Genelabs Technologies Inc. and the government of Taiwanestablished a joint venture designed to develop a biopharmaceuticalcompany focused on the Asia Pacific market.

The joint venture initially is capitalized at about $34 million.Taiwan's Ministry of Finance is investing about $12 million in theventure, and getting a 35 percent stake in the venture, calledGenelabs Biotechnology Ltd. (GBL), a Genelabs subsidiary.Genelabs will invest about $10 million over two years, as well ascontributing technology, for a 40 percent stake, And private investorsin Taiwan will own the other 25 percent.

The investment decision by Taiwan is the first in thebiopharmaceutical industry under a six-year development planlaunched there in 1991, Genelabs said. Biotechnology is one of threeindustries the Taiwanese government has identified as priorities, thecompany said.

Genelabs, of Redwood City, Calif., established GBL in Hsinchu,Taiwan, in 1993, and is further expanding its Asian presence with theTaiwanese agreement. It has sales offices in Beijing and Shanghai,People's Republic of China, a diagnostics division in Singapore, anda minority-owned subsidiary in Thailand.

"This organization [in Taiwan] will have an expanded role inhandling Genelabs-related pharmaceutical development,manufacturing and marketing in Asia," Frank Kung, the company'schairman and CEO, told BioWorld. `The most important aspect isthat we want to build a commercial-oriented pharmaceuticalcompany."

Kung said the strategy is to have products and sales immediately withimproved delivery of generic products. The plan, he said, is to beprofitable in three years. Intermediate sales are expected to comefrom Genelabs' product pipeline, which includes the drug GL701 in aPhase II/III trial for steroid-dependent lupus patients.

Genelabs also has a diagnostics business, predominantly for viraldiseases, that generated $11.4 million in 1994 revenues.

Earlier this year Genelabs got access to additional technologiesthrough a collaboration with Emeryville, Calif.-based Chiron Corp.,which is interested in Genelabs' rights to the recently discoveredhepatitis G virus. A cross-licensing aspect of that deal gives Genelabsthe right to commercialize Western Blot and rapid diagnostichepatitis C and HIV tests in Asia, excluding Japan.

Kung said inroads the company has made in Asia is attributable to anumber of factors, including its viral technologies, management teamand some six years of actively developing a business there. "Thisproject took a lot of time and effort," he said.

"Given [Taiwan's] experience and track record in promoting theelectronic and computer industries 10 years ago, we are very excitedabout the opportunity to participate in building a pharmaceuticalindustry in Taiwan," Kung said. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.