At the beginning of 2009, IPO activity was at a standstill. But as the year progressed, and the threat of a complete financial disaster receded, a few companies managed to complete transactions that made them publicly owned entities, including several representatives of the China life science sector. We looked at how they fared, noticing a huge difference between those that listed in China and those who chose a US exchange for their home.
In mid-summer of 2009, China lifted its IPO ban, allowing companies once again to access public markets. The first entry, a successful transaction, was Guilin Sanjin Pharmaceutical Co. (SZ: 002275), which ended the year with a 41% increase. But the life science companies that listed on the ChiNext did even better -- often providing a 100% return or better. All of this is in sharp contrast to the experience of life science companies that chose to list on US exchanges.
In the last two months, three China life science companies have made their debuts on US exchanges. The most important insight from these IPOs is that they actually took place. In the previous 12 months, the worldwide economic crisis prevented almost all IPO activity, so a completed IPO became reason enough to celebrate. With that being said, the three companies – China Nuokang Bio-Pharma (NSDQ: NKBP), Concord Medical (NYSE: CCM) and China Cord Blood (NYSE: CO) – did not fare particularly well in their debuts.
Ranbaxy Laboratories has sold its share in a China manufacturing JV, Ranbaxy Guangzhou China (RGCL), to HNG Chembio Pharmacy Co Ltd. Terms were not disclosed. The sale was thought to have been spurred by Ranbaxy\'s desire to rationalize its worldwide operations after Japan’s Daiichi Sankyo purchased a 64% stake in Ranbaxy in June 2008. Ranbaxy will continue to supply the China market with pharmaceutical products, though from a different facility.
Sinovac Biotech (NSDQ: SVA) has applied to the SFDA to begin a clinical trial for a vaccine that protects against human enterovirus 71 (EV 71), which causes hand, foot, and mouth disease (HFMD). Sinovac began work on the vaccine over one year ago with research help from the CDC of China. At that time, Sinovac said enterovirus infections did not have specific treatments or a preventative vaccine. The company’s clinical trial application for a HFMD vaccine is the first filed in China.
Biostar Pharmaceuticals (OTCBB: BSPM) plans to launch its Xin Aoxing Oleanolic Acid Capsules in Beijing and Shanghai in early January 2010. Xin Aoxing is an OTC treatment for hepatitis B that produced 76% of the company’s revenues in Q3. Biostar said it expects the initiative will add $9 million to 2010 revenues, a meaningful addition to the $48 million of revenues that Biostar is on track to report for 2009.
Traditional Chinese medicine experts have discovered a TCM treatment for H1N1 flu, according to the Beijing Administration of Traditional Chinese Medicine. They selected Jin Hua Qing Gan Fang from more than 120 TCM flu remedies, finding that the treatment lessened flu symptoms and shortened the time people felt sick. Best of all, they claim it costs only one-fourth as much as western flu drugs and does not cause any adverse effects.