It’s an interesting one.
On the surface, this seems to be a deal to license TPM diclofenac gel to a small pharma, based in a provincial Chinese city, which has very limited market reach.
Yet New York-based OrbiMed, a global healthcare fund manager with over $14 billion in assets under management, has selected Credit Pharma for its portfolio. All up, OrbiMed has approximately 140 companies in its portfolio, ranging from seed-stage venture capital to large publicly-traded companies. Less than 30 of these companies are based in Asia and, interestingly, one of these is Strides Shasun (OrbiMed’s initial investment was in Shasun, before it merged with Strides). This number is likely to rise as OrbiMed launched a $551m Asia private equity fund earlier this month. The fund manager, which has Asian headquarters in Shanghai, noted that Asia has over half of the world’s patient population, with the demand for quality healthcare still greatly exceeding supply. China’s healthcare market was singled out not only for its rapid growth, but also for its development as a leading centre of innovation, and its increasing integration with the rest of the world, especially the U.S.
Credit Pharma’s DCAT profile suggests it specialises in pain management and CNS. So far, it has brought two first-to-market and sole generic products to market. It says it has a very successful record in ChinaFDA approvals and has nationwide channels covering more than 2500 hospitals. It is currently collaborating in an 8600 person hospital-based clinical trial in China.
The company has two subsidiaries and an R & D centre. One of the subsidiaries is a Sino-US JV, Sichuan Credit Chemworth Pharmaceutical Co Ltd. This company’s facilities received Chinese GMP certification and FDA certification in 2010 and it has since passed four FDA inspections. Like Credit Pharma, Credit Chemworth’s main business appears to be the supply of bulk APIs and intermediates (which can include bulk formulations) to both domestic and international pharmaceutical companies. Its marketed products appear weighted towards injectables.
Putting all this together, my thoughts are:
- Credit Pharma may not be planning to market the TPM diclofenac gel under its own name. It may be planning to act as a bulk manufacturer/supplier providing the gel under sub-licence to a larger pharma in an arrangement similar to that which Themis has with Novartis.
- Credit Pharma will not only have done its due diligence on TPM, it will have done due diligence on the Novartis Voveran TPM gel product. I therefore view its interest in licensing as a further strong endorsement of the product. In addition, I don’t think Credit Pharma would be committing USD400,000 to acquire licensing rights for TPM diclofenac gel without having a strategic plan.
- OrbiMed will also have done its due diligence on Credit Pharma. Its selection of Credit Pharma as one of the few Chinese pharma in its portfolio, when there are over 5,000 drug manufacturers in China, is a strong endorsement of the company. One might also expect that OrbiMed will have influence on Credit Pharma’s strategic development, decision making and networking.
- The Chinese manufacturing facility for Credit Chemworth appears to be Credit Pharma’s manufacturing facility. Hence, Credit Chemworth’s weighting to injectables manufacture and Credit Pharma’s links to the Chinese hospital network is another interesting aspect.
- In yesterday’s announcement, Ross Murdoch said China represents a very important market for Phosphagenics’ products and we look forward to finding ways to build on this partnership with Credit Pharma.
On scratching the surface of this deal, there is more than first meets the eye.
(20min delay)