Pharmula Acquisition To Provide US Expansion Base For Jingxin
This article was originally published in PharmAsia News
Executive Summary
Shanghai-listed Jingxin Pharmaceutical is aiming to tap into the US market for its growing formulations business through the majority acquisition of Pharmula, a US-based contract services firm. The Chinese manufacturer is looking to capitalize on its partners’ strength in R&D to facilitate its global expansion.
SHANGHAI - Zhejiang Jingxin Pharmaceutical Co. Ltd. has acquired a 51% stake in the US contract research organization (CRO) Pharmula Laboratories for $1.02m in cash, marking the first step by the Shanghai-listed manufacturing company to tap into an overseas market for its formulation business.
The purchase of the majority stake in Pharmula indicates the company’s international R&D deployment, Jingxin said in a statement, in order to establish contacts and become familiar with market information and talent in the US, and furthermore to implement its abbreviated new drug application (ANDA) projects effectively in that market.
The acquisition will also enhance the company’s R&D strengths in developing formulations and preparations for chemical drugs, which is in line with its long-term and sustainable development goals, Jingxin explained.
Conshohocken, Philadelphia-based Pharmula, founded by industry veterans from major pharmaceutical companies, provides formulation development and analytical services ranging from active pharmaceutical ingredients (APIs) to finished products, as well as drug registration and filing capabilities in both China and the US.
“The acquisition is expected to close in late September 2015,” said Lance Liu, business consultant of Pharmula. “Pharmula will devote a substantial portion of its resources to develop products for the US market and manage the manufacturing, ANDA filing and eventual marketing of these products. And the current management shall continue to have control of Pharmula's operation.”
According to Liu, Pharmula can provide a cost effective way to file ANDAs in the US, using its network of consultants to prepare and file ANDAs to the US FDA with the option to bring them in-house when needed.
Pharmula has particular expertise in formulation technologies, including controlled release and injectable drugs using lyophilisation, as well as analytical method development on difficult to analyze active pharmaceuticals, Liu said.
The company also has experience in ANDA filings with Paragraph IV Patent Certifications against the Orange Book patents for generic drug companies, he noted.
Through this investment to gain a controlling stake in Pharmula, Jingxin will use its platform and R&D capabilities to develop products which have good market prospects but with high technical barriers for both the US and China markets, Jingxin said.
From APIs To Formulations
Jingxin manufactures both APIs and finished products with more than 160 products approved. It is one of the biggest manufacturers of quinolone antibiotics and holds large market shares for ciprofloxacin and levofloxacin. Jingxin’s products have been distributed to international markets including Southeast Asia, South Asia, Latin America and Europe.
Jingxin’s simvastatin and sertraline tablets have already been approved by the EU, and its rosuvastatin product is being prepared for EU and US approvals.
“Jingxin has seen steady growth of its API business but the company is continuously implementing its extensional strategy,” said Ming Li, an analyst with Industrial Securities. “Jingxin’s API business will be helping its formulation sector to actively seek a breakthrough in overseas markets.”
At the same time, Jingxin will also acquire new products or advanced technologies from abroad when it enters those markets, to further improve its product quality and help drug procurement bidding in China, Li added.
“Pharmula has strong R&D capability for developing first-time generic drugs and has experience in patent litigation,” noted Lei Zhang, an analyst with China Investment Securities. “This acquisition shows Jingxin’s readying for the international deployment of its formulation business, which is its future focus.”
In November 2014, Jingxin set up an equally oned joint venture with Crescent Pharma in the UK. The first phase of investment will be used for the registration of rosuvastatin tablets, a generic version of AstraZeneca PLC’s Crestor, with the UK Medicines and Healthcare Products Regulatory Agency.
Under the JV, Jingxin will manufacture the drugs, while Crescent will be responsible for product registration, product management and sales in the UK and other European countries. The patent of Crestor will expire in 2017.