Clinical trials and in-house drug development are expensive and time-consuming aspects of the biotechnology industry, but are nevertheless fixtures of standard business development. SciClone Pharmaceuticals (NASDAQ:SCLN), however, has created a unique work-around through its partnership and acquisition-based business strategy. Three years ago SciClone, which is based in the U.S,, eliminated its in-house development program and began selling only partnered and in-licensed products as a China-focused pharmaceutical.
In this PropThink exclusive video, SciClone’s CEO Friedhelm Blobel discusses the company’s flagship product, Zadaxin, and how widely-anticipated government price cuts are likely to affect revenue much less than investors may fear. The company has been actively working to lower the costs of goods, essentially slashing the price of the Active Pharmaceutical Ingredient in Zadaxin by more than 50%. Blobel says, “We will, even after this price renewal, have a better – or about the same – gross margin that we have enjoyed for the first ten years with this drug.” The discussion also includes the effects of intellectual property in China and growth expectations for the Chinese market. Blobel expounds the details of SciClone’s partnership agreements with companies like Baxter International (NYSE:BAX), Pfizer (NYSE:PFE) and Sanofi (NYSE:SNY). Chinese traditional medicine greatly affects drug sales in China, and Blobel says it makes up as much as 20% of the market. He explains how SciClone’s strong cash position and continuing revenue growth contribute to the company’s future plans and gives investors an idea of what the future may hold for this profit-generating pharmaceutical company.
You can see our coverage of SciClone Pharmaceuticals, in which we advise a Long position, by clicking here.