On 17 September, with the two prime ministers present, Zhou Jun, Chairman at Shanghai Pharmaceuticals Holding Co., Ltd. (hereinafter referred to as "Shanghai Pharma"), and Dmitry Morozov, founder and CEO of Russia’s BIOCAD, signed an agreement in St. Petersburg, Russia to establish a joint venture named SPH-BIOCAD (HK) Limited (hereinafter referred to as the “Joint Venture”). The Joint Venture, which is the first and only platform for BIOCAD in Greater China, will introduce cutting-edge biopharmaceutical products and biotechnologies in the future.
Prior to signing the agreement, the two parties conducted several rounds of discussions and consultations on the details of the cooperation and the commercialization model of future products. In June of this year, during the 23rd St. Petersburg International Economic Forum, the two parties signed a shareholder agreement and a memorandum of understanding witnessed by the heads of China and Russia. The signing of this agreement marked the official establishment of the Joint Venture and the beginning of its basic operations. The joint venture is seen as a key project by both China and Russia and is highly valued by both governments.
The registered capital of the Joint Venture is US$400 million. Shanghai Pharma will contribute US$200.4 million in cash, accounting for 50.1% of total equity of the Joint Venture. BIOCAD will contribute US$29.94 million in cash and the consideration of the permanent and exclusive rights to R&D, production, sales and other commercialization rights for 6 biopharmaceutical products in China (including Mainland China, Hong Kong, Macao and Taiwan), accounting for 49.9% of the equity of the joint venture.
The first six biopharmaceutical products that the two parties will cooperate on include three biosimilars and three innovative biopharmaceutical products. The biosimilars, focusing on oncology and autoimmune diseases, have been marketed in Russia as well as in other countries in Central Europe and Asia. The innovative biopharmaceutical drugs include an IL-17 antibody, a PD-1 antibody and a GITR antibody. The IL-17 antibody was launched in Russia this year, and the PD-1 antibody is expected to receive approval for marketing in Russia shortly.
Cho Man, President at Shanghai Pharma, described the cooperation with BIOCAD as an important step for Shanghai Pharma to accelerate its development in biopharmaceutical drugs. The six selected products are all at the forefront of R&D, and have a very broad market potential in the cooperation region, combining the strengths of both parties in R&D innovation and marketing. Shanghai Pharma is looking forward to further leveraging this exclusive platform to carry out comprehensive and in-depth cooperation with BIOCAD on R&D and manufacturing to further diversify and improve its biopharmaceutical R&D pipeline, which will increase financial performance while benefiting patients.
Zhou Jun, Chairman at Shanghai Pharma, noted that this Joint Venture is another milestone in the innovation-driven transformation and international development of R&D for Shanghai Pharma and an important step for the company to improve its blueprint in biopharmaceuticals. This collaboration shows the company’s strong drive to innovate and is part of its strategy for rapid growth. The Joint Venture is a good example of both countries’ aim to closely and pragmatically collaborate in key areas. As the first cooperation between Shanghai Pharma and a Russian company, it is expected to perform strongly, with full support from both governments, under the motto “exploitation, innovation, mutual benefits and win-win results”.
Dmitry Morozov, founder and CEO of BIOCAD said: “This is largest international deal to date for BIOCAD. For many years, we’ve been looking for the right partner in China. Today, we are absolutely confident in having found the right partner. SPH has an outstanding local expertise and a long track-record of growth, while making medicines more and more affordable for Chinese patients. Our new enterprise will relentlessly strive to bring more game-changing advanced therapies to China.”
In recent years, one of the national goals of the Chinese government has been to transform China from a “large pharmaceutical country” to a “strong pharmaceutical country”. Driven by this policy, the pharmaceutical industry in China is undergoing rapid transformation and upgrade, which is reshaping the competitive landscape. R&D and innovation competencies have become the most crucial competitive strength of pharmaceutical companies. Shanghai Pharma has continuously increased its investment in R&D with a compound growth rate of 18.45% in R&D expenses from 2013 to 2018. At present, Shanghai Pharma has a total of 9 innovative drugs in different clinical development stages, 10 generic drugs approved for production, 6 varieties successfully passing consistency evaluation and 490 patents. It also has established R&D centers in China (Hong Kong, Shanghai and Benxi, Liaoning Province) and overseas (San Diego and Philadelphia in the United States). Shanghai Pharma is also accelerating the introduction of new drugs through in-depth cooperation with international biopharmaceutical companies.
In the next three to five years, Shanghai Pharma aims to accelerate its transformation from a generic to an innovative pharmaceutical company, and increase its R&D investment from 7% to over 10% of total sales from pharmaceutical manufacturing. Shanghai Pharma strives to become a top-40 global pharma company and represent China pharma companies on the world stage.
Introduction to BIOCAD:
BIOCAD is a leading Russian innovative company that integrates a world-class R&D center, cutting-edge pharmaceutical and biotech production, and an international system of preclinical and clinical studies. It is one of the few full-cycle drug manufacturing companies covering activities from molecule search to mass production and marketing support. BIOCAD's products are designed to treat some of the most complex diseases such as cancer, HIV, hepatitis, multiple sclerosis, etc. The company employs more than 2 200 people, including about 1 000 scientists and researchers.
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