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Biopharmaceuticals China News is a monthly report with 12 issues per annum published by CCM International Limited. It's your gateway to know what is happening in China Market. Key columns include Investment Focus, Governmental Policies,Market Dynamics,and Technology & New Products,etc. If you are interested in this newsletter or ask for the latest sample, please contact emarket2@cnchemicals.com or 86-20-38767072.
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Copyright © CCM International Limited
Biopharmaceuticals China News
Vol.1 Issue 1. 2010
Biopharmaceuticals China News
Vol. 1 Issue 1. 2010 Publication date: 4 May, 2010
Investment Focus 1 Potential investment opportunity in China’s vaccine industry2 Resources (holding) integrates Beijing Pharmaceutical Group
Govermental Policies3 Updated Pricing Drug List by NDRC comes into force3 Procurement and Distribution Rules of Essential Drugs to issue in 2010
Market Dynamics4 Hualan’snetprofitsoars229.10%in20095 Huge potential in China’s diabetes treatment market7 China Securities Pharmaceutical Index hits record high7 TotaloutputofCeftriaxoneSodiumhitarecordhighin20099 BeijingOriGenewonUSD16millionventurecapital9 Lilly’sMulti-DrugResistantTuberculosisPlaninChina10 Hepalinkratifiedtobelisted
Technology&NewProduct11 CephalosporinOxazineAmidineproducedbyBaiyunshanPharmaceuticalobtainsUSP
NewsinBrief12 Sanofi-AventisbuildsresearchcenterinChina12 Novartis(China)publicizesdiabetestreatmentbreakthrough12 Fosun’snetprofitup91.3%inQ1201012 Bayer Schering Pharma (China) upgrades 12 Biopharmaceutical output value in Jiangsu to exceed USD73 billion in 2012
CONTENTS
Despiteofglobalfinancialcrisiswhichresultedinnegativeeffect on most industries in the world,China’spharmaceuticalindustrywitnessedsounddevelopmentin2009,thankstoimplementationofnationwideHealth Care Reform. Some biopharmaceutical enterprises achieved splendid performance in2009,suchasHualanBiological Engineering Inc., the largest blood product and
Welcometo theApril issueof Biopharmaceuticals China News,speciallypublishedbyCCM International.
vaccine producer in China, achieved net profitgrowthofUSD89.1million,up229.40%yearonyear.
In order to guide health and sustainable development of China’s pharmaceutical industry, Chinese government successively issued related policies, such as Pricing Drug List by National Development and Reform Commission, Procurement and Distribution Rules of Essential Drugs, etc. These policies are bound to facilitate the progress of pharmaceutical industry, especially biopharmaceutical industry. China’spharmaceuticalindustrywillcontinue its development momentum and boominthefollowingseveralyears.
Biopharmaceuticals China News
Vol. 1 Issue 1. 2010 Publication date: 4 May, 2010
■ TheconfidencebankruptcytowardChina’svaccinesafetyafteraseriesofincidentsbrokeoutinrecent months provided great potential investment opportunity for foreign pharmaceutical companies in China’s vaccine industry.
■ CooperatedwithBeijinggovernment,Recources(holding) integratedpharmaceuticalassetofBeijingPharmaceuticalGroupCo.,Ltd.onApr.2nd,2010.
■ TheupdatedPricingDrugListbyDevelopmentandReformCommissioncameintoforceonApr.1st , 2010.
■ StipulationsforProcurementandDistributionofEssentialDrugsinChinawillbeissuedin2010.
■ Hualanrealizednetprofitgrowthof229.40%in2009,mainlyaidedbyincreasedplasmadosageinbloodproductsandrisingdemandforvaccineinQ32009.
■ Huge potential market exists in China’s diabetes treatment market as China has the largest numbersofdiabetespatientsthroughouttheworld.
■ Aidedbyexcellentperformanceofbiopharmaceuticalcompanies,ChinaSecuritiesPharmaceuticalIndex,onApr.12th,2010,hitrecordhigh,closeto6125.0.
■ ExportquantityandpriceofCeftriaxoneSodiumhashitarecordhighsince2008, thankstothriving clinical demand, improving of total CS output and intensifying the efforts on oversea markets exploitation.
■ OnMar.17th,2010,BeijingOriGenewonUSD16millionventurecapital for itsTrueMABTMproject.
■ CooperatingwithZhejiangHisun,LillystartedtoimplementitsglobalMDR-TBplaninChinaonMar. 23rd, 2010.
■ InApr.2010,Hepalinkhasbeenformallyratifiedtobe listedbyChinaSecuritiesRegulatoryCommission.
■ OnApr.11th,2010,CephalosporinOxazineAmidinedevelopedbyBaiyunshanPharmaceuticalsuccessfully obtained USP.
BiopharmaceuticalChinaNewsataglance
Main companies mentioned in this issue
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com1
Investment Focus
Potential investment opportunity in China’s vaccine industry
TheconfidencebankruptcytowardChina’svaccine
safety after a series of incidents broke out in recent
months provided great potential investment
opportunity for foreign pharmaceutical companies
in China’s vaccine industry. For instance, nearly
100 children in Shanxi Province died from the
unqualified vaccine injected; another case is that
unqualified vaccine produced by Jiangsu Ealong
Biotech. Co., Ltd., the first vaccine producer in
Jiangsu Province, flooded in Jiangsu’s vaccine
market.
These incidents result in the absence confidence
ofChinesepeople towardshomemadevaccine
safety and governmental credibility, and quality
assured vaccines are urgently needed in China.
Thus, foreignpharmaceutical companies,with
theadvantageof superior technology,won the
potential investment opportunities in China’s
vaccine industry, such as exporting qualified
vaccines toChina, cooperatingwithdomestic
p h a r m a c e u t i c a l p r o d u c e r s b y p r o v i d i n g
technology, etc.
In the future,vaccinebasicsmarketwhichwas
monopolized by state-owned enterprises is
likelytobeco-sharedbyforeignpharmaceutical
companies, such as some foreign pharmaceutical
companies have invested into BCG vaccine and
PoliovaccinewhichbelongtocatalogueofChina’s
immunizationprograms,accordingtotherevised
industrial Catalog Guiding Foreign Investment in
2007.
Chinese government has a l lowed fore ign
pharmaceutical companies to co-investwith
domestic vaccine producers in China’s vaccine
industry. InSep.2009,GlaxoSmithKline, the
second largest pharmaceutical company in
theworld, cooperatedwith JiangsuWatoson
BiotechnologyLtd.which focuses onhuman
vaccine R&D, production and sales in China, to
haveinvestedUSD53.97millioninChina’schildren
vaccine industry and established a joint venture in
China,withGlaxoSmithKlineholding65%stocks.
Accordingtothe investmentplan,theplantwill
manufacturemeasles-rubella-mumpscombined
vaccines,akindofchildrenvaccine,whichfallinto
the catalogue of National Vaccination Program, as
wellasotherchildren’svaccine.
InNov.2009,NovartisPharmacyLtd., thesecondlargestflu
vaccineproducer in theworld,alsoenteredChinesevaccine
industryby expendingUSD124.63million topurchase85
%stocksofZhejiangTianyuanBioPharmaceuticalCo.,Ltd.
(Tianyuan), the second largest flu vaccine supplier in China. ’
Atpresent,Chinaisthethirdlargestpharmaceuticalmarketin
theworld.Inthefuture,NovartiswillprovideTianyuanvaccine
technology includingtechnologyof influenzavaccine,rabies
vaccine, etc., for the purpose of Novartis’s vaccine production
localization,andNovartis’sstrategictargetistobecomealeader
inthefast-growingvaccineindustryinChina.’saidMr.Vasella,
CEOofNovartisinNov.2009.
Theabove-mentionedfactsindicatethatinvestmentrestriction
for foreign pharmaceutical companies in China’s vaccine
industry have been gradually relaxed, and policy barriers
restraining foreign pharmaceutical companies to enter China’s
vaccineindustrywillbeeliminatedstepbystep.
Notes: Vaccine basics refer to vaccines supplied by Chinese government for free, including: 1.Vaccines belong to the catalogue of National Immunization Program.2.Extra vaccines when provinces, autonomous regions and municipalities implement the National Immunization Program.3.Vaccines used for emergent vaccination or mass preventive vaccination organized by government at or above the county level or relevant administrative department in charge of health.
Related Market Report this Month:
Future of Red Biotechnology in China
Acomprehensiveindustryreportwith178pages, please click the title to see the main content and sample pages.
To purchase or need more details, please contact us at econtact@cnchemicals.com
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com2
Resources (holding) integrates Beijing Pharmaceutical Group
OnApr. 2nd, 2010, cooperatedwith the Beijing
government, China Resources (holding) Co., Ltd.
Resources(holding), one of the leading conglomerates
inHongKong andChineseMainland, integrated
pharmaceutical assets of Beijing Pharmaceutical Group
Co., Ltd.( Beijing Pharmaceutical Group) (PICTURE 1).
TheintegrationwillbeimplementedbyChinaResources
Medications Group Co., Ltd. (Resources Medications), a
subsidiaryofResources(holding).Aftertheintegration,
Beijing governmentwill hold 30% stocks of the
integrated company, andResources (holding)will
relocate the headquarter of Resources Medications,
usedtobeinShenzhen,toBeijing.
Resources (holding) and Beijing government signed a
strategiccooperationframeworkagreementregarding
pharmaceuticalandmicroelectronicssectors.According
to this agreement, Resources (holding)’s investment into
pharmaceutical industryinBeijingwillbeencouraged
and supported by Beijing government, such as enjoying
reductionandexemptionoftaxes,financialassistance,
etc., and Beijing governmentwill also facilitate
Resources (holding)’s integration of biopharmaceutical
resources in order to found a leading pharmaceutical
enterprise in Beijing. Through cooperationwith
Resources(holding),Beijinggovernmentwill further
promote the development of pharmaceutical industry.”
said Mr. Guo Jinlong, Mayor of Beijing on the signing
ceremony.
Resources Medications’s target of this integration is to
set up platform for pharmaceutical enterprises under
directjurisdictionofcentralgovernment.Andafterthis
assetreorganization,BeijingPharmaceuticalGroupwill
get listed in overall.
ResourcesMedicationswill formacomplete industry
chain of pharmaceutical industry covering Chinese
medicine, chemical medicine, biopharmaceutical,
medicalequipmentandpharmaceuticalbusiness,which
will largelyheighten itsposition inpharmaceutical
industry. Resources Medications has achieved total
revenueofUSD4.94billion in2009,andbecomethe
second largest pharmaceutical company in China.
Resources Medications is a wholly-owned subsidiary of Resources (holding), engaged in Resources (holding)’s domestic pharmaceutical business, with total assets of around USD3.81 billion and turnover of USD3.96 billion in 2009. Beijing Pharmaceutical Group, with total turnover of USD3.9 billion in 2009, is a wholly-owned company of Beijing government. It has about 20 subsidiaries, among which Wandong Medical Equipment and Beijing Double-Crane Pharmaceutical are listed in Shanghai and Shenzhen Stock Exchange.
PICTURE 1: Signing ceremony of Beijing government
and Resources (holding)
Source: http://info.crc.com.cn/internet/news/xwfbny/201004/
t20100403_111966.htm
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com3
Govermental Policies
Updated Pricing Drug List by NDRC comes into force
The updated Pricing Drug List by National Development and
ReformCommissionNDRCcameintoforceonApr.1st,2010,
indicating thatChinesegovernmentwill further strengthen
management and supervision of prescription drugs prices and
decentralizemorepricingpowertolocalgovernment, inorder
toachievestandardizationindrugsmarketandrationalpricing
authority division.
AccordingtothenewList,allprescriptiondrugsintheSocialized
MedicineCatalogpublishedin2009andallnationalessential
drugs are added into Pricing Drug List. Besides, prices of
narcotic drugs and psychotropic substances in Pricing Drug List
areguidedbywiththehighestex-factorypriceandtheirhighest
retail price, instead of government referential price in previous
time.
UnderthebackgroundofpublishmentofOnEstablishmentof
ImplementationAdvicesofNationalEssentialDrugsSystem
inAug.2009,NDRCupgradesthePricingDrugList issuedin
2005.ThenewListwillexertinfluenceondrugpricing,market
behavior, etc. of related pharmaceutical enterprises. Some
expertsairtheirownopinionsonthisupgradedList.
“Thoughmain prescription drugswith patent protection
belong to multinational companies, their patent protection
willhaveexpiredoneafteranotherby2013,whichwill leave
great development opportunity for domestic prescription
drugs producers. Thus, in order to effectively guide China’s
pharmaceutical industry’s health development, NDRC upgrades
Pricing Drug List.” disclosed by a director from a multinational
enterprise in Shanghai.
“In the lightof thispolicy, thereare556kindsofover-the-
counter drugs priced by provinces, autonomous regions and
municipalities pricing departments, implying that Chinese
governmentwill decentralizemorepricingpower to local
government.”disclosedbyaninsiderinApr.2010.
Wangming,ManagerofGuangzhouPharmaceuticalHoldings
Ltd.said“AftertheupdatedPricingDrugListcameintoforce,
pharmaceuticalcompaniesmayshowmoreconcernonhowto
winapreponderantpriceintheprocessofdrugtender.“
Note:The Pricing Drug List issued in 2005 by National Development and Reform Commission showed that the pricing drugs were divided into following two categories: part of drugs are priced by the government; the rest are guided by government
referential price. That is to say, in the reimbursement of drugs, the price of prescription drugs was constituted by the National Development and Reform Commission, and drugs with government referential price were referred to retail price by local government, according to actual local condition. To OTC drugs, local government constitute retail price, according to actual local condition.
Procurement and Distribution Rules of Essential Drugs to issue in 2010
OnApr.8th,2010,theforumonhowtoactively
manage the procurement and distribution of
essential drugs after the issuance of National
BasicMedicineSystemwasheldinBeijing,in
whichruleforprocurementanddistributionof
essential drugs in China to be issued in 2010
wasinformed,indicatingthatassomerelative
policies and stipulations perfect, production
and supply of basic drugs will bemore
reasonableandscientificundergovernmental
management.
Accord ing to Mr . Zheng , D i rec to r o f
Department of Essential Drug of the Ministry
of Health, by the end of Feb. 2010, there have
beenabout30%primary care institutions
implementing National Basic Medicine
System, and the proportion is expected to
climbtomorethan60%in2010.Duringthe
implementation of National Basic Medicine
System for about one year, various defects like
skimble-scamblepriceofdrugs,commercial
bribe, etc., have been exposed. Thus, it is
necessary and urgent to constitute a unified
standard for procurement and distribution of
essential drugs
Regardinghowtoeffectively implement the
rule, some experts air their viewson this
forum. Mr. Liao, Deputy Director of Health
Department of Sichuan Province, said, “In poor
regions like Sichuan Province, government
shouldpermitrelevantqualifiedcompaniesto
participate in distribution, in order to ensure
availability of essential drugs.”
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com4
Mr.NiuZhengqian,DeputySecretaryofChineseMedicineEntrepreneurAssociation,viewed“Weshouldtakemarket
mechanism into full play; and let hospitals, manufacturers and distribution companies be engaged in free competition; only
bythiswaycantheruleofprocurementanddistributionofessentialdrugstakegreatereffectandbringmorebenefits.”.
“AftertheNationalBasicMedicineSystemhasbeenimplemented,governmentshouldconstituteanationalunifiedstandard
for procurement and distribution of essential drugs, in order to avoid the commercial bribe in the tender process.” said Li
Zhenjiang,ChairmanofShinewayPharmaceuticalGroup,thelargestmanufacturerofmodernChinesemedicineinjections,
soft capsules and granules.
Regardinghowtocarryoutthisrule,CCMalsoputforwardsomesuggestions.Firstly,thereshouldbeacomplete,objective
and fair standard system for drugs tender; secondly, government should establish reasonable entrance thresholds for
pharmaceutical industry in order to guarantee drugs quality; thirdly, as for pricing, combination of market mechanism and
governmentalsupervisionshouldbemadeinthewholetenderprocessandenterprisesshouldbegivenmorerights,suchas
howtodistributedrugs,etc.
Market Dynamics
Hualan’snetprofitsoars229.10%in2009
Accordingtoannualreportforfiscalyear2009onMar.
9th,2009,HualanBiologicalEngineeringInc.(Hualan),
the largest blood product and vaccine producer in China
withcapacityof1,500t/aforplasmaprocessingand29.74
million doses per year for vaccine, achieved net profit
growthof229.40%, thanks to significantly increased
plasma dosage in blood products, and rising demand for
vaccineinQ32009.
Thoughunderthecontextofglobalfinancialcrisis,Hualan
stillmadeconsiderableachievementsin2009.
.
Theachievementfirstlysourcedfromvaccine,whichwas
neededwith largenumberswhen influenza suddenly
happened inQ32009.Revenue fromvaccinerealized
USD104.52million in2009,up887.84%over2008.
Besides, the company is responsible for 52.25 million
doses vaccine for national H1N1 storage task, among
which29.46millionhavebeenshippedtothelocations
designatedbygovernment,andtherestwillbereleased
beforetheendofthisyear.Inthefuture,itwillaccelerate
the process of overseas registration for H1N1 bacteria and
seasonal influenzavaccinessoastofurtherenhanceits
vaccinebusiness(TABLE1).
Development of blood products business also contributed
tothenetprofitgrowth.Thecompanyachievedrevenue
ofUSD74.19million frombloodproducts,withgross
profitrateof63.63%in2009,respectivelyup26.09%and
4.88%against2008.Revenues fromhumanalbumin,
intravenous immunoglobulin (IVIG) and other blood
TABLE1:Hualan’sbusinesssituation,2008&2009
Item
2009 2008
Value, million USD
Up YOY, %
Value, million USD
Up YOY, %
Revenue 178.00 160.39 68.00 48.25
Net profit 89.00 229.40 27.00 70.35 Source: Annual report of Hualan in 2009
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com5
productsreachedUSD38.56million,USD21.11million,
USD14.51million,up 15.53%, 10.74%and 127.27%
separatelyover2008.Takingtherisingmarketdemand
for IVIG into consideration, the National Development
and Reform Commission raised IVIG price, thus revenue
from IVIG increased, and revenue proportion of human
serum albumin declined accordingly in blood products.
Thisstructureoptimizationishelpfulforimprovement
ofplasmautilizationrateandgrossprofitrateofblood
products (FIGURE 1).
Hualan is estimated to get sound development in 2010,
asaseriesofvaccinessuchasseasonalinfluenzavaccine,
hansenulahepatitisB vaccine, etc.will beput into
marketthisyear.Additionally,aidedbythe increased
plasmadosage,couplewiththeprice increaseofIVIG
fromUSD60.41/dosetoUSD87.97/dose inShanghai,
whichisalsolikelytoincreaseinotherregionsofChina,
thecompany’snetprofitisestimatedtoriseby30%~50%
year on year. The company’s much better performance in
stock market is a strong proof for its fastest development
in recent years.
FIGURE1:Hualan’sstockperformance,Jan.2006~Apr.2010
�
Source: google finance
Note: SCI refers to Shanghai Composite Index
Huge potential in China’s diabetes treatment market
China,withmorethan92millionadultdiabetesandabout150
million potential diabetes, has the largest numbers of diabetes
patients in theworld, according toNewEnglandJournalof
MedicineinMar.2010,inwhichnewmedicalresearchfindings,
reviewarticles,andeditorialopiniononawidevarietyoftopics
of importance to biomedical science and clinical practice are
published. Besides, total direct medical expenditure of diabetes
(maleandfemalediabetespatientswithageofover20inChina)
and its complicationshas reachedUSD2.8billionand itwill
witnessuptrendinthefuture,disclosedintheHighBloodSugar
DiabetesForumsponsoredbyUSAAbbottLaboratoriesinApr.
2010.
ThisshowsthathugepotentialexistsinChina’sdiabetestreatment
market. Some multinational pharmaceutical enterprises, like
NovoNordisk,EliLillyandSanofi-Avetishavecapturedabout
90%marketshareofChina’sdiabetestreatmentmarketoftop
firstclasshospitals.Andtheyhaveenlargedorwillenlargetheir
investmentsinthisfieldinChina.
For instance, in order to consolidate its leadership in China’s
diabetes market, Novo Nordisk, the largest human insulin
producer in theworld, inputUSD381million toestablish the
world’slargestinsulinpreparationandbottlingplantinChinaat
theendof2008,whichisthelargestinvestmentforthecompany
afteritsfoundationfor80years.Atpresent,NovoNordiskseizes
above60%marketshareofhumaninsulininChina.
AnothercaseisSanofi-Aventis,adiversifiedhealthcarecompany
in theworld.To furtherenlarge itsmarketshare inChina, it
announcedinApr.2009thatitwouldinvestUSD87.9millionto
expanditsLantuspre-fillingproductionlineinitsinsulinfactory
inBeijingEconomicandTechnologicalDevelopmentZone,which
is expected to be launched in 2012. By then the company’s Lantus
capacitywillreach50millionunitsperyear.
Atpresent,domesticapprovedantidiabeticdrugsmainlyrefer
to insulinsecretion(glinidesandsulphonylurea),non-insulin
secretion(biguanides,α-glucosidase inhibitorandglitazones)
and human insulin. What is the situation of prescription status of
patientswithdiabetesinmainhospitalsofChina’smediumand
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com6
large cities? (FIGURE 2)
In the light of a market research study, surveying diabetes
prescription status in main hospitals of China’s medium and
largecitieswith4500prescriptionsofpatientswithdiabetes
by Cegedim Strategic Data, a leading market research company
dedicatedtothehealthcareindustry,inMar.2010,inthefieldof
oral drugs treating diabetes, the class of Biguanide, accounting for
37.6%prescriptionshare,isstillthemostwidelyusedantidiabetic
drugfordiabetestreatment,andrecommendedasfirst-linedrug
for diabetes treatment and listed in Catalogue of National Basic
Medicines.
However, in the class ofα-glucosidase inhibitor,Acarbose
produced byGermany Bayer Group captures about 30%
prescription share, aided by its being under patent protection
statusandsuccessfulpromotionindiabetestreatmentfield.
In the field of injective drugs treating diabetes, human insulin
occupiesabout38.6%prescriptionshare.KeyproductsofNovolin
30RofNovoNordisk inDemark takesup12.3%prescription
share.
FIGURE2:Structureofprescriptionsharebydifferentclassesandbrandsofdiabetesdrugsin2009
Nateglinide3.40%
MetforminHydrochloride
10.20%Kaboping
4.10%Gliquidone
3.50%Avandia4.10% Avandamet
0.20%
Novolin R3.80%
Novolin N3.30%
Novolin 30R12.30%
Lantus2.90%
Repaglinide7.50%
Metformin22.50%
Acarbose29.40%
Glipizide9.30% Others
6.10%Others2.40% Others
1.50%
Humulin70/30 6.10%
Others0.40%
Others1.50%
Others4.90% Others
1.10%
Diamicron8.30%
Others5.80%
Glimepiride4.50%
Others8.10%
Glinides
s
α-glucosidase inhibitor
Glinides andBiguanides
Biguanide
Glitazones
Sulphonylurea
Short-actinghuman insulin
Intermediate-eff icacyhuman insulin
Premix human insulin
Long-actinghumaninsulin
12.4% 37.6% 24.1% 0.2% 10.2% 33.7% 34.6% 4.8% 6.4% 3.3%Distribution of prescription share
Source: Cegedim Strategic Data
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com7
China Securities Pharmaceutical Index hits record high
A i d e d b y e x c e l l e n t p e r f o r m a n c e o f
biopharmaceutical companies, China Securities
PharmaceuticalIndex(CSPI,399933)hasbeen
performing strongly since early 2010, and hit
recordhighof6125.0onApr.12th,2010.
AsofApr.7th,2010,88BChavereleasedtheir
fiscal2009annual reports in succession,and
achievedtotalnetprofitofUSD231.95million,
up67.58%comparedwith2008,mainlythanks
to sound development and promising prosperity
in this industry, reform of Health Care system,
issuance of the Catalog of National Basic Drugs,
reorganizedassetsofBC,etc.
It is aided by the excellent performance of
biopharmaceutical companies that CSPI has
become the strongest securities industry index in
China.OnApr.12th,ShanghaiStockExchange
CompositeIndex(SSECI)performeddowntrend,
whileCSPIhit thehistoricallyhigh level and
closedatpointsof6125.0.Asof thatday,CSPI
has continuously advanced for 11 market days,
reflectingthepromisingprosperityinthisindustry
(FIGURE 3).
W h e n C S P I r e a c h e d r e c o r d h i g h , m a n y
pharmaceutical stocks’ price also jumped to a
newhighpoint.Apart fromthepharmaceutical
stocks listed this year, 45 pharmaceutical stocks
have hit record high since early 2010, accounting
for32.85%ofthetotalcomparablestocks.And12
pharmaceutical stocks have achieved the highest
sinceApr.2010,suchasShanghaiRAAS,Jiangsu
Yuyue,PkucareSouthwestPharmaceuticals,etc.
Eyeing this excel lent performance of BC,
institutionalinvestorssignificantlyincreasedtheir
BCstocks.AsofQ42009,their totalBCstocks
reached3.20billionshares,up70.6%overthat
asofQ32009,indicatingtheiroptimismtowards
biopharmaceutical industry.
Notes: CSPI is an index to reflect the overall performance of biopharmaceutical stocks in Shanghai and Shenzhen stock markets, which is indexed with all biopharmaceutical shares by China Securities Index Co. , Ltd. , a professional company specializing in creation and management of indices and index-related services.
Total output of Ceftriaxone Sodium hitarecordhighin2009
Total output of Ceftriaxone Sodium, the third generation cephalosporin
andabroad-spectrumcephalosporinwitha longplasmaelimination
half-lifeofapproximately8hours innormaladults,hitarecordhigh
in2009reaching3768tonnesin2009,up29%yearonyear,thanksto
thriving clinical demand, significantly increasing number of producers
of Ceftriaxone Sodium and their efforts to intensify exploitation of
overseas market. Besides, the export price of Ceftriaxone Sodium reached
USD127.3/kginFeb.2010,up35.8%comparedwiththatinMay.2009.
ClinicaldemandofCeftriaxoneSodiumisgrowingsteadilyalongwith
thedevelopmentofprimarycare.AccordingtoareportissuedbyChina
AssociationofPharmaceuticalCommerce (CAPC) inApr.2010, the
expenditure of Ceftriaxone Sodium in hospitals of 22 major cities in
ChinawasUSD39million,up35.1%comparedwiththatin2007,andits
marketsharehasachieved42%inChina’scephalosporinmarketin2009,
up11.5%comparedwiththatin2004.Besides,astotheannualgrowth
rateoverthepastfewyears,onlyCeftriaxoneSodiumhasachieved106%
comparedwithothercephalosporinslikeCefazolinSodium,Cefotaxime
Sodium,CefoperazoneSodium,CefurozimeSodium.Asanactof the
reformofhealth-carein2009,ChinesegovernmentwillinvestUSD124.6
billion to improve primary care over the next three years. Therefore, it is
expectedthattheclinicaldemandofCeftriaxoneSodiumwillcontinuethis
uptrend in the future.
Figure:CSPIandSSECIperformance,Jan.2009~Apr.2010
Source: Baidu Finance
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com8
Inthepast fewyears, totalnumberofCeftriaxoneSodium
producers significantly increased.According to a report
issuedbyCAPCinApr.2010,thenumberoftotalproducers
ofCeftriaxoneSodiumwas3 intheearlystagebutreached
36atendof2009.Meanwhile,mainproducers likeShanxi
WeiqidaPharmaceuticalCo.,Ltd.,ShanghaiAsiaPioneer
PharmaceuticalCo.,Ltd., etc., capturedabout80% total
capacity of Ceftriaxone Sodium in China.
Ceftriaxone Sodium producers have been intensifying
exploitation of overseasmarket. In the past few years,
the export of Ceftriaxone Sodium has been amounted to
30%~40%ofitstotalcapacity,whichachieved899tonnesin
2009,up14.1%yearonyear.India,SouthKorea,Europe,and
SoutheastAsiaarethemajorexportdestinations.Since2007,
Ceftriaxone Sodium producers has exported cephalosporin
includingCeftriaxoneSodium,cefoperazone,etc.,achieving
atotalvalueofUSD236milliontoRussiaandBelarus,whose
cephalosporin production technology lags behind (FIGURE 4).
However,therearesomeuncertaintiesforCeftriaxoneSodium
exportsinthefuture.InOct.2008,theMinistryofCommerce
and Industry of India formally determined that the export of
CeftriaxoneSodiumtoIndiafromChinawasdumping,andthe
Indiangovernmentlevied108%~120%anti-dumpingduties
on Ceftriaxone Sodium imported from China. Thus, many
ChineseCeftriaxoneSodiumexportersareforcedtowithdraw
form Indian market. Besides, some member countries in
European Commission like Italy and Spain begin to investigate
the dumping cases of Chinese Ceftriaxone Sodium, disclosed
by some insiders in China.
FIGURE4:ExportvolumeandexportgrowthrateofCeftriaxoneSodium,2007~2009
658
788
899
19.33% 19.76%
14.09%
-
100
200
300
400
500
600
700
800
900
1,000
2007 2008 2009
tonn
e
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Export Quantity Export Grow th Rate
Source: China Customs
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com9
BeijingOriGenewonUSD16million venture capital
OnMar.17th,2010,BeijingOriGeneTechnologies,
Inc.(Beijing OriGene) announced it has won
USD16millionSeriesBventurecapital fromIDG-
Accel, SBI&THVentureCapitalManagement
Co.,Ltd.,andZero2IPOCapital,and itsprevious
investors, Morningside Venture Investments and
President International Development Corp. also
participated.Theventurecapitalwillbemainlyused
to continuously build the largest collection of next
generationmonoclonalantibodies (TrueMABTM)
covering the majority of human proteome in the
world.
“Thiscapitalwill facilitate theaccomplishmentof
building the largest monoclonal antibody collection
intheworldcoveringtheentirehumangenomeof
approximately 20,000 genes.” said Mr. He, Beijing
OriGene’sChairmanandCEO.
BeijingOriGenehasdedicatedtobuildthe largest
collectionofhumanfull-lengthcDNAclonessince
lastdecade.Theprojectwillbedevelopedwiththe
mostup-to-date antibody technologies andwill
beusingauthentichuman full-lengthproteinsas
immunogens during the manufacturering process.
TrueMABTMmonoclonalantibodiesarecurrently
available in themarket andwill be utilized by
commercial partners for various applications
like flowcytometryandMultiplesenzyme-linked
immunosorbent assays. Itwasestimatedbysomeinsidersthatasof2020,therewillbeabout3,000
kindsofnewdrugsproducedbybiopharmaceutical
technology, and gross output value of drugs produced
by biotechnology will reachUSD396 billion,
disclosed by Liu Yanhua, Undersecretary of Ministry
of Science and Technology in Jun. 2007. Therefore,
the promising prospect of biopharmaceutical
industry attracts venture investors’ capital.
AccordingtostatisticfromZero2IPO,aninformation
and consultation for venture capital (VC) and private
equity(PE),in2009,thereweretotal49casesofVC
and PE to have been invested in the pharmaceutical
industrywithtotal investmentofUSD320million,
amongwhich31casesareinvestedintodevelopment
and expansion of pharmaceutical companies. “It
is estimated that in 2010, investors of VC and PE
willbefurtheractive inpharmaceutical industry.”
saidZhengyufen,seniorprojectmanagerofmedical
healthdepartmentinZero2IPO.
Note:
Beijing OriGene Technologies, Inc. is a gene centric life sciences tool company dedicated to support academic, pharmaceutical and biotech companies in their research of gene functions and drug discovery. OriGene’s novel product line includes the world’s largest cDNA and shRNA clone collection, over 5,000 purified human proteins, high quality monoclonal antibodies, 100,000 highly validated human tissues, and Lumines Multiplex Assay products. OriGene also provides a broad range of antibody validation products including genome-wide tagged antigen standards and extensive IHC slides derived from the company’s tissue collection.
Lil ly ’s Mult i -Drug ResistantTuberculosis Plan in China
CooperatingwithZhejiangHisunPharmaceuticalCo.,
Ltd. (ZhejiangHisun), a well-known anti-infection
pharmaceutical enterprise in China, Eli Lilly Company (Lilly)
in theUS,aglobalR&D-basedpharmaceuticalcompany,
started to implement its globalmulti-drug resistant
tuberculosisplan(MDR-TB)inChinaonMar.23rd,2010.
ThisMDR-TBprojectexists to save livesbypreventing
and treatingMDR-TB–a terribledisease that afflicts
millions of people in some poor regions throughout the
world.AccordingtoMr.Lai,Lilly’sCEOinChina,Lilyhas
cooperatedwithZhejiangHisunbytransferringtechnology
of capreomycin for free, training relevant technicians, as
wellasprovingamplefunds,besides,inordertoeffectively
controlthespreadofMDR-TB,thecompanywillalsocarry
out a series of health education, such as training medical
personnel,popularizingpreventionknowledge,etc.
Lily has successfully transferred a series of production
technologyofcapreomycintoHisuntillnow,andHisunhas
launchedcapreomycinproductionlineforthisprojectwith
totalcapacityof5milliondoses/year.
By far,Lillyhas investedUSD135million for thisMDR-
TB project. In Jan. 2010, contributed by this project,
Lillywon “2009MultinationalCorporations inChina
ContributionAward“.“Thisawardfutureindicatesthelong-
term commitment for preventing and treating tuberculosis
inChina,especially forMDR-TB,” saidMr.EricBaclet,
RegionalCEOofLillyinChinainJan.2010.
MDR-TBpreventionand treatment isaustere inChina.
AccordingtoareportissuedbyChineseMinistryofHealth,
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com10
therewereabout4.5millionpatientswithactivetuberculosisinChinaasofMar.2009,80%ofwhichwereinruralareas.Besides,
accordingtoaWHOresearchin2006,about130,000newMDR-TBpatientsincreaseannuallyinChina,accountingfor28%ofthe
world’stotalnewlyMDR-TBpatients.Atthesametime,hightreatmentexpenditureforMDR-TB,usually100timeshigherthan
that for normal tuberculosis, also restricts patients’ treatment.
GreatconcernfortreatmentofMDR-TBhasbeenshowninChina,wheresymptomssuspiciousoftuberculosisarechecked,anda
unifiedfreetreatmentforfreeprogramforpatientsdiagnosedisalsoprovided.Duringtheyear2001to2008,therewere642,000
MDR-TBpatientshealed.
Capreomycinismainlyappliedformycobacterium-causedtuberculosispatientswhoaren’thealedwithfirst-lineanti-drugssuchas
streptomycin,isoniazid,rifampicinandethambuto,etc.,andforthepatientswhoarenotapplicabletotheabovementionedfirst-
lineanti-drugs,attributedtotoxicityorbacteriaresistance.Itwillbeacquiredbacterialresistancewhenusedseparately,thusonly
withcombinationofantibacterialdrugscanitcureTB.
Hepalinkratifiedtobelisted
In Apr. 2010, ShenzhenHepalink
Pharmaceutical Co., Ltd. (Hepalink),
the biggest suppl ier of heparins
sodium’s Act ive Pharmaceut ica l
Ingredients API in theworld, has
been formally ratified to be listed in
ShenzhenStockExchangebyChina
Securities Regulatory commission.
Thecompanywill issue40.1million
stocks,withaboutUSD21.7pershare,
to raise about USD869.5million,
amongwhichaboutUSD70.8million
will be used for its new heparins
sodium’sAPIproduction lineswith
capacityof830t/a,andaboutUSD56.2
millionwillbeusedasfloatingcapital
ofthisproject.Theproductsofthisnew
productionlineareinaccordancewith
authentication standards of U.S. Food
andDrugAdministration (FDA)and
Certificate of Suitability for European
Pharmacopeia (CEP).
Hepalink has been developing rapidly
since2007.In2009, itsrevenueand
netprofit reachedUSD32.8million
andUSD11.9million,respectivelyup
411.2%and387.8%yearonyear. Its
revenue and net profit respectively
realizedaCAGRof172.6%and244.5%
from2007to2009.
The company’s rapid achievement
is mainly thanks to its technical
superiority inR&Dandproduction.Atpresent, ithasbecomethe largestheparins
sodium’sAPIproductionandsaleenterpriseintheworld.Accordingtostatisticsfrom
ChinaCustoms in2009,Jan.2009~Sep.2009,Hepalink’sexportvaluereached
USD175.8million,accountingfor39.5%ofnationaltotalexportvalueofthisproduct.
Currently,supplyofheparinssodium’sAPI fallsshortofdemandand inadequate
capacity has become the bottleneck for its further development in future. The launch of
thisnewproductionlinewilleffectivelysolvethisproblem,disclosedbyinsiderinApr.
2010.
AfteritislistedinShengzhenStockExchange,stockholderofthecompanywillbenefit
alot.LiliandLitancouple,Hepalink’sfactocontrollerholding288.0millionHepalink’s
stockshares,willbecometherichestperson inChinesemainlandvaluingUSD6.3
billion.AndstockvalueofGoldmanSachs,afull-serviceglobalinvestmentbankingand
securitiesfirm,whoinvestedUSD4.9milliontoHepalinkin2007,andholding12.5%
stocksofthecompany,willreachUSD966.2million,93timesofitsinitialinvestment.
AccordingtoHapalin’sProspectusissuedinApr.2010,itisestimatedthatasof2010,
demandforheparinssodium’sAPIwillreach6142tonnes,achievingaCAGRof10.2%
year on year.
However,Hepalinkmayalso facesomeuncertainties in future. Itsprofitmargin
willdecline in the future, since theproductioncostof rawmaterialofheparins
sodium’sAPI,whichaccountsfor85%productioncost,mayincreaseinthefuture,
whileheparinssodium’sAPIpricewilldeclineduetotheexpandedcapacityofother
companiesinrecentyears(TABLE2).
TABLE2:Hepalink’sheparinssodium’sAPIexportvalue,Jan.2006~Sep.2009
Year
Total export value (million USD)
Hepalink’s export value
(million USD) Market share
(%)Jan. 2009~Sep. 2009 444.2 175.8 39.5
2008 226.1 63.5 28.1
2007 137.5 27.6 20.1
2006 103.3 29.4 28.5Marketshare=Hepalin’sexportvalue/totalexportvalue
Source: Hapalin’s Prospectus issued in Apr. 2010
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com11
Technology&NewProduct
OnApr.11th,2010,CephalosporinOxazineAmidine
developedbyGuangzhouBaiyunshanPharmaceutical
Co., Ltd.( Baiyunshan Pharmaceutical) successfully
achieved the US Patent(USP), and Baiyunshan
Pharmaceuticalwill cooperatewith the South
ChinaCenterforInnovativePharmaceutical,anon-
business scientificorganizationengaged innew
pharmaceuticals creation and public services, to
developthisnewdrug,revealedMr.Chen,General
ManagerofGuangzhouBaiyunshanPharmaceutical
Co., Ltd. (000522, one of the leading pharmaceutical
manufacturer in Guangdong Province).
Thenewlydevelopeddrugenjoysgoodantibacterial
activitytogram-positivebacteria.Mr.Zhu,Deputy
Director of Baiyunshan Pharmaceutical, said
”CephalosporinOxazineAmidinehasanentirely
newchemicalstructurewhichisobtainedthrough
molecular modification of cefathiamidine, and has
shorterhalf-lifeandlesstoxicitythancefathiamidine,
thus it enjoys good application prospect.”
Baiyunshan Pharmaceutical has been always
attaching great importance to independent R&D
of drugs.Mr. Chen also viewed ”Independent
intellectual property can strengthen company’s
core-competitiveness,especiallyforpharmaceutical
companies. Thus, the achievement of obtaining USP
CephalosporinOxazineAmidinep r o d u c e d b y B a i y u n s h a n Pharmaceutical obtains USP
ofCephalosporinOxazineAmidinecanfurtherenhance
thecompany’shi-tech innovationcapability,which is in
accordancewith itsstrategy–patent first,distribution
followsinoverseasmarket.Throughthisway,Baiyunshan
Pharmaceutical’sCOAwillparticipate in international
competition.”
WithaccessiontoWTO,Chinesegovernmenthasissueda
seriesofpoliciessuchasMeasuresfortheAdministration
ofDrugRegistration,tosupportR&Dofnewdrugswith
independent intellectual property rights. Mr. Liu Xuebin,
oneof thekey researchers forCephalosporinOxazine
Amidine, said”Aidedbyrelativesupportingpoliciesof
government, pharmaceutical companies have changed the
disjunction of drugs R&D and market demand, and have
been takingmore important role in innovationofnew
drugs as they are fully informed of market demand. ”
Mr.Chen also showedhis confidence in themarket
prospectof thisnewdrug.According tostatistics from
ChinesePharmaceuticalAssociation,nationalorganization
of pharmaceutical professionals, total consumers of
cephalosporin in 22 major cities in China have reached
USD101.5millionin2008,up27.0%comparedwith2007.
Besides,exemplifiedbycefathiamidine,withsalesrevenue
ofUSD44.0millionin2009,coupledwithrichexperience
forpromotionofproducts,CephalosporinOxazineAmidine
isboundtowingoodprosperousmarketinthefuture.
BiopharmaceuticalsChinaNews Vol. 1 Issue 1. 2010
CCM International Limited www.cnchemicals.com12
Sanofi -Aventisbuildsresearchcenter in China
OnApril6th,Sanofi -AventisGroup(Sanofi -Aventis),
the largest drug manufacturer in Europe, announced that
itwouldsetup itsR&DcentersofAsiaPacific inChina
to accelerate the development of drugs and therapies
innovation.TheR&DwillradiateregionsincludingJapan,
Russia and India.
Novart is (China) publ ic izesdiabetes treatment breakthrough
OnApril21st,Novartis(China)andtheMinistryofHealth
joined hands to issue the largest diabetes treatment
breakthroughon"SecondSino-UShigh-levelexchangeof
Cardiovascular Summit" held in Shanghai. The breakthrough
ofNAVIGATORattractgreatconcernfromcardiovascular
experts,sinceitshowedthatRASinhibitorsValsartancan
effectivelypreventdiabetesoccurrenceforpre-diabetes.
Fosun’snetprofitup91.3%inQ12010
OnApril29th,FosunPharmaceutical(Fosun)announcedits
firstQuarterReportin2010,accordingtowhichitsrevenue
increasedby27.34%andnetprofit by91.3%aidedby
excellent performance of key pharmaceutical business, and
benefitfromstocktransfer.
NewsinBrief
Bayer Schering Pharma (China) upgrades
Since this year, Bayer Schering Pharma (China) upgraded
to be a separate district and reported directly to
headquarters.ItwillinvestUSD132.92milliontoglobalR
&DcenterinBeijinginnext5yearsandlaunchfournew
varieties to speed up the exploitation of Chinese market. It
achieved USD704.53 million sales revenue last year, up by
28%yearonyear.
Biopharmaceutical output value in Jiangsu to exceed USD73 billion in 2012
Recently, Science and Technology Department of
Jiangsu Province published Development Plan of
NewBiotechnology andPharmaceutical Industry in
JiangsuProvince (2009~2012).Theplanshows that
Biopharmaceuticaloutputvalue inJiangsuwillexceed
USD73billion in2012 comparedwithUSD29billion
currentlyanditwillpushJiangsutobethemostactivearea
ofnewbiotechnologyandpharmaceuticalindustryallover
theworld.
BiopharmaceuticalsChinaNews
CCM International Limited www.cnchemicals.com13
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