Glaxo forms vaccine JV with Chinese firm

Drug company GlaxoSmithKline (GSK) has formed a joint venture with Chinese firm Shenzhen Neptunus Interlong Bio-Technique Company to develop and manufacture influenza vaccines for the Chinese market.

The JV will make influenza vaccines for China, Hong Kong and Macau, including vaccines for seasonal, pre-pandemic and pandemic influenza.  

Shenzhen Neptunus will own 60% of the JV and will contribute cash and assets to the tune of approximately $47 million. The Chinese firm will also provide local manufacturing capacity and research and development expertise, and will transfer, sub-license or otherwise make available to the JV proprietary rights and interests in defined influenza vaccines and a rabies vaccine. The parties have agreed that the value of the non-cash contribution of Shenzhen Neptunus is $45.53 million therefore the Chinese firm shall pay a further $1.47 million in cash for its 60% ownership interest.

Shenzhen Neptunus has been listed on Hong Kong's Growth Enterprise Market since 2005.

GSK will own 40% against a cash and asset contribution valued at $31.33 million. GSK will provide access to its proprietary adjuvant system. Vaccine adjuvants are compounds used to enhance the ability of the vaccine antigen to create the desired immune system response. GSK's system helps to improve efficiency and optimise production by increasing the number of vaccine doses that can be produced using a smaller amount of antigen.

GSK's non-cash contribution has been valued at $3.69 million, therefore GSK shall pay another $27.64 million for its 40% stake. The contribution will be made in tranches with $13.82 million payable within 90 days of the establishment of the JV, an additional $3.69 million payable 90 days after the first payment and the balance payable within two years.

The board of directors of the JV will initially comprise six directors, with the two partners nominating three each. GSK is expected to purchase additional shares and obtain a majority equity interest in the JV within the next two years. Once GSK becomes majority shareholder it will be entitled to nominate a seventh director to the board.

"This new alliance enables GSK to build new vaccines capability in a critical emerging market such as China," said Jean Stéphenne, president and general manager of GlaxoSmithKline Biologicals, in a written statement. "Together we will gain access to specific local influenza antigens and make available new vaccines to benefit public health in China and neighbouring territories."

The vaccines are expected to become available over the next few years, based on receipt of all necessary regulatory approvals and an anticipated completion of the deal by the fourth quarter this year.