Biopharmaceuticals China News Sample - Published by CCM International Ltd

Biopharmaceuticals China News

Vol.1 Issue 1. 2010

Copyright © CCM International Limited

Vol. 1 Issue 1. 2010 Publication date: 4 May, 2010

CONTENTS

Investment Focus
1 Potential investment opportunity in China’s vaccine industry
2 Resources (holding) integrates Beijing Pharmaceutical Group

Govermental Policies
3 Updated Pricing Drug List by NDRC comes into force
3 Procurement and Distribution Rules of Essential Drugs to issue in 2010

Market Dynamics
4 Hualan’s net profit soars 229.10% in 2009
5 Huge potential in China’s diabetes treatment market
7 China Securities Pharmaceutical Index hits record high
7 Total output of Ceftriaxone Sodium hit a record high in 2009
9 Beijing OriGene won USD16 million venture capital
9 Lilly’s Multi-Drug Resistant Tuberculosis Plan in China
10 Hepalink ratified to be listed

Technology & New Product
11 Cephalosporin Oxazine Amidine produced by Baiyunshan Pharmaceutical obtains USP

News in Brief
12 Sanofi - Aventis builds research center in China
12 Novartis (China) publicizes diabetes treatment breakthrough
12 Fosun’s net profit up 91.3% in Q1 2010
12 Bayer Schering Pharma (China) upgrades
12 Biopharmaceutical output value in Jiangsu to exceed USD73 billion in 2012

Welcome to the April issue vaccine producer in China, achieved net
of Biopharmaceuticals China profit growth of USD89.1 million, up
News, specially published by 229.40% year on year.
CCM International. In order to guide health and sustainable
development of China’s pharmaceutical
Despite of global financial crisis industry, Chinese government successively
which resulted in negative issued related policies, such as Pricing
effect on most industries in the Drug List by National Development and
world, China’s pharmaceutical Reform Commission, Procurement and
industry witnessed sound Distribution Rules of Essential Drugs,
development in 2009, thanks to etc. These policies are bound to facilitate
implementation of nationwide the progress of pharmaceutical industry,
Health Care Reform. Some especially biopharmaceutical industry.
biopharmaceutical enterprises China’s pharmaceutical industry will
achieved splendid performance continue its development momentum and
in 2009, such as Hualan boom in the following several years.
Biological Engineering Inc.,
the largest blood product and

Vol. 1 Issue 1. 2010 Publication date: 4 May, 2010

Biopharmaceutical China News at a glance
■ The confidence bankruptcy toward China’s vaccine 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.
■ Cooperated with Beijing government, Recources(holding) integrated pharmaceutical asset of
Beijing Pharmaceutical Group Co., Ltd. on Apr. 2nd, 2010.
■ The updated Pricing Drug List by Development and Reform Commission came into force on Apr.
1st , 2010.
■ Stipulations for Procurement and Distribution of Essential Drugs in China will be issued in 2010.

■ Hualan realized net profit growth of 229.40% in 2009, mainly aided by increased plasma dosage in
blood products and rising demand for vaccine in Q3 2009.
■ Huge potential market exists in China’s diabetes treatment market as China has the largest
numbers of diabetes patients throughout the world.
■ Aided by excellent performance of biopharmaceutical companies, China Securities Pharmaceutical
Index, on Apr. 12th, 2010, hit record high, close to 6125.0.
■ Export quantity and price of Ceftriaxone Sodium has hit a record high since 2008, thanks to
thriving clinical demand, improving of total CS output and intensifying the efforts on oversea markets
exploitation.
■ On Mar. 17th, 2010, Beijing OriGene won USD16 million venture capital for its TrueMABTM
project.
■ Cooperating with Zhejiang Hisun, Lilly started to implement its global MDR-TB plan in China on
Mar. 23rd, 2010.
■ In Apr. 2010, Hepalink has been formally ratified to be listed by China Securities Regulatory
Commission.
■ On Apr. 11th, 2010, Cephalosporin Oxazine Amidine developed by Baiyunshan Pharmaceutical
successfully obtained USP.

Main companies mentioned in this issue

Biopharmaceuticals China News Vol. 1 Issue 1. 2010

Investment Focus In Nov. 2009, Novartis Pharmacy Ltd., the second largest flu
vaccine producer in the world, also entered Chinese vaccine
industry by expending USD124.63 million to purchase 85
Potential investment opportunity % stocks of Zhejiang Tianyuan Bio Pharmaceutical Co., Ltd.
in China’s vaccine industry (Tianyuan), the second largest flu vaccine supplier in China. ’
At present, China is the third largest pharmaceutical market in
the world. In the future, Novartis will provide Tianyuan vaccine
The confidence bankruptcy toward China’s vaccine technology including technology of influenza vaccine, rabies
safety after a series of incidents broke out in recent vaccine, etc., for the purpose of Novartis’s vaccine production
months provided great potential investment localization, and Novartis’s strategic target is to become a leader
opportunity for foreign pharmaceutical companies in the fast-growing vaccine industry in China.’ said Mr. Vasella,
in China’s vaccine industry. For instance, nearly CEO of Novartis in Nov. 2009.
100 children in Shanxi Province died from the
unqualified vaccine injected; another case is that The above-mentioned facts indicate that investment restriction
unqualified vaccine produced by Jiangsu Ealong for foreign pharmaceutical companies in China’s vaccine
Biotech. Co., Ltd., the first vaccine producer in industry have been gradually relaxed, and policy barriers
Jiangsu Province, flooded in Jiangsu’s vaccine restraining foreign pharmaceutical companies to enter China’s
market. vaccine industry will be eliminated step by step.

These incidents result in the absence confidence Notes:
of Chinese people towards homemade vaccine Vaccine basics refer to vaccines supplied by Chinese
safety and governmental credibility, and quality government for free, including:
assured vaccines are urgently needed in China. 1.Vaccines belong to the catalogue of National Immunization
Thus, foreign pharmaceutical companies, with Program.
the advantage of superior technology, won the 2.Extra vaccines when provinces, autonomous regions and
potential investment opportunities in China’s municipalities implement the National Immunization Program.
vaccine industry, such as exporting qualified 3.Vaccines used for emergent vaccination or mass preventive
vaccines to China, cooperating with domestic vaccination organized by government at or above the county
pharmaceutical producers by providing level or relevant administrative department in charge of
technology, etc. health.

In the future, vaccine basics market which was
monopolized by state-owned enterprises is
likely to be co-shared by foreign pharmaceutical
companies, such as some foreign pharmaceutical
companies have invested into BCG vaccine and
Polio vaccine which belong to catalogue of China’s
immunization programs, according to the revised
industrial Catalog Guiding Foreign Investment in
2007. Related Market Report this Month:
C h i n e s e g o v e r n m e n t h a s a l l o w e d f o r e i g n
Future of Red Biotechnology in
pharmaceutical companies to co-invest with
China
domestic vaccine producers in China’s vaccine
industry. In Sep. 2009, Glaxo Smith Kline, the
second largest pharmaceutical company in A comprehensive industry report with 178
the world, cooperated with Jiangsu Watoson pages, please click the title to see the main
Biotechnology Ltd. which focuses on human content and sample pages.
vaccine R&D, production and sales in China, to
have invested USD53.97 million in China’s children To purchase or need more details, please
vaccine industry and established a joint venture in contact us at econtact@cnchemicals.com
China, with Glaxo Smith Kline holding 65% stocks.
According to the investment plan, the plant will
manufacture measles-rubella-mumps combined
vaccines, a kind of children vaccine, which fall into
the catalogue of National Vaccination Program, as
well as other children’s vaccine.

CCM International Limited 1 www.cnchemicals.com


Resources (holding) integrates Beijing Pharmaceutical Group

On Apr. 2nd, 2010, cooperated with the Beijing Resources Medications’s target of this integration is to
government, China Resources (holding) Co., Ltd. set up platform for pharmaceutical enterprises under
Resources(holding), one of the leading conglomerates direct jurisdiction of central government. And after this
in Hong Kong and Chinese Mainland, integrated asset reorganization, Beijing Pharmaceutical Group will
pharmaceutical assets of Beijing Pharmaceutical Group get listed in overall.
Co., Ltd.( Beijing Pharmaceutical Group) (PICTURE 1).
Resources Medications will form a complete industry
The integration will be implemented by China Resources chain of pharmaceutical industry covering Chinese
Medications Group Co., Ltd. (Resources Medications), a medicine, chemical medicine, biopharmaceutical,
subsidiary of Resources (holding). After the integration, medical equipment and pharmaceutical business, which
Beijing government will hold 30% stocks of the will largely heighten its position in pharmaceutical
integrated company, and Resources (holding) will industry. Resources Medications has achieved total
relocate the headquarter of Resources Medications, revenue of USD4.94 billion in 2009, and become the
used to be in Shenzhen, to Beijing. second largest pharmaceutical company in China.

Resources (holding) and Beijing government signed a Resources Medications is a wholly-owned subsidiary of
strategic cooperation framework agreement regarding Resources (holding), engaged in Resources (holding)’s
pharmaceutical and microelectronics sectors. According domestic pharmaceutical business, with total assets
to this agreement, Resources (holding)’s investment into of around USD3.81 billion and turnover of USD3.96
pharmaceutical industry in Beijing will be encouraged billion in 2009. Beijing Pharmaceutical Group, with
and supported by Beijing government, such as enjoying total turnover of USD3.9 billion in 2009, is a wholly-
reduction and exemption of taxes, financial assistance, owned company of Beijing government. It has about
etc., and Beijing government will also facilitate 20 subsidiaries, among which Wandong Medical
Resources (holding)’s integration of biopharmaceutical Equipment and Beijing Double-Crane Pharmaceutical
resources in order to found a leading pharmaceutical are listed in Shanghai and Shenzhen Stock Exchange.
enterprise in Beijing. Through cooperation with
Resources (holding), Beijing government will further
promote the development of pharmaceutical industry.”
said Mr. Guo Jinlong, Mayor of Beijing on the signing
ceremony.

PICTURE 1: Signing ceremony of Beijing government
and Resources (holding)

Source: http://info.crc.com.cn/internet/news/xwfbny/201004/
t20100403_111966.htm



Govermental Policies 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
Updated Pricing Drug List by drugs with government referential price were referred to
retail price by local government, according to actual local
NDRC comes into force condition. To OTC drugs, local government constitute
retail price, according to actual local condition.

The updated Pricing Drug List by National Development and
Reform Commission NDRC came into force on Apr. 1st, 2010,
indicating that Chinese government will further strengthen
management and supervision of prescription drugs prices and
decentralize more pricing power to local government, in order
to achieve standardization in drugs market and rational pricing
authority division.
Procurement and Distribution Rules
of Essential Drugs to issue in 2010
According to the new List, all prescription drugs in the Socialized
Medicine Catalog published in 2009 and all national essential
On Apr. 8th, 2010, the forum on how to actively
drugs are added into Pricing Drug List. Besides, prices of
manage the procurement and distribution of
narcotic drugs and psychotropic substances in Pricing Drug List
essential drugs after the issuance of National
are guided by with the highest ex-factory price and their highest
Basic Medicine System was held in Beijing, in
retail price, instead of government referential price in previous
which rule for procurement and distribution of
time.
essential drugs in China to be issued in 2010
was informed, indicating that as some relative
Under the background of publishment of On Establishment of
policies and stipulations perfect, production
Implementation Advices of National Essential Drugs System
and supply of basic drugs will be more
in Aug. 2009, NDRC upgrades the Pricing Drug List issued in
reasonable and scientific under governmental
2005. The new List will exert influence on drug pricing, market
management.
behavior, etc. of related pharmaceutical enterprises. Some
experts air their own opinions on this upgraded List.
A c c o r d i n g t o M r . Z h e n g , D i r e c t o r o f
Department of Essential Drug of the Ministry
“Though main prescription drugs with patent protection
of Health, by the end of Feb. 2010, there have
belong to multinational companies, their patent protection
been about 30% primary care institutions
will have expired one after another by 2013, which will leave
implementing National Basic Medicine
great development opportunity for domestic prescription
System, and the proportion is expected to
drugs producers. Thus, in order to effectively guide China’s
climb to more than 60% in 2010. During the
pharmaceutical industry’s health development, NDRC upgrades
implementation of National Basic Medicine
Pricing Drug List.” disclosed by a director from a multinational
System for about one year, various defects like
enterprise in Shanghai.
skimble - scamble price of drugs, commercial
bribe, etc., have been exposed. Thus, it is
“In the light of this policy, there are 556 kinds of over-the-
necessary and urgent to constitute a unified
counter drugs priced by provinces, autonomous regions and
standard for procurement and distribution of
municipalities pricing departments, implying that Chinese
essential drugs
government will decentralize more pricing power to local
government.” disclosed by an insider in Apr. 2010.
Regarding how to effectively implement the
rule, some experts air their views on this
Wangming, Manager of Guangzhou Pharmaceutical Holdings
forum. Mr. Liao, Deputy Director of Health
Ltd. said “After the updated Pricing Drug List came into force,
Department of Sichuan Province, said, “In poor
pharmaceutical companies may show more concern on how to
regions like Sichuan Province, government
win a preponderant price in the process of drug tender. “
should permit relevant qualified companies to
participate in distribution, in order to ensure
Note:
availability of essential drugs.”
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



Mr. Niu Zhengqian, Deputy Secretary of Chinese Medicine Entrepreneur Association, viewed “We should take market
mechanism into full play; and let hospitals, manufacturers and distribution companies be engaged in free competition; only
by this way can the rule of procurement and distribution of essential drugs take greater effect and bring more benefits.”.

“After the National Basic Medicine System has been implemented, government should constitute a national unified standard
for procurement and distribution of essential drugs, in order to avoid the commercial bribe in the tender process.” said Li
Zhenjiang, Chairman of Shineway Pharmaceutical Group, the largest manufacturer of modern Chinese medicine injections,
soft capsules and granules.

Regarding how to carry out this rule, CCM also put forward some suggestions. Firstly, there should be a complete, 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
governmental supervision should be made in the whole tender process and enterprises should be given more rights, such as
how to distribute drugs, etc.

doses vaccine for national H1N1 storage task, among
Market Dynamics which 29.46 million have been shipped to the locations
designated by government, and the rest will be released
before the end of this year. In the future, it will accelerate
Hualan’s net profit soars 229.10% the process of overseas registration for H1N1 bacteria and
in 2009 seasonal influenza vaccines so as to further enhance its
vaccine business (TABLE 1).
Development of blood products business also contributed
According to annual report for fiscal year 2009 on Mar. to the net profit growth. The company achieved revenue
9th, 2009, Hualan Biological Engineering Inc. (Hualan), of USD74.19 million from blood products, with gross
the largest blood product and vaccine producer in China profit rate of 63.63% in 2009, respectively up 26.09% and
with capacity of 1,500t/a for plasma processing and 29.74 4.88% against 2008. Revenues from human albumin,
million doses per year for vaccine, achieved net profit intravenous immunoglobulin (IVIG) and other blood
growth of 229.40%, thanks to significantly increased
plasma dosage in blood products, and rising demand for
vaccine in Q3 2009.
TABLE 1: Hualan’s business situation, 2008 & 2009
Though under the context of global financial crisis, Hualan 2009 2008
still made considerable achievements in 2009.
Value, Value,
. million Up YOY, million Up
The achievement firstly sourced from vaccine, which was Item USD % USD YOY, %
needed with large numbers when influenza suddenly Revenue 178.00 160.39 68.00 48.25
happened in Q3 2009. Revenue from vaccine realized
Net profit 89.00 229.40 27.00 70.35
USD104.52 million in 2009, up 887.84% over 2008.
Besides, the company is responsible for 52.25 million Source: Annual report of Hualan in 2009



products reached USD38.56 million, USD21.11 million,
USD14.51 million, up 15.53%, 10.74% and 127.27% FIGURE 1: Hualan’s stock performance, Jan. 2006 ~ Apr. 2010
separately over 2008. Taking the rising market demand
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.
This structure optimization is helpful for improvement
of plasma utilization rate and gross profit rate of blood
products (FIGURE 1).

Hualan is estimated to get sound development in 2010,
as a series of vaccines such as seasonal influenza vaccine, �
hansenula hepatitis B vaccine, etc. will be put into
market this year. Additionally, aided by the increased
plasma dosage, couple with the price increase of IVIG
from USD60.41/dose to USD87.97/dose in Shanghai,
which is also likely to increase in other regions of China,
the company’s net profit is estimated to rise by 30%~50%
year on year. The company’s much better performance in
stock market is a strong proof for its fastest development
in recent years.

Source: google finance
Note: SCI refers to Shanghai Composite Index

Huge potential in China’s diabetes
treatment market

China, with more than 92 million adult diabetes and about 150 diabetes market, Novo Nordisk, the largest human insulin
million potential diabetes, has the largest numbers of diabetes producer in the world, input USD381 million to establish the
patients in the world, according to New England Journal of world’s largest insulin preparation and bottling plant in China at
Medicine in Mar. 2010, in which new medical research findings, the end of 2008, which is the largest investment for the company
review articles, and editorial opinion on a wide variety of topics after its foundation for 80 years. At present, Novo Nordisk seizes
of importance to biomedical science and clinical practice are above 60% market share of human insulin in China.
published. Besides, total direct medical expenditure of diabetes
(male and female diabetes patients with age of over 20 in China) Another case is Sanofi-Aventis, a diversified healthcare company
and its complications has reached USD2.8 billion and it will in the world. To further enlarge its market share in China, it
witness uptrend in the future, disclosed in the High Blood Sugar announced in Apr. 2009 that it would invest USD87.9 million to
Diabetes Forum sponsored by USA Abbott Laboratories in Apr. expand its Lantus pre-filling production line in its insulin factory
2010. in Beijing Economic and Technological Development Zone, which
is expected to be launched in 2012. By then the company’s Lantus
This shows that huge potential exists in China’s diabetes treatment capacity will reach 50 million units per year.
market. Some multinational pharmaceutical enterprises, like
Novo Nordisk, Eli Lilly and Sanofi-Avetis have captured about At present, domestic approved antidiabetic drugs mainly refer
90% market share of China’s diabetes treatment market of top to insulin secretion (glinides and sulphonylurea), non-insulin
first class hospitals. And they have enlarged or will enlarge their secretion (biguanides, α-glucosidase inhibitor and glitazones)
investments in this field in China. and human insulin. What is the situation of prescription status of
For instance, in order to consolidate its leadership in China’s patients with diabetes in main hospitals of China’s medium and



large cities? (FIGURE 2) Medicines.
However, in the class of α-glucosidase inhibitor, Acarbose
In the light of a market research study, surveying diabetes produced by Germany Bayer Group captures about 30%
prescription status in main hospitals of China’s medium and prescription share, aided by its being under patent protection
large cities with 4500 prescriptions of patients with diabetes status and successful promotion in diabetes treatment field.
by Cegedim Strategic Data, a leading market research company
dedicated to the healthcare industry, in Mar. 2010, in the field of In the field of injective drugs treating diabetes, human insulin
oral drugs treating diabetes, the class of Biguanide, accounting for occupies about 38.6% prescription share. Key products of Novolin
37.6% prescription share, is still the most widely used antidiabetic 30R of Novo Nordisk in Demark takes up 12.3% prescription
drug for diabetes treatment, and recommended as first-line drug share.
for diabetes treatment and listed in Catalogue of National Basic

FIGURE 2: Structure of prescription share by different classes and brands of diabetes drugs in 2009

Biguanide α-glucosidase inhibitor
Sulphonylurea

Others
4.90% Others
1.10%
Premix human insulin
Others
8.10%
Intermediate-efficacy
human insulin
Glimepiride
Metformin 4.50% Others
22.50% 5.80% Long-
Glinides
Acarbose Short-acting acting
Diamicron
29.40% human insulin human
8.30% Glitazones Humulin70/30
insulin
6.10%
Glinides and
Others1.50% Biguanides
Glipizide
Repaglinide Metformin Others Others
9.30% Others Novolin 30R
7.50% Hydrochloride 6.10% 2.40% Others
1.50% 12.30%
10.20% 0.40%
Kaboping Gliquidone Avandia Novolin R Novolin N Lantus
Nateglinide
4.10% 3.50% 4.10% Avandamet 3.80% 3.30% 2.90%
3.40%
0.20%
Distribution of prescription share
12.4% 37.6% 34.6% 33.7% 10.2% 0.2% 6.4% 4.8% 24.1% 3.3%

s
Source: Cegedim Strategic Data



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 Figure: CSPI and SSECI performance, Jan. 2009 ~ Apr. 2010
Pharmaceutical Index (CSPI, 399933) has been
performing strongly since early 2010, and hit
record high of 6125.0 on Apr. 12th, 2010.

As of Apr. 7th, 2010, 88 BC have released their
fiscal 2009 annual reports in succession, and
achieved total net profit of USD231.95 million,
up 67.58% compared with 2008, mainly thanks
to sound development and promising prosperity
in this industry, reform of Health Care system,
issuance of the Catalog of National Basic Drugs,
reorganized assets of BC, etc.

It is aided by the excellent performance of
biopharmaceutical companies that CSPI has
become the strongest securities industry index in Source: Baidu Finance
China. On Apr. 12th, Shanghai Stock Exchange
Composite Index (SSECI) performed downtrend,
while CSPI hit the historically high level and
closed at points of 6125.0. As of that day, CSPI
has continuously advanced for 11 market days,
reflecting the promising prosperity in this industry
(FIGURE 3). Total output of Ceftriaxone Sodium
When CSPI reached record high, many
hit a record high in 2009
pharmaceutical stocks’ price also jumped to a
new high point. Apart from the pharmaceutical Total output of Ceftriaxone Sodium, the third generation cephalosporin
stocks listed this year, 45 pharmaceutical stocks and a broad-spectrum cephalosporin with a long plasma elimination
have hit record high since early 2010, accounting half-life of approximately 8 hours in normal adults, hit a record high
for 32.85% of the total comparable stocks. And 12 in 2009 reaching 3768 tonnes in 2009, up 29% year on year, thanks to
pharmaceutical stocks have achieved the highest thriving clinical demand, significantly increasing number of producers
since Apr. 2010, such as Shanghai RAAS, Jiangsu of Ceftriaxone Sodium and their efforts to intensify exploitation of
Yuyue, Pkucare Southwest Pharmaceuticals, etc. overseas market. Besides, the export price of Ceftriaxone Sodium reached
USD127.3/kg in Feb. 2010, up 35.8% compared with that in May. 2009.
Eyeing this excellent performance of BC,
institutional investors significantly increased their Clinical demand of Ceftriaxone Sodium is growing steadily along with
BC stocks. As of Q4 2009, their total BC stocks the development of primary care. According to a report issued by China
reached 3.20 billion shares, up 70.6% over that Association of Pharmaceutical Commerce (CAPC) in Apr. 2010, the
as of Q3 2009, indicating their optimism towards expenditure of Ceftriaxone Sodium in hospitals of 22 major cities in
biopharmaceutical industry. China was USD39 million, up 35.1% compared with that in 2007, and its
market share has achieved 42% in China’s cephalosporin market in 2009,
Notes: up 11.5% compared with that in 2004. Besides, as to the annual growth
CSPI is an index to reflect the overall performance rate over the past few years, only Ceftriaxone Sodium has achieved 106%
of biopharmaceutical stocks in Shanghai and compared with other cephalosporins like Cefazolin Sodium, Cefotaxime
Shenzhen stock markets, which is indexed with Sodium, Cefoperazone Sodium, Cefurozime Sodium. As an act of the
all biopharmaceutical shares by China Securities reform of health-care in 2009, Chinese government will invest USD124.6
Index Co., Ltd., a professional company billion to improve primary care over the next three years. Therefore, it is
specializing in creation and management of expected that the clinical demand of Ceftriaxone Sodium will continue this
indices and index-related services. uptrend in the future.



In the past few years, total number of Ceftriaxone Sodium a total value of USD236 million to Russia and Belarus, whose
producers significantly increased. According to a report cephalosporin production technology lags behind (FIGURE 4).
issued by CAPC in Apr. 2010, the number of total producers
of Ceftriaxone Sodium was 3 in the early stage but reached However, there are some uncertainties for Ceftriaxone Sodium
36 at end of 2009. Meanwhile, main producers like Shanxi exports in the future. In Oct. 2008, the Ministry of Commerce
Weiqida Pharmaceutical Co., Ltd., Shanghai Asia Pioneer and Industry of India formally determined that the export of
Pharmaceutical Co., Ltd., etc., captured about 80% total Ceftriaxone Sodium to India from China was dumping, and the
capacity of Ceftriaxone Sodium in China. Indian government levied 108%~120% anti-dumping duties
on Ceftriaxone Sodium imported from China. Thus, many
Ceftriaxone Sodium producers have been intensifying Chinese Ceftriaxone Sodium exporters are forced to withdraw
exploitation of overseas market. In the past few years, form Indian market. Besides, some member countries in
the export of Ceftriaxone Sodium has been amounted to European Commission like Italy and Spain begin to investigate
30%~40% of its total capacity, which achieved 899 tonnes in the dumping cases of Chinese Ceftriaxone Sodium, disclosed
2009, up 14.1% year on year. India, South Korea, Europe, and by some insiders in China.
Southeast Asia are the major export destinations. Since 2007,
Ceftriaxone Sodium producers has exported cephalosporin
including Ceftriaxone Sodium, cefoperazone, etc., achieving

FIGURE 4: Export volume and export growth rate of Ceftriaxone Sodium, 2007~2009

1,000 25.00%
899
900
788
800 19.33% 19.76% 20.00%
700 658

600 15.00%
14.09%
tonne

500
400 10.00%
300
200 5.00%
100
- 0.00%
2007 2008 2009

Export Quantity Export Grow th Rate

Source: China Customs



Beijing OriGene won USD16 Beijing OriGene Technologies, Inc. is a gene centric life
sciences tool company dedicated to support academic,
million venture capital pharmaceutical and biotech companies in their research
of gene functions and drug discovery. OriGene’s novel
On Mar. 17th, 2010, Beijing OriGene Technologies, product line includes the world’s largest cDNA and shRNA
Inc.(Beijing OriGene) announced it has won clone collection, over 5,000 purified human proteins, high
USD16 million Series B venture capital from IDG- quality monoclonal antibodies, 100,000 highly validated
Accel, SBI & TH Venture Capital Management human tissues, and Lumines Multiplex Assay products.
Co., Ltd., and Zero2IPO Capital, and its previous OriGene also provides a broad range of antibody validation
investors, Morningside Venture Investments and products including genome-wide tagged antigen standards
President International Development Corp. also and extensive IHC slides derived from the company’s tissue
participated. The venture capital will be mainly used collection.
to continuously build the largest collection of next
generation monoclonal antibodies (TrueMABTM)
covering the majority of human proteome in the
world.

“This capital will facilitate the accomplishment of
building the largest monoclonal antibody collection
in the world covering the entire human genome of
approximately 20,000 genes.” said Mr. He, Beijing
L i l l y ’ s M u l t i - D r u g R e s i s t a n t
OriGene’s Chairman and CEO. Tuberculosis Plan in China
Beijing OriGene has dedicated to build the largest Cooperating with Zhejiang Hisun Pharmaceutical Co.,
collection of human full-length cDNA clones since Ltd. (Zhejiang Hisun), a well-known anti-infection
last decade. The project will be developed with the pharmaceutical enterprise in China, Eli Lilly Company (Lilly)
most up-to-date antibody technologies and will in the US, a global R&D-based pharmaceutical company,
be using authentic human full-length proteins as started to implement its global multi-drug resistant
immunogens during the manufacturering process. tuberculosis plan (MDR-TB) in China on Mar. 23rd, 2010.

TrueMABTM monoclonal antibodies are currently This MDR-TB project exists to save lives by preventing
available in the market and will be utilized by and treating MDR-TB – a terrible disease that afflicts
commercial partners for various applications millions of people in some poor regions throughout the
like flow cytometry and Multiples enzyme-linked world. According to Mr. Lai, Lilly’s CEO in China, Lily has
immunosorbent assays. It was estimated by some cooperated with Zhejiang Hisun by transferring technology
insiders that as of 2020, there will be about 3,000 of capreomycin for free, training relevant technicians, as
kinds of new drugs produced by biopharmaceutical well as proving ample funds, besides, in order to effectively
technology, and gross output value of drugs produced control the spread of MDR-TB, the company will also carry
by biotechnology will reach USD396 billion, out a series of health education, such as training medical
disclosed by Liu Yanhua, Undersecretary of Ministry personnel, popularizing prevention knowledge, etc.
of Science and Technology in Jun. 2007. Therefore,
the promising prospect of biopharmaceutical Lily has successfully transferred a series of production
industry attracts venture investors’ capital. technology of capreomycin to Hisun till now, and Hisun has
launched capreomycin production line for this project with
According to statistic from Zero2IPO, an information total capacity of 5 million doses/year.
and consultation for venture capital (VC) and private
equity (PE), in 2009, there were total 49 cases of VC By far, Lilly has invested USD135 million for this MDR-
and PE to have been invested in the pharmaceutical TB project. In Jan. 2010, contributed by this project,
industry with total investment of USD320 million, Lilly won “2009 Multinational Corporations in China
among which 31 cases are invested into development Contribution Award “. “This award future indicates the long-
and expansion of pharmaceutical companies. “It term commitment for preventing and treating tuberculosis
is estimated that in 2010, investors of VC and PE in China, especially for MDR-TB,” said Mr. Eric Baclet,
will be further active in pharmaceutical industry.” Regional CEO of Lilly in China in Jan. 2010.
said Zhengyufen, senior project manager of medical
health department in Zero2IPO. MDR-TB prevention and treatment is austere in China.
According to a report issued by Chinese Ministry of Health,
Note:



there were about 4.5 million patients with active tuberculosis in China as of Mar. 2009, 80% of which were in rural areas. Besides,
according to a WHO research in 2006, about 130,000 new MDR-TB patients increase annually in China, accounting for 28% of the
world’s total newly MDR-TB patients. At the same time, high treatment expenditure for MDR-TB, usually 100 times higher than
that for normal tuberculosis, also restricts patients’ treatment.

Great concern for treatment of MDR-TB has been shown in China, where symptoms suspicious of tuberculosis are checked, and a
unified free treatment for free program for patients diagnosed is also provided. During the year 2001 to 2008, there were 642,000
MDR-TB patients healed.

Capreomycin is mainly applied for mycobacterium-caused tuberculosis patients who aren’t healed with first-line anti-drugs such as
streptomycin, isoniazid, rifampicin and ethambuto, etc., and for the patients who are not applicable to the above mentioned first-
line anti-drugs, attributed to toxicity or bacteria resistance. It will be acquired bacterial resistance when used separately, thus only
with combination of antibacterial drugs can it cure TB.

superiority in R&D and production. At present, it has become the largest heparins
Hepalink ratified to be sodium’s API production and sale enterprise in the world. According to statistics from
listed China Customs in 2009, Jan. 2009 ~ Sep. 2009, Hepalink’s export value reached
USD175.8 million, accounting for 39.5% of national total export value of this product.
In Apr. 2010, Shenzhen Hepalink
Pharmaceutical Co., Ltd. (Hepalink), Currently, supply of heparins sodium’s API falls short of demand and inadequate
the biggest supplier of heparins capacity has become the bottleneck for its further development in future. The launch of
s o d i u m ’ s A c t i v e P h a r m a c e u t i c a l this new production line will effectively solve this problem, disclosed by insider in Apr.
Ingredients API in the world, has 2010.
been formally ratified to be listed in
Shenzhen Stock Exchange by China After it is listed in Shengzhen Stock Exchange, stock holder of the company will benefit
Securities Regulatory commission. a lot. Lili and Litan couple, Hepalink’s facto controller holding 288.0 million Hepalink’s
stock shares, will become the richest person in Chinese mainland valuing USD6.3
The company will issue 40.1 million billion. And stock value of Goldman Sachs, a full-service global investment banking and
stocks, with about USD21.7 per share, securities firm, who invested USD 4.9 million to Hepalink in 2007, and holding 12.5%
to raise about USD869.5 million, stocks of the company, will reach USD966.2 million, 93 times of its initial investment.
among which about USD70.8 million
will be used for its new heparins According to Hapalin’s Prospectus issued in Apr. 2010, it is estimated that as of 2010,
sodium’s API production lines with demand for heparins sodium’s API will reach 6142 tonnes, achieving a CAGR of 10.2%
capacity of 830t/a, and about USD56.2 year on year.
million will be used as floating capital
of this project. The products of this new However, Hepalink may also face some uncertainties in future. Its profit margin
production line are in accordance with will decline in the future, since the production cost of raw material of heparins
authentication standards of U.S. Food sodium’s API, which accounts for 85% production cost, may increase in the future,
and Drug Administration (FDA) and while heparins sodium’s API price will decline due to the expanded capacity of other
Certificate of Suitability for European companies in recent years (TABLE 2).
Pharmacopeia (CEP).

Hepalink has been developing rapidly
since 2007. In 2009, its revenue and TABLE 2: Hepalink’s heparins sodium’s API export value, Jan. 2006~Sep. 2009
net profit reached USD32.8 million
Hepalink’s export
and USD11.9 million, respectively up Year Total export value value Market share
411.2% and 387.8% year on year. Its 　 (million USD) (million USD) (%)
revenue and net profit respectively Jan. 2009~Sep. 2009
　 444.2 175.8 39.5
realized a CAGR of 172.6% and 244.5%
from 2007 to 2009. 2008 226.1 63.5 28.1
2007 137.5 27.6 20.1
The company’s rapid achievement
2006 103.3 29.4 28.5
is mainly thanks to its technical
Market share=Hepalin’s export value/total export value
Source: Hapalin’s Prospectus issued in Apr. 2010



of Cephalosporin Oxazine Amidine can further enhance
Technology & New Product the company’s hi-tech innovation capability, which is in
accordance with its strategy – patent first, distribution
Cephalosporin Oxazine Amidine follows in overseas market. Through this way, Baiyunshan
Pharmaceutical’s COA will participate in international
produced by Baiyunshan competition.”
Pharmaceutical obtains USP
With accession to WTO, Chinese government has issued a
On Apr. 11th, 2010, Cephalosporin Oxazine Amidine series of policies such as Measures for the Administration
developed by Guangzhou Baiyunshan Pharmaceutical of Drug Registration, to support R&D of new drugs with
Co., Ltd.( Baiyunshan Pharmaceutical) successfully independent intellectual property rights. Mr. Liu Xuebin,
achieved the US Patent(USP), and Baiyunshan one of the key researchers for Cephalosporin Oxazine
Pharmaceutical will cooperate with the South Amidine, said ”Aided by relative supporting policies of
China Center for Innovative Pharmaceutical, a non- government, pharmaceutical companies have changed the
business scientific organization engaged in new disjunction of drugs R&D and market demand, and have
pharmaceuticals creation and public services, to been taking more important role in innovation of new
develop this new drug, revealed Mr. Chen, General drugs as they are fully informed of market demand. ”
Manager of Guangzhou Baiyunshan Pharmaceutical
Co., Ltd. (000522, one of the leading pharmaceutical Mr. Chen also showed his confidence in the market
manufacturer in Guangdong Province). prospect of this new drug. According to statistics from
Chinese Pharmaceutical Association, national organization
The newly developed drug enjoys good antibacterial of pharmaceutical professionals, total consumers of
activity to gram-positive bacteria. Mr. Zhu, Deputy cephalosporin in 22 major cities in China have reached
Director of Baiyunshan Pharmaceutical, said USD101.5 million in 2008, up 27.0% compared with 2007.
”Cephalosporin Oxazine Amidine has an entirely Besides, exemplified by cefathiamidine, with sales revenue
new chemical structure which is obtained through of USD44.0 million in 2009, coupled with rich experience
molecular modification of cefathiamidine, and has for promotion of products, Cephalosporin Oxazine Amidine
shorter half-life and less toxicity than cefathiamidine, is bound to win good prosperous market in the future.
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, especially for pharmaceutical
companies. Thus, the achievement of obtaining USP



News in Brief

Sanofi - Aventis builds research Bayer Schering Pharma (China)
center in China upgrades
On April 6th, Sanofi - Aventis Group (Sanofi - Aventis), Since this year, Bayer Schering Pharma (China) upgraded
the largest drug manufacturer in Europe, announced that to be a separate district and reported directly to
it would set up its R & D centers of Asia Pacific in China headquarters. It will invest USD132.92 million to global R
to accelerate the development of drugs and therapies & D center in Beijing in next 5 years and launch four new
innovation. The R&D will radiate regions including Japan, varieties to speed up the exploitation of Chinese market. It
Russia and India. achieved USD704.53 million sales revenue last year, up by
28% year on year.

N o v a r t i s ( C h i n a ) p u b l i c i z e s
diabetes treatment breakthrough Biopharmaceutical output value
in Jiangsu to exceed USD73
On April 21st, Novartis (China) and the Ministry of Health billion in 2012
joined hands to issue the largest diabetes treatment
breakthrough on "Second Sino-US high-level exchange of Recently, Science and Technology Department of
Cardiovascular Summit" held in Shanghai. The breakthrough Jiangsu Province published Development Plan of
of NAVIGATOR attract great concern from cardiovascular New Biotechnology and Pharmaceutical Industry in
experts, since it showed that RAS inhibitors Valsartan can Jiangsu Province (2009 ~ 2012). The plan shows that
effectively prevent diabetes occurrence for pre-diabetes. Biopharmaceutical output value in Jiangsu will exceed
USD73 billion in 2012 compared with USD29 billion

Fosun’s net profit up 91.3% in Q1 currently and it will push Jiangsu to be the most active area
of new biotechnology and pharmaceutical industry all over
2010 the world.

On April 29th, Fosun Pharmaceutical (Fosun) announced its
first Quarter Report in 2010, according to which its revenue
increased by 27.34% and net profit by 91.3% aided by
excellent performance of key pharmaceutical business, and
benefit from stock transfer.



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