The Group’s wholly-owned subsidiary, Sino Harbour Bio Technology Limited (“SH BioTech HK”) entered into a joint venture agreement (the “JV Agreement”) on 15 December 2015 with Zhejiang University of Technology Assets Operation Limited (“Uni Assets Ltd”) and Irvine Pharmaceutical Services, Inc. (“IPS”) to incorporate a New Company in the PRC, named “Zhejiang IPS Pharmaceutical Technology Co., Ltd., to enter the pharmaceutical inspection industry.
The New Company shall have a registered capital of RMB64.00 million (equivalent to approximately HK$76.89 million). SH BioTech HK will be injecting a capital of RMB38.40 million (equivalent to approximately HK$46.13 million) in cash to subscribe for a 60% equity stake in the New Company (the “Subscription”) and upon the completion of the Subscription, the New Company will be a subsidiary of the Group. Uni Assets Ltd will be injecting a capital of RMB12.80 million to subscribe for a 20% equity stake in the New Company and IPS will be injecting its intangible assets in an aggregate fair value of RMB12.80 million in return for a 20% equity stake of the New Company.
The New Company will establish a service centre, for pharmaceutical services including third-party pharmaceutical quality research and standard inspection, customized synthesis, prescription technology, new drug research, drug safety evaluation and clinical trial in the PRC and the Asian-Pacific region (the “Pharmaceutical Centre”), and enable the Pharmaceutical Centre to pass the relevant FDA inspection and/or audit so that the Pharmaceutical Centre will be qualified to issue testing and analytical reports according to the regulations promulgated and enforced by the FDA. Subject to FDA’s satisfactory review, the Pharmaceutical Centre will be one of the first batch of approved qualified laboratories in the PRC.
he New Company shall develop a trading platform to assist pharmaceutical products from the PRC to enter into the markets in the USA, Canada and the European Union; involve in the drug quality standards and the third-party arbitration services; provide training on FDA related services and standards for Chinese drug manufacturing enterprises; provide services of FDA application and advices for Chinese drug manufacturing enterprises; and establish branch offices in major pharmaceutical regional centres in the PRC, to expand its market share.
Furthermore, the Collaborative Innovation Centre of Yangtze River Delta Region Green Pharmaceuticals (“YRD Innovation Centre”) and the Zhejiang University of Technology (“ZH Tech University”) shall cooperate with the New Company to expand its influence and market share as well as provide sufficient technology and human resources support to the New Company.
Following the Group’s subscription of Zhejiang Davi Pharmaceutical to diversify the Group’s business into the pharmaceutical industry in late November, the Group is further expanding the Group’s business scope to the pharmaceutical inspection industry to increase income sources by capturing the business opportunities arising from a huge market demand and potential in the medical treatment industry which is expected to grow rapidly. The demand for pharmaceutical services for high-end pharmaceutical products in the PRC and favourable government initiatives on third party’s inspection institutes are also facilitating growth of the industry. With the strong background and support of the Group’s JV partners, the Group is fully confident in the development of the new business.