HONG KONG – Three years after a failed attempt, Chinese insulin maker Gan & Lee Pharmaceuticals Ltd. is looking at China's stock markets.

The company announced plans to launch an IPO to raise nearly ¥1.5 billion (US$227 million) in mainland China. Industry observers see the financing as a critical step for the company staying competitive in the domestic market as well as exploring new opportunities overseas.

The China Securities Regulatory Commission issued a notice earlier this month, noting that the Beijing-based drugmaker submitted its IPO application involving a public issue of 65 million shares.

"One of the main investments this time is to research and develop new drugs for treatment of diabetes," a spokesman from Gan & Lee told BioWorld Asia. "In the future, we will not only produce insulin products that have been marketed by other companies, but also develop first-in-class innovative drugs. We are aiming to have innovative drugs with our own patent in the next five to 10 years and [to] get one innovative diabetes-related drug selling in the U.S."

The expected ¥1.5 billion will be poured into four major sectors, according to the IPO prospectus, including building up the company's distribution and sales network; applying for approvals from the U.S. FDA for its star product, insulin glargine injection; pushing forward insulin mass production; and supplementing the company's liquid capital.

"The IPO is essential for Gan & Lee at this moment," said Wu Xiuqing, a medical industry analyst with Zhejiang Y's Capital Management. "Both expanding its distribution network and getting marketed in the U.S. require large amounts of money."

This is not the first time that Gan & Lee has laid the groundwork for a listing. In 2012, the company set off on its first IPO journey. However, a bribery scandal forced the company to suspend the process. At the time, a sales representative from Gan & Lee told a local newspaper that the company had spent around ¥800 million over five years to bribe doctors to promote the firm's drugs. The investigation ended when police arrested seven Hubei Province-based sales representatives of the company, according to State media reports.

"If the company fails again, it will lag behind its competitors," said Wu, who is positive about the coming issue, given the company's "high research and development capacity and the promising market in China."

There are about 129 million adults with diabetes in China, the largest group in the world and ahead of both India and the U.S., according to the Global Report on Diabetes recently issued by the World Health Organization (WHO). The number of patients suffering from the chronic disease has increased rapidly in the country in the past couple decades. The prevalence rate in Chinese adults has increased from less than 1 percent in 1980 to 9.4 percent in 2014.

There is large demand for insulin products in China, said Cheng Mou, research director at Guangzhou PICO Medicine Information, a medical intelligence provider under the CFDA Southern Medicine Economic Research Institute.

"China is developing fast and the living standard has largely improved. We see a much higher intake of sugar as compared to 30 or 40 years ago when people were still struggling with starvation," said Cheng. "This leads to a booming number of people with obesity and diabetes, while insulin is involved in major therapies of the chronic diseases."


Founded in 1998, Gan & Lee has been focusing on biosynthesis of human insulin analogues. Its current product pipeline includes insulin glargine injection, insulin lispro injection and mixed protamine zinc recombinant human insulin lispro injection (25R). In May, the drugmaker received marketing approval from the CFDA for its insulin aspart injection.

Gan & Lee last year reported revenues of ¥1.22 billion, up 32 percent year-over-year, and net profit of ¥447.4 million, up 32 percent year-over-year.

Keeping its focus in insulin injections, the company, in Cheng's perspective, can further boost its business by expanding to oral hypoglycemic drugs.

"The company, with years of dedication to the insulin area, has developed huge amounts of data and information about diabetes in China and a solid network of related doctors and hospitals. They can utilize its resources on oral hypoglycemic drugs as complementary products," Cheng said.

In type 1 diabetes, the body cannot make enough insulin and requires daily insulin injections. In type 2, the body can still produce insulin, but not enough to keep blood sugar at a normal level. Type 2 is more often linked to obesity and relatively unhealthy diets, and the number of people with type 2 diabetes has risen particularly fast. Those patients usually rely on oral hypoglycemic drugs to control their blood sugar.

Gan & Lee's main local competitor, Tonghua Dongbao Pharmaceutical Co. Ltd. (SH: 600867), is currently manufacturing nine oral hypoglycemic drugs.

"Dongbao has a more comprehensive product pipeline compared with Gan & Lee," noted Wu at Y'S Capital. "Its emphasis is on the rural market and cheaper products, though. Gan & Lee has an advantage of having the more advanced insulin products, insulin analogues. It is the only Chinese company, for the time being, selling insulin analogues, or the third generation of insulin."

While competitive in China, Gan & Lee has a more ambitious plan to tap overseas markets. Currently, its insulin glargine injection, Basalin, has been well received in India and Mexico and in 2013 the company rolled out a project to market its insulin glargine injection in the U.S.

"The U.S. now is the largest insulin glargine injection consumption market," said the company spokesman. "If we step into the U.S. market, it means we get into the mainstream markets of diabetes treatment globally. The U.S. is known for its high standards of drugs; thus it is not an easy task. We need to invest a huge amount of money there."