The Burrill Report


SciClone Pharmaceuticals is significantly expanding its drug portfolio and Chinese salesforce with the acquisition of Shanghai’s NovaMed Pharmaceutical for $61.8 million and a promise of $43 million more if NovaMed can hit certain sales and income targets in the next two years.

NovaMed, a privately-held and venture-backed specialty pharma, has a portfolio of 18 drugs spanning oncology, cardiovascular disease, central nervous system disorders, urology, and infectious diseases. Its 450-member sales force will bring SciClone’s sales team to 680 people, expanding its local reach in China.

“NovaMed represents an excellent strategic acquisition as it allows SciClone, in a single transaction, to dramatically expand our presence in China in five important areas: pharmaceutical products, targeted therapeutic indications, management depth, salesforce size and revenue," says Friedhelm Blobel, SciClone’s president and CEO.

SciClone has been focused on China since its inception. But the addition of a stronger management team in China comes at a crucial time in the development of its presence in the country.

The company is reshaping its management in China in the face of concerns expressed by Securities and Exchange Commission and Department of Justice investigators that some of its executives may have violated provisions of the Foreign Corrupt Practices Act. That investigation, as well as an independent internal investigation “may continue to significantly impact SciClone's earnings,” it noted in a statement accompanying its fourth quarter 2010 and year-end earning statement.

Once the NovaMed acquisition closes, SciClone's current operations in China and the newly acquired NovaMed will continue to operate as separate entities in the Chinese market but under the leadership of NovaMed’s co-founder and CEO, Mark Lotter. The NovaMed unit will continue to lead sales and marketing efforts for its current product portfolio. SciClone's sales and marketing team will still sell and market Zadaxin, SciClone’s treatment for chronic hepatitis B, chronic hepatitis C, and certain cancers. Zadixin is one of the largest imported pharmaceutical products in China, measured by revenue.

The diversification NovaMed’s portfolio of Chinese-approved medicines could also help defray potential losses on Zadaxin sales in China, where authorities are reviewing the medicine’s pricing as part of healthcare reform in that country.

SciClone anticipates that its 2011 revenue will be between $133 million and $138 million, taking into account the acquisition.



April 23, 2011
http://www.burrillreport.com/article-sciclone_ramps_up_in_china_with_novamed_buy.html