2019-09-18 12:00

BIOCAD plans to establish a $400 million joint venture in China

Russian pharmaceutical company BIOCAD and Chinese Shanghai Pharmaceuticals Holding (SPH) have decided on the parameters of a joint venture (JV) SPH BIOCAD with a capital of $400 million. BIOCAD will contribute the rights to six drugs and $29.94 million, receiving 49.9%. The deal will allow the company to enter the Chinese market, whose turnover may grow from $100 billion to $250 billion in ten years.

BIOCAD CEO Dmitry Morozov and SPH Chairman of the Board Jun Zhou signed the final agreement to establish SPH BIOCAD in China on September 17. A representative of the Russian company told Kommersant about this. The capital of SPH BIOCAD is $400 million, SPH will invest $200.4 million and receive 50.1% of the company. BIOCAD will invest $29.94 million in exchange for the remaining stake, as well as permanent and exclusive rights to production, distribution and other four drugs for the treatment of oncology (Bevacizumab, Trastasumab, Adalimumab, Netakimab) and two more products under development. The rights will be valid in mainland China, Hong Kong, Macao and Taiwan.

Dmitry Morozov noted that SPH BIOCAD will become the BIOCAD platform to bring innovative products to Chinese and other Asian markets in the future. SPH, for its part, can expand its lineup with biological products for the treatment of cancer and autoimmune diseases, added the top manager. According to him, the revenue of SPH BIOCAD will be distributed in proportion to the share of participants. BIOCAD said that the creation of the SPH is planned to be completed by the end of 2019. The first three or four years of SPH BIOCAD's work will be spent on clinical trials and registration of six BIOCAD products in China.

"Based on the structure of the deal, BIOCAD technologies are estimated at $170 million. This is a very good indicator for the Russian company, given that most of the withdrawn drugs are reproducible," said Deputy CEO of Stada CIS Ivan Glushkov. According to him, the controlling interest in joint ventures traditionally remains with the Chinese side, which is due to the government policy. Under this scenario, the American Pfizer also entered the market, reminds the top manager.

According to Director General of DSM Group Sergey Shulyak, in 2018 the turnover of the Chinese pharmaceutical market exceeded $100 billion, and the world's largest market in the U.S. - $250 billion. But in the next ten years, the Chinese market can catch up with the American market, he predicts. At the same time, Mr. Shulyak believes that in addition to profits from participation in SPH BIOCAD BIOCAD can count on royalties from the sale of their drugs. World companies show on average financial indicators in China better than in other locations, echoed Ivan Glushkov. At the same time, he points out, China is reducing administrative barriers for foreign pharmaceutical companies to reduce prices for drugs against cancer, the number of which is growing.