-determine questions of safety. Safety includes IP protection, but it also must address the matter of a country’s overall stability. When PWC looked at the countries of Asia, it found out that a country could excel in one area – say, cost – but offset that advantage with drawbacks in some other area, often safety. To help executives look at the broad picture rationally, PWC scored each country in the various categories and put together a weighted ranking. China was one of the three countries to be favorably designated a “hotspot,” as were India and, surprisingly, Singapore. The report, entitled “The Changing Dynamics of Pharma Outsourcing in Asia” (copy here), does more than construct its weighted index. It also discusses the status of each county’s biomedical development, making interesting observations along the way about the state of biomedical development in Asia.

Another story with broad implications that surfaced last week was the tainted infant formula scandal, the latest iteration of product-safety, ineffective-regulation stories coming out of China (see story). Four children have now died, while more than six thousand have fallen ill, some of them seriously. The Ministry of Health has located the problem in melamine, a chemical that was added to milk to raise the protein readings (though not the actual level of protein) in milk that was diluted with water. Long-term use of the tainted formula leads to kidney stones. According to the MOH, manufacturers were not aware of the problem because they do not test for melamine. The chemical seems to have been added in collection stations, the middlemen between milk producers and formula manufacturers. A total of 22 infant formula companies recalled their products. Sanlu is the company that seems to be the center of the scandal, in part because of allegations that it has been aware of the problem for some months. Sanlu is 43% owned by the New Zealand dairy company Fonterra Group. Synutra International (NASDAQ:SYUT), which is listed in the US, is one of the 22 companies that will recall all or part of its infant formula products.

Moving on the company-specific news, China Biologic Products (NASDAQ:CBPO) announced it received permission from the SFDA to begin a clinical trial of its new Human Coagulation Factor VIII product [FVIII], a coagulation treatment for hemophilia and mass hemorrhaging (see story). China Biologic is one of four suppliers in China of Cryoprecipitate, the key raw material for FVIII. The company has been supplying Cryoprecipitate to Green Cross China, and Green Cross has used the product to produce FVIII. From the start of the Green Cross contract, China Biologic’s longer-term plan was to work toward producing FVIII on its own.

Sinovac Biotech (NASDAQ:SVA) has licensed the Biolik Biopharmaceutical Company, a Ukraine-located vaccine manufacturer, to conduct clinical trials of Healive, Sinovac’s inactivated hepatitis A vaccine, in the Ukraine (see story). Biolik, which will market and distribute Healive in the Ukraine after it obtains regulatory clearance, estimates the eventual Ukraine market for Healive at $10 million annually. Biolik manufactures and distributes immunobiological and medical products to the Ukraine as well as all of the countries that once constituted the USSR, including Russia. The Healive initiative, however, seems aimed specifically at the Ukraine, at least at first.

There were two stories last week about the use of TCM-based products in the west. Xel Pharmaceuticals of Utah is developing a transdermal patch to deliver Huperzine A, a TCM drug used for dementia, as a potential treatment for Alzheimer’s disease (see story). The company has produced a prototype patch that delivers 400-800 mcg of Huperzine A per day for up to seven days. Xel says the drug inhibits acetyl cholinesterase. Several cholinesterase inhibiters drugs are in use against early to mid-stage forms of Alzheimer’s.

A second TCM medication, derived from the Thunder God vine, is being developed by Phytomedics of Jamesburg, New Jersey (see story). The company is currently testing its formulation, known as PMI-001, in a Phase III trial. In China, the drug is taken for excessive menstrual periods or autoimmune diseases, including rheumatoid arthritis, multiple sclerosis, and lupus. PMI-001 is an oral drug, protected by six patents, that has shown anti-inflammatory and immunosuppressant effects. The drug inhibits IL-2, IL-6, a-TNF, i-NOS, and COX-2 gene transcription, all of which are targets of other arthritis drugs.

China Sky One Medical (OTCPK:CSKI) reported it has successfully completed the first phase of examinations for the Conformité Européenne [CE] certification, or CE mark (see story). If granted, the CE mark will give the company the ability to sell its OTC medical products in the European Union. China Sky One submitted its application for CE certification in May, 2008. The company hopes to begin exporting to Europe this year. China Sky One has a rapidly portfolio of OTC drugs, most of them applied topically.

On the financial front last week, China Biopharma [CHBO.OB] announced it completed a 1-for-100 reverse stock split that included a new stock symbol (see story). The company distributes vaccines in China. Because margins in that field are very low, China Biopharma is negotiating to carry the higher margined niche products of several manufactures. Before the reverse split, the company’s shares were listed at a price of $.0005. That equates to a post-reverse-split price of $.05, and the stock ended the week’s trading one cent lower, a 20% drop, at $.04.

And finally, China Pharma Holdings (NYSEMKT:CPHI) forecast a 40% to 45% increase in its Q3 revenues (see story). That would be an improvement on Q2, during which revenues climbed 32%. The only analyst who follows China Pharma is on record as expecting only a 33% gain in Q3. An increase from there to 40% growth would take the company’s revenues an extra $500,000 higher to approximately $11.5 million. China Pharma is currently producing 17 off-patent drugs. It is developing an additional nine products, which includes two products that are currently awaiting SFDA approval.

Disclosure: none.