China's Sino Bio Plans Acquisitions

Chinese pharmaceuticals producer Sino Biopharmaceutical is to seek out potential acquisition targets in order to boost growth prospects. In the first nine months of 2004, the company reported an 82% rise in net profit to some US$17.21mn, on revenue of US$103.01mn. Sino Bio also recently acquired a local company making the injectable cardio-cerebral therapy Alprostadil, which accounted for about a third of the company's revenue in the period.

Meanwhile, the company claims that it is ahead of much of the local sector in boosting its R&D spending. Chinese companies typically spend no more than 2% of revenue on discovery and development efforts, but Sino Bio has recently increased its own share to roughly 8%. The company could also stand to benefit from tough new Chinese regulations requiring all producers to adhere to GMP quality standards. Since Sino Bio insists that over a third of producers fail to meet such standards, it will gain from the already accelerating consolidation in the sector. However, many doubt that the new rules will be enforced throughout a local industry that is dominated by basic products, and in which the share of copy drugs also remains significant.