Unigene launches joint venture with Chinese state

By Ny Nick Taylor

- Last updated on GMT

Related tags Joint venture People's republic of china

US drugmaker Unigene has begun construction of new facilities in
China as part of its joint venture with a state-owned Chinese
pharmaceutical company to establish research, development and
manufacturing capacities in the nation.

The joint venture is in conjunction with state owned Shijiazhuang Pharmaceutical Group Corporation (SPG), its subsidiary China Pharmaceutical Group (CPG) and NBP Pharmaceutical Company (NBP).

The facility is designed to comply with the good manufacturing practice and good laboratory practice guidelines laid down by the US Food and Drug Administration and Chinese State Food and Drug Administration, as well as International Conference on Harmonization (ICH) guidelines.

Although global standards are being adhered to the facility is very much aimed at the Chinese market.

Dr Warren Levy, CEO of Unigene and vice chairman of the joint venture, said: " The PRC (People's Republic of China) pharmaceutical market for Western-style pharmaceuticals in 2006 was $13.1 billion, representing year-on-year growth of 30 per cent, one of the fastest growth rates in the world. "

It has been projected that the PRC will become the world's leading consumer of pharmaceutical products by the year 2020. "

The plant will initially focus on the development and production of osteoporosis treatments salmon calcitonin and parathyroid hormone, primarily for the Chinese market.

A phased completion of the site is planned, with a four-storey building scheduled to be finished first, around the end of 2008.

Facilities for molecular biology, fermentation, purification, pharmacology, analytical chemistry, formulation and pilot-scale production of biotechnology products will be housed within this first building.

Looking down the line further manufacturing facilities will be added for peptide production and manufacture of oral and nasal finished formulations.

Production and validation activities are expected to go live in 2009.

SPG has provided the 215,000 sq ft of land in the Shijiazhuang economic and technology development zone of Hebei Province on which the plant will be constructed.

The bulk of the funding is coming from SPG's subsidiary CPG, meaning the deal is effectively an acquisition of Unigene's technology by Chinese state-owned or affiliated companies.

In addition, NBP has opened up some of its facilities for 40 SPG/CPG employees to work exclusively on projects relating to the joint venture.

Financially the venture is quite complex but the financial burden on Unigene is minimal owing to the technology they are providing.

In addition there is an option for Unigene to repay a loan from CPG by providing additional technologies or reduce its share in the partnership at a later date.

This structuring of the deal should minimise the risk for Unigene in entering the Chinese market.

The company is still very much in the developmental stage and made a loss of $3.45m for the 2007 calendar year.

Regardless of the venture's outcome, the fact that a small company which is yet to establish itself firmly in Western markets is willing to chance its arm with a move into China highlights the importance some are placing on the nation.

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