HONG KONG – A large Chinese conglomerate that rose to fame as a maker of the food additive monosodium glutamate, better known as MSG, has taken definitive steps into the biopharmaceutical space, sealing a deal to buying one of the major hepatitis B vaccine (HBV) suppliers in the country for ¥600 million (US$96 million).

China's Meihua Group Co. announced in January that it would acquire Dalian Hissen BioPharm Co., but it did not provide a valuation for the deal. The latest announcement takes the acquisition forward.

"We started from the biological fermentation and are navigating parts of our business towards the biopharmaceutical area," a spokeswoman at Meihua told BioWorld Asia.

Meihua already has paid the original shareholder of Hissen, Tibet-based pharmaceutical company Yiyuan Industrial Co., ¥400 million in performance bonds and pre-paid equity transfer fees. The rest of the payment will be completed within 20 working days after both parties complete their agreement. The company set the price for the acquisition after an audit of the target company. At the end of 2013, Hissen had total assets of ¥605 million, debt of ¥404 million and retained profits for the year of ¥4.4 million.

"As of December 31, 2013, based on the valuation through income approach, Hissen's appraisal value was ¥600 million, the evaluation increment was ¥400 million and the value-added ratio was 202 percent," noted Meihua, in an update of the acquisition.

"This acquisition will be the first and an important substantial step for the company to enter the biopharmaceutical industry," said Meihua. "It stands in line with the future development planning and benefits the company."

Hissen's profile in China's HBV market rose toward the end of last year after another leading vaccine maker, Shenzhen Kangtai Biological Products Co. (also known as Biokangtai), was put under investigation following allegations of problems with the quality of some of its vaccines. Biokangtai later was cleared and authorities said there had been no link between the company's vaccines and the deaths of seven infants across the country. (See BioWorld Asia, Jan. 2, 2014, and Jan. 29, 2014.)

Biokangtai resumed production on Feb. 18 after receiving a new GMP certificate from the CFDA for its HBV product. The new certificate is valid until Feb. 17, 2019.

The third major supplier of HBV in China, Beijing Tiantan Biological Products Co., also passed the GMP test and resumed production earlier this year. The CFDA gave Tiantan the green light on April 10.

Although all three companies were stopped from producing at one point this year, both Beijing Tiantan and Biokangtai are back in production and have taken market share away from Hissen, which has not produced vaccine since November 2013 and trailed the other two firms in applying for a GMP certificate.

"Hissen is still in the progress of getting the new GMP certificate," said Meihua's spokeswoman.

MEIHUA'S NEXT KEY BUSINESS

Hissen has about 29 percent of the HBV market in China. Its hansenula yeast expression platform has earned it a leading position in China's HBV market. The company's pipeline includes recombinant hepatitis B vaccine (hansenula polymorpha), rabies vaccine (hamster kidney cell) for human and a new flu split vaccine.

Another focus of Hissen is two bacteriophage preparations being co-developed with the National Institutes for Food and Drug Control (former National Institute for the Control of Pharmaceutical and Biological Products). One involves drug-resistant bacteria Pseudomonas aeruginosa, which causes respirational diseases, and the other is Staphylococcus aureus, which is often associated with burn injuries. Meihua said those preparations will open up a new market in China since no such kind of product has been launched in the country yet.

Meihua is determined to make biopharmaceuticals its next key business. The acquisition of Hissen provides Meihua a bridge into the vaccine field, and, in March, Meihua announced another agreement to acquire a 52 percent stake in capsule manufacturer Shanxi Guangsheng Medicinal Capsule Co. Ltd.

"We also signed a strategic cooperation agreement with Tianjin Institute of Industrial biotechnology last year," the spokeswoman said. "That is another move for Meihua to enter the biopharmaceutical field."

Founded in 2002, Meihua started in the flavoring business by making MSG and entered amino acids manufacturing in 2008. The company also produces fertilizers, microbial protein and liquid ammonia.