Top R&D leaders from global pharmaceutical companies, including Pfizer, Eli Lilly, Roche, AstraZeneca and Merck, explained their R&D models and lessons learned from the past years in a roundtable discussion at the Asia Pharma R&D Leaders conference held in Shanghai recently.

The main function of Lilly’s China R&D center is supporting Lilly’s global development. Only a small part of its R&D effort is focused on de novo discovery. In this regard, Eli Lilly works with academics and CRO partners across China, and these efforts have generated several drug candidates, two of which are in phase I clinical trials.

AstraZeneca’s China R&D Center, dubbed the “Innovation Center”, focuses on “translational research.” Richard Wang, director of strategic alliance and collaboration in Asia, said, “We have a lot of discovery compounds in the pipeline; the key is to convert them into medicine.” AstraZeneca’s China R&D center has an in-house research team, but also works with external entities including academia, CROs and other pharma service providers. Three drug candidates have come out of these efforts, and the drug candidates are all targeting diseases prevalent in Asia.

Lundbeck started its China R&D by outsourcing chemistry work, which gradually turned into more commitments to CROs – now full projects are given to CROs. The main challenge is to integrate the in-house discovery work from its R&D labs in Europe with the CRO work in China.

When asked about what they have learned doing R&D in China, Eli Lilly’s site head of China Tony Zhang said, “External work can increase the efficiency of the drug development value chain, but we have to define clearly what we do, and how to check it.” Others mentioned the importance of management of human factors: “Chinese researchers are competent and driven, but sometimes lack experience.” Aside from managing researchers, the relationship management between scientists, CROs and headquarters is a challenging task as well.

There are significant economic reasons for global large pharmas to build their R&D efforts in China, including time, cost, market and talent. But aside from economics, in the measurement of increased success rate of drug discovery, will China do better than developed nations?

The transaction was approved by the boards of directors of both companies. Millipore and Merck will create a €2.1 billion (US$2.9 billion) world-class partner in the life science sector, achieving significant scale in high-margin specialty products with an attractive growth profile.

Together, Millipore and Merck will have a significant presence in high-growth segments and an enhanced geographic presence. Combining the research and development capabilities of both companies will create a powerful innovation platform to develop cutting-edge technologies that are tailored even more closely to the needs of customers.

The acquisition will be funded through available cash and a term loan provided by Bank of America, Merrill Lynch, BNP Paribas, and Commerzbank Aktiengesellschaft. Merck plans to replace part of the facility by issuing bonds later. Merck is committed to retaining a solid investment-grade rating.

Millipore has a strong position in the attractive bioresearch and bio-production segments, offering a comprehensive range of products, technologies and services for pharma and biotech companies, as well as for academia, to improve laboratory productivity and develop and optimize manufacturing processes.

Millipore has been continuously transforming itself into a life science leader by driving innovation, entering new markets and generating exceptional operational performance. In 2009, Millipore generated sales of US$1.7 billion, with around 6,000 employees in more than 30 countries. The transaction is expected to be completed by the second half of 2010.

The difference between hotspot and differentiation
In China, local and national governments have integrated various resources into the building of bio-industrial parks adopting the business model that first proved successful in the US. Creation of bio-industrial parks is a complex undertaking that presents challenges at every step from idea to application. Following the success of Wuxi AppTec Co. Ltd (Shanghai, China), a leading CRO company; many bio-industrial parks began to seek out and groom similar world class companies such as those providing outsourcing services or conducting researchand development (R&D).

Although the Chinese pharmaceutical outsourcing market is growing rapidly, this does not mean that all bio-industrial parks should focus on CROs. In my view, these bio-industrial parks should pay more attention to the following three factors: local investment environment, geographical location and high-tech talent. Based on the differentiation of these factors, and a need for specialty and high-quality science parks, a national strategy was devised and executed for the whole of China.The challenge for the strategy is matching the needs of companies to local resources. R&D companies need a technology pool (such as academic institutions) and investigative talent; clinical trial companies focus on patient populations and better hospitals; manufacturing enterprises are concerned with cost reduction. Bio-industrial parks should, therefore, introduce targeted companies and develop their specialty according to the appropriate differentiation within the biotech industry.

Balancing me-too and innovation
It is necessary for the government to encourage Chinese companies to be innovative. While innovation is very important but relatively weak as a basis for China’s pharmaceutical industry, me-too, outsourcing, in-licensing and out-licensing are other essentials for the growth of the industry. In most of China’s second-tier cities, me-too and outsourcing would be the better option as a focal point for development activities.

Furthermore, I believe the small and medium-sized enterprises engaged in short term development, for example, production of diagnostic reagents, may be better suited to second-tier bio-industrial parks. In contrast,companies based on proprietary technology require a long-term strategy and market orientation. As such, the government plans a park’s development strategy based on the local development situation and future goals in order to strike a reasonable balance between me-too companies and innovative ones.

Opportunities and challenges
China has the world’s largest population, and the country has undertaken sweeping reforms designed to improve healthcare access in the country. At present,China is actively promoting a rural health policy to activate and improve the health insurance for 800 million rural farmers. This initiative undoubtedly represents a huge number of opportunities for domestic and international pharmaceutical businesses. We believe that an annual 25% growth rate of China’s pharmaceuticalindustry will remain consistent for the next five years(the end of China’s twelfth Five-year Plan for Economic Development).

Harnessing these growth opportunities is a new challenge. Each of the top ten pharmaceutical companies has entered China and is either building an R&D center or renting space for R&D operations. However,some companies are still hesitating, wondering about the uncertainty of Chinese policy and marketing. Certainly,adapting to a rapidly changing market is a difficult challenge for small and medium-size enterprises.

Balance soft environment and hard infrastructure
Most of the bio-industrial parks have made large investments in construction infrastructure, including first-rate buildings and advanced equipment and instruments. The true accelerators of enterprise development, however, are more important than these solid structures. These catalyst include optimised training systems, efficient talent recruitment services, frequent academic communication, professional law services and intellectual property rights consulting. As a lead-ing and professional consulting company, we providethese services to developing enterprises. From talent recruitment, market expansion to finance channels,we provide a one-stop service.

China’s Ministry of Finance (MoF) announced Friday that the central government had authorized the spending of 37 billion RMB ($5.5 billion) as part of its larger 850 billion RMB healthcare reform, announced last year. The new money will help give medical care access to lower-income citizens.

WuXi PharmaTech plans to continue its growth by expanding into biotech, safety evaluation and manufacturing. In fact, to make the growth a reality, the company invests about $60 million each year in capital expenditures. “The majority of our clients are big international firms, with Pfizer and Merck ranking as the top two,” said Edward Hu, COO of the WuXi PharmaTech in a recent interview.

WuXi PharmaTech also reported its Suzhou non-clinical safety testing facility received full accreditation from the Association for the Assessment and Accreditation of Laboratory Animal Care International (AAALAC), an important step in WuXi’s goal of gaining international acceptance of the new lab.

China Cord Blood Corporation has acquired a 20% equity interest in Shandong Cord Blood Bank (SCBB) for $20.5 million. China Cord Blood already projects an investment yield in this year of 5% or about $1 million from the purchase. More importantly, China Cord Blood also has right of first refusal on future equity interests in SCBB. China Cord Blood raised $20 million in a secondary offering late last year.

Fosun Pharma will invest $9.7 million into Biosino Bio-Technology and Science in a move to increase its presence in the in-vitro diagnostic sector. After the transaction is completed, Fosun will hold approximately 24% of Biosino’s outstanding shares. The shares were priced at HK$2.36 (US$.30), about a 20% discount to Biosino’s recent trading price.

Beijing Shenghong Biotechnology Co. has paid 28 million RMB ($4.1 million) to Tibet Rhodiola Pharmaceutical Holding Co. (SHEX: 600211) for four new drug projects and research findings. According to an announcement, Tibet Rhodiola and a subsidiary company have spent 24.7 million RMB on the products. Shenghong will also assume debt associated with the drugs, though the amount of debt was not specified.

H Lundbeck A/S (CPH: LUN), a pharmaceutical company headquartered in Denmark, expanded its Asian sales agreement with Teva Pharma to include Azilect (rasagiline), a treatment for Parkinson’s disease. The agreement gives Teva the right to market Azilect in China and five other Asian countries. Lundbeck will be responsible for conducting clinical trials of the drug and obtaining SFDA approval.

China Aoxing will collaborate with QRxPharma Limited (ASX: QRX and OTCQX: QRXPY), a clinical stage Australian pharma, to develop MoxDuo®IV for the China market. MoxDuoIV is an IV formulation of QRxPharma’s patented morphine and oxycodone Dual-Opioid™ technology for the acute treatment of moderate to severe pain.

Dishman Chemicals and Pharmaceuticals, the Indian company that offers contract research and manufacturing services (CRAMS), said its new Shanghai manufacturing facility will begin operations almost a year behind schedule. Originally, Dishman expected to have the facility on line in October 2009, but it now expects that all government inspections will be completed in August/September 2010.

In mid-summer of 2009, China lifted its IPO ban, allowing companies once again to access public markets. The first entry, a successful transaction, was Guilin Sanjin Pharmaceutical Co. (SZ: 002275), which ended the year with a 41% increase. But the life science companies that listed on the ChiNext did even better — often providing a 100% return or better. All of this is in sharp contrast to the experience of life science companies that chose to list on US exchanges.

In the last two months, three China life science companies have made their debuts on US exchanges. The most important insight from these IPOs is that they actually took place. In the previous 12 months, the worldwide economic crisis prevented almost all IPO activity, so a completed IPO became reason enough to celebrate. With that being said, the three companies – China Nuokang Bio-Pharma (NSDQ: NKBP), Concord Medical (NYSE: CCM) and China Cord Blood (NYSE: CO) – did not fare particularly well in their debuts.

Ranbaxy Laboratories (RBXLF.PK) has sold its share in a China manufacturing JV, Ranbaxy Guangzhou China (RGCL), to HNG Chembio Pharmacy Co Ltd. Terms were not disclosed. The sale was thought to have been spurred by Ranbaxy’s desire to rationalize its worldwide operations after Japan’s Daiichi Sankyo purchased a 64% stake in Ranbaxy in June 2008. Ranbaxy will continue to supply the China market with pharmaceutical products, though from a different facility.

Sinovac Biotech (NSDQ: SVA) has applied to the SFDA to begin a clinical trial for a vaccine that protects against human enterovirus 71 (EV 71), which causes hand, foot, and mouth disease (HFMD). Sinovac began work on the vaccine over one year ago with research help from the CDC of China. At that time, Sinovac said enterovirus infections did not have specific treatments or a preventative vaccine. The company’s clinical trial application for a HFMD vaccine is the first filed in China.

Biostar Pharmaceuticals (BSPM.OB) plans to launch its Xin Aoxing Oleanolic Acid Capsules in Beijing and Shanghai in early January 2010. Xin Aoxing is an OTC treatment for hepatitis B that produced 76% of the company’s revenues in Q3. Biostar said it expects the initiative will add $9 million to 2010 revenues, a meaningful addition to the $48 million of revenues that Biostar is on track to report for 2009.

Traditional Chinese medicine experts have discovered a TCM treatment for H1N1 flu, according to the Beijing Administration of Traditional Chinese Medicine. They selected Jin Hua Qing Gan Fang from more than 120 TCM flu remedies, finding that the treatment lessened flu symptoms and shortened the time people felt sick. Best of all, they claim it costs only one-fourth as much as western flu drugs and does not cause any adverse effects.

1 阿斯利康

9月，阿斯利康（中国）在上海张江高科技园区正式奠基。该项目将分两期建设。一期包括中国区业务总部办公楼、培训中心和部分亚太及全球职能中心，预计于2011年1月竣工并投入使用；二期为阿斯利康中国创新研究中心新址，将于2012年底完工。

2008年阿斯利康公司全球营业额超过316亿美元，中国贡献了6亿美元。不过即便如此，阿斯利康超越了传统的对手——辉瑞、葛兰素史克、赛诺菲安万特，排在了跨国制药企业中国销售的冠军位置。从2001年在中国的销售额仅为8500万美元，到2008年，阿斯利康的销售数字定格在6亿美元，年均增长率近30%。而阿斯利康未来10年在中国的年增长率定在22%，这意味着在2018年，销售额将翻三番达到48亿美元。中国将是阿斯利康全球最重要的市场之一。阿斯利康目前在中国正在培养自己的销售队伍，且要利用城市包围农村之战略在华夏大地谋占我国医药市场。

2 拜耳医药

09年年初，拜耳医药保健旗下的拜耳先灵医药宣布，投资1亿欧元在北京建立全球研发中心，从而加强公司在全球范围内的研发能力。

拜耳医药保健执行委员会成员、拜耳先灵医药董事会主席安德里费比说：“拜耳一直在加强亚太区的业务，中国更是公司业务增长的主要驱动力。在新建立的北京研发中心，拜耳将组建一支世界顶级水平的研发团队，从而延展拜耳全球的研发专业知识和能力。北京将是拜耳全球创新药物开发的重要地点。”

德国拜耳医药保健2008年的亚太区业绩：总销售收入为9.1亿欧元（合13亿美元），中国市场对其业绩贡献达到48%，北京将是拜耳全球创新药物开发的重要地点也是顺理成章之事。

3 罗氏

09年年初，瑞士罗氏公司向媒体透露或许今年会首次收购一家中国生物科技公司，或者购买中国公司开发的化合物的销售权。

罗氏公司主管全球制药研发事务的Lee Babiss道“我们不仅在寻找这些领域里的资产，而且还在寻找药物制剂，因为中国公司对这方面的理解真的非常深刻。我们也在重点关注一些机会，这可能涉及兼并和收购，或者简单的许可交易。”

2008年，罗氏全集团的收入456亿瑞士法郎，其中有100亿瑞郎是来自于诊断这条业务线的收入。而在中国市场罗氏诊断年增长率超过了30%。中国市场以19%以市场份额占到了亚太市场第一位，是整个亚太市场1/3的规模。随着制药公司在美国和欧洲这些成熟市场上的销售收入下降，它们正在将目光瞄向中国等新兴市场，以寻求获得更大的销售份额。罗氏正在中国实施的科研项目大约为6个。

4 强生制药

2009年4月16日，强生制药研发中心宣布在上海建立新研发中心，并成为其亚洲区研发总部。此次在上海建立亚洲总部，强生制药研发中心将把公司在北京、孟买、班加罗尔等地研发队伍整合起来，并与高校、研究机构和企业构建协作网络，致力于开发新的医疗方法。

本年第一季度强生公司药品业务销售收入下跌7.2%，为150亿美元；第二季度。药品业务销售收入下跌13.3%，仅为55亿美元。而强制药中国区每年的增长比例都是以两位数的速度在上升，这也充足表明了中国市场的价值所在。对于各大制药公司来说，中国机会不仅意味着市场和销售，而且让整个产业链深受裨益。

5 赛诺菲安万特

2009从今年年初开始，赛赛诺菲-安万特在中国医药市场特别活跃。赛诺菲安万特与宣武医院牵手研发合作；与中国杭州民生药业有限公司签订意向书，双方拟共同组建一个新的消费医疗产品合资企业，新的合资企业将成为赛赛诺菲-安万特进入中国非处方药市场的战略平台；增加6亿元投资，扩建位于北京经济技术开发区的胰岛素工厂，建设来得时（甘精胰岛素）预灌装生产线；斥资 2.7亿元在杭州滨江高新区建新的生产基地，用于生产心血管病和癌症治疗药物；投资9,400万美元（人民币7亿元）在深圳建设的流感疫苗生产基地，将于今年完成施工并进入设备和工艺验收阶段，并将于2012年按计划投产。

赛诺菲-安万特在中国成绩的取得源于其跟上了中国市场发展的脚步；源于其对中国市场的透彻了解和分析；源于其勇于开拓新兴市场的胆识与智慧；源于其不仅仅是要获取，而是要双赢的合作精神。在新兴市场中，赛诺菲-安万特的做法或可成为跨国药企的样板，而其对发展战略的深思熟虑、对市场和投资的精准把握及其与合作伙伴的紧密结合等，更值得我们借鉴学习。

6 诺华公司

2009年诺华公司在上海的研发中心正在动工， 诺华要在未来5年内共投资10亿美元，在上海建立全球第三大研发中心，同时宣布其全球技术中心的重要组成部分–苏州诺华制药科技有限公司在江苏常熟正式投入运营。

2009年诺华在华还有两项现金投资，分别是2500万美元增资诺华常熟生产基地和购买浙江天元生物药业85%的股份。

诺华中国2008年在华销售额为33亿元，同比增长29%，完成了“厚积”项目，被看作是“打基础”的阶段基本完成，接下来将进入高速发展期。在专利药和OTC领域，未来5年诺华将有计划地分别上市超过20个产品，非专利药山德士则期望每年上市20个产品。作为全球第5大疫苗提供商，诺华在中国也正加快步伐。

7 默克

2009年，默克9月以4000万美元收购苏州泰珠科技发展有限公司。11月其旗下业务部门默克雪兰诺对外宣布，公司计划在北京建立一个全球研发中心，未来4年将投入1.5亿余欧元（约合人民币15亿余元）用于建设该研发中心。

根据医药市场权威调研机构IMS Health发布的2009年截至目前的数据，默克集团在华医药业务今年增速位居中国前15大医药外资企业首位。默克雪兰诺在中国的业绩突出，销售收入近三年内增长了9-10倍。默克雪兰诺在中国已经有分布在8个不同领域的16个产品上市销售。主要分布在生殖、肿瘤、内分泌、心血管、外科急症等领域，在上述多个领域默克雪兰诺已经是市场主导公司，比如甲状腺领域默克雪兰诺的市场份额已经超过80%，在生殖领域的市场份额也超过65%。默克雪兰诺目前正在忙于新药在中国的注册事项。

8 辉瑞

2009年，辉瑞在中国先是对辉瑞制药有限公司新无菌车间追加投资建成一个新的生产车间，然后是扩大华研发规模武汉光谷设研发机构，接着联手北大开展生命科学基础研究。

辉瑞进入中国市场的时间较早，1989年辉瑞在大连建立现代化的工厂。辉瑞目前是在我国投资最大的外资制药企业之一，在全国一百多个城市开展经营活动。今年一季度，辉瑞公司净收益下跌2%，但在新兴市场的业绩增幅为9%，包括中国在内的亚洲市场受到金融危机的影响较小。而中国正在进行的医疗体制改革，更让辉瑞重新梳理在华发展战略和重点。

9 雅培

雅培加大对中国地区的研发投入——今年年初，雅培在中国新建了两家生产基地，其中一个是位于广州的专门服务于中国市场的营养品生产厂，也是唯一一家由雅培营养部运营的服务于单一市场的生产厂。此外，雅培还在上海浙江高技术工业园创建了研发中心，这是该公司在中国的第一个研发设施。

雅培公司国际营养部高级副总裁陈芳田日前表示，中国经济的高速增长为雅培这样的跨国公司带来发展机会，中国是一个非常重要的市场，“未来5年内，中国将是雅培公司业务增长的关键贡献者”。

2008年，雅培的药品销售额为167亿美元。雅培国际（中国）总经理周文军说：“每个人都知道这是个大国，医疗保健行业的市场潜力巨大。没有人能够接受十年之后自己没有在中国发展的代价。大家在基本战略上的认识是比较一致的。”

10 葛兰素史克

今年10月，葛兰素史克出手与江苏沃森公司组建合资企业，研发并生产面向中国市场的小儿疫苗。

虽然目前处方药仍是葛兰素史克在华最大的一块业务，但疫苗和消费品未来成长的潜力更大。是以葛兰素史克正加大对保健消费品和疫苗领域的投入，要在中国形成三足鼎立的业务构成。目前葛兰素史克的整个重心已经转移到东部地区，以中国市场为例，北京、上海和广州这样的大城市的经济总量可能已经超过欧洲一个国家了，未来增长空间很大。

Syngenta Biotechnology opened a temporary R&D facility in Beijing in the summer of 2008 and already has 70 employees on staff. Worldwide, Syngenta employs 24,000 people in more than 90 countries. Of these, 4,000 are working in R&D.

Michiel van Lookeren Campagne, President of Syngenta Biotechnology, called the China facility a “capability expansion.” The company says its Beijing lab is the first foreign-funded agricultural biotech research institution in China.

The Biotechnology division of Syngenta is headquartered in the Research Triangle Park in North Carolina. In 2001, 85% of Syngenta’s revenues came from chemicals. Only 15% came from seeds.

Syngenta, the parent company, opened a chemical R&D center in Goa, India in 2007.

In the new Reimbursement List, there are 1164 western drugs: 349 in class A, 791 in class B, another 20 drugs covered only by work-related injury insurance, and four drugs covered only by maternity insurance. There are 987 TCM drugs; 154 are in class A, while 833 are in class B.

New regulations limit the amount of money to be spent on drugs that are subject to abuse.

The new List has four major features that are different from the 2004 version of the List:

1. All therapeutic drugs in the National Basic Drug List are placed in the A class, providing the highest level of reimbursement for these basic medications. Insurance participants don’t need to pay for A class drugs, and local governments are prohibited from changing the prices on A class medications;
2. 260 drugs were added to the list, an increase of 13.7%. The number of class A drugs rose by 53, a jump of 11.8%;
3. Infrequently used drugs or those that have been replaced by better equivalents were replaced;
4. Local governments can construct a point-of use drug reporting system, which also has a method for getting permission to use drugs that are outside of the List, but are used for clinical emergencies and special diseases.

The A class section of the new list went into effect on December 1. Local governments will be allowed to adjust the level of reimbursement for B class drugs, though they must release their lists no later than March 2010.

Battered by economic uncertainty and under pressure to deliver better medical products in more cost-effective ways, pharmaceutical companies are increasingly driven to outsource their research and development to clinical research organisations (CROs) in Asia. This trend in the biomedical sector is poised to make China one of the most popular CRO destinations within the next 10 years. This week, RightSite looks at how investors can profit from the growth of China’s CRO industry.

Creating a Structure for Growth

Compared with the rapid development of China’s manufacturing outsourcing industry, China’s pharmaceutical R&D outsourcing, formally referred to as Clinical Research Outsourcing, has lagged behind. This slower development can be traced to the slow development of China’s biomedical sector, as well as to earlier failures to protect the intellectual property which is critical to industry confidence. However, improvements over the past decade such as the government’s heavy investment in the bio-medical industry and stricter enforcement of intellectual property laws have provided a major boost to the country’s medical research ability. (Read more about government initiative and the health reform in “China Medical Zones Provide Opportunities”). Industry development has also been driven by the growth of demand for medical products and services from China’s burgeoning middle class.

Strengthened IP Rights Protection of Pharmaceutical Products

China’s progress on the protection of pharmaceutical IP rights offers a better investment environment for multinational pharmaceuticals that sow millions of dollars every year into R&D. According to the Patent Law of PRC, which came into effect in 1993, once a new pharmaceutical product is approved for entering the market in China, the State Food and Drug Administration (SFDA) will impose a monitoring period to observe the safety of the product. During this period, no other companies will be granted the approval to market the drug in China. This law was revised in 2000 to allow the patenting of pharmaceutical compositions, which established a major improvement over the previous practice of only allowing the patenting of a method to make or use a drug.

More important than the establishment of such statutes, however, has been the change in the attitude of the local authorities toward the enforcement of intellectual property protections. According to research published by Australian law firm DLA Phillips Fox, China has put new measures in place to raise the penalties for patent infringement from 300% to 400% of illicit profits and increasing damage payments from RMB 50,000 to RMB 200,000, even if there is no profit from infringement. These changes are just part of the changing attitudes toward protecting patents and other intellectual property that is making China more attractive for research dependent industries such as CRO.

Downsizing Creates Openings

The recent downsizing of businesses in the developed world has led an increasing number of multinational pharmaceutical companies to transfer their non-core R&D activities to countries that offer both low manufacturing costs and access to a large talent pool. This downsizing not only has created opportunities for CROs in Asia, but also has helped multinational pharmaceutical companies to remain competitive even in an economic downturn. “Usually the research process of developing a new drug takes 8 to 12 years, in this sense, outsourcing the R&D process to CROs would be a more reasonable solution” Zhang Wei, the director of China SFDA pointed out.

In fact, CROs now undertake about a third of new drug research work globally, making this a USD 20 billion business. With pharmaceutical outsourcing bases start to take shape in China and India, the global CRO market, which grows at 16% every year, is expected to reach USD 30 billion by the end of 2010.

China CRO Industry On the Fast Track

At present, the CRO industry in China is still in the early stages of development. Before 1997 only a few in China had heard of CRO sector, however, the rising global demand appears set to multiply the level of demand over the next five years. According to a report published by PricewaterCoopers on the growth prospects for Asia’s CRO industry, the market value of China’s clinical research outsourcing operations was around RMB 260 million in 2008, marking a ten-fold increase from 2005. The report also indicates that the CRO market value for China in 2010 could reach RMB 430 million.

And China has already surpassed India to become the most popular CRO destination in the world. By June of 2008, the number of on-going and completed clinic trials registered in China reached 870 while during the same period, India achieved only 737 such trials.

This fast growth of China’s medical industry has attracted large amounts of foreign investment into the sector. After Quintiles Transnational’s entry in Beijing as the first CRO in the country, Convance, a leading multinational, opened a preclinical laboratory in Shanghai’s Zhangjiang Hi-Tech Park in late 2007 (which is its fifth CRO lab worldwide). At present all of the top four CRO multinationals, Convance, MDS Pharma Services, Quintiles Transnational Corp, PPD, have set up presences in China.

Cost Competitiveness Lures Foreign Investment

Among the primary reasons for multinationsals to invest in CRO facilities in China, cost reduction is the most commonly cited. “The US and Europe are the biggest two CRO markets in the world, accounting for 48% and 29% of the global market share. However, the cost advantage that Asian countries can offer will draw more pharmaceutical companies to set R&D facilities or cooperate with local CRO companies in these country in the future.” a senior manager from Schering-Plough China said. Indeed, according to some sources, the cost of clinical trials in China is only 22% of that in the US and other more developed nations.

More Good Reasons for Global Players to Go Local in China

Localization can also help international pharmaceuticals to get approval for new medical products more quickly from the State Food and Drug Administration(SFDA). Pfizer China, which just invested in a new R&D facilities in Hubei Wuhan last month, are planning on cooperate with up to 500 medical institutions in China by 2010 which involves the participation of 2000 medical professionals.

In addition, locating clinical trials in China can provide advantages for multinational pharmaceutical companies developing treatments for illnesses more common in developing nations. Studies that rely on finding a pool of participants who have been exposed to diseases or other ailments common in developing countries can often find it easier to source the participants they need within China than in their home markets where such illnesses may already be relatively rare.

With more foreign investors joining the competition and more government supports in place to facilitate the grow of the CRO industry, it is likely that China’s CRO will grow into another strong brand for the country in the next decade.

Of the 5,000,000 ADSs being offered, 4,526,979 ADSs are offered by the Company, and 473,021 are offered by selling shareholders. A selling shareholder has granted the underwriters a 30-day option to purchase up to an additional 750,000 ADSs to cover over-allotments, if any.

The Company intends to use the net proceeds from this offering to fund the expansion of its sales and marketing platform, the acquisition and in-licensing of new technologies, products or companies, the research and development of its product candidates, the expansion and enhancement of its manufacturing facilities and for general corporate purposes.

Jefferies & Company acted as the sole bookrunner and Oppenheimer & Co. acted as co-manager for the offering.

Nuokang’s registration statement relating to these securities has been declared effective by the United States Securities and Exchange Commission. This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

The offering of the securities is made only by means of a prospectus forming a part of the registration statement. A copy of the prospectus relating to the offering may be obtained from Jefferies & Company, Attention: Syndicate Prospectus Department, 520 Madison Avenue, New York, NY 10022, telephone: (888) 449-2342 or Oppenheimer & Co., Attention: Prospectus Department, 300 Madison Avenue, 5th Floor, New York, NY 10017, by telephone at (212) 667-8563.

About China Nuokang Bio-Pharmaceutical Inc.
China Nuokang Bio-Pharmaceutical Inc. (NASDAQ: NKBP) is a leading biopharmaceutical company in China focused on the research, development, manufacture, marketing and sales of hematological and cardiovascular products. The Company provides a diversified portfolio of products across more than 2,400 hospitals in China. Nuokang’s principal products include Baquting®, China’s leading hemocoagulase product by market share, and Aiduo®, a cardiovascular stress imaging agent. The Company’s product pipeline includes product candidates under development in hematological, cardiovascular and cerebrovascular disease diagnosis, treatment and prevention.