Zacks_Analysts' Blog : Simcere Drug Cleared in China - Analyst Blog

Recently, the State Food and Drug Administration (SFDA) of China delivered a boost to Simcere Pharmaceutical Group (SCR) by clearing its drug Iremod, for treating patients suffering from active rheumatoid arthritis (RA).

Iremod, developed solely by Simcere, will be the first Iguratimod drug to hit the global market and will be used mainly to treat patients suffering from active RA. Iguratimod refers to a new disease-modifying, anti-rheumatoid therapy and belongs to the category of Disease Modifying Anti-rheumatic Drugs (DMARDs).

The approval of Iremod by the Chinese regulatory authorities will not only boost Simcere’s top line but also widen the treatment options for patients suffering from the dreaded disease, whose incidence is on the rise. Iremod will operate in a highly lucrative market and will compete with players like Bristol-Myers (BMY), Johnson & Johnson(JNJ) and Pfizer (PFE).

The approval of Iremod will further bolster the portfolio of Simcere, which is headquartered in Nanjing, China. The product portfolio at Simcere comprises of cancer therapies Endu and Sinofuan coupled with branded generic drugs and over-the-counter offerings.

The approval of Iremod comes close on the heels of another positive development at Simcere. In July 2011, the Chinese company inked a deal with global healthcare leader Merck (MRK) to form a joint venture with the objective of providing Chinese patients significantly enhanced access to quality therapies. The partnership will initially focus on branded pharmaceutical offerings for treating patients suffering from cardiovascular and metabolic diseases.

In the field of cardiovascular diseases, the joint venture aims at putting forward a combined portfolio of selected therapies from Merck and Simcere. The products include Zocor (simvastatin), Cozaar (losartan) and Renitec (enalapril) from Merck and Xinta (levamlodipine) and Shufutan (rosuvastatin) from Simcere.

Moreover, in the field of metabolic diseases, the joint venture will aim at maximizing the access of the Chinese type II diabetes patients to Merck’s Januvia (sitagliptin). The incidence of the disease is on the rise in China.

Our Take

We currently have a Neutral recommendation on Simcere Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

We are pleased with Simcere Pharma’s efforts to expand its portfolio by launching new drugs. With over 100 drugs in the National Drug Reimbursement List issued by China’s Ministry of Human Resources and Social Security, we believe the company, which boasts of a well-established sales network, is well-positioned for long-term growth.