Xianju Pharmaceutical Invests Nearly RMB 100 Million to Build Hangzhou R&D Base to Attract Top-Tier Talent

To capture the high-end marketR&DTalent,Xianju PharmaceuticalInitiate force application.

Yiou Healthcare, December 9 – According to today’s announcement by Zhejiang Xianju Pharmaceutical Co., Ltd. (“Xianju Pharmaceutical”), the company plans to inject RMB 93.95 million of its own funds into its wholly-owned subsidiary, Hangzhou NeuroIZ Co., Ltd. (“NeuroIZ”), to invest in and construct the Xianju Pharmaceutical Hangzhou R&D Base on the existing land plot of Hangzhou NeuroIZ.

Following the capital increase, NeuroIZ’s registered capital increased from RMB 56.05 million to RMB 150 million, with Zhejiang Xianju Pharmaceutical Co., Ltd. holding a 77.58% equity stake in NeuroIZ.

NeuroIZ is a joint venture established by Zhejiang Xianju Pharmaceutical Co., Ltd. and Spain’s NEURO & IZ Internation S.L., primarily engaged in the production of medical devices such as arterial compression hemostats, inflatable wound dressings, umbilical cord clamps, and disposable medical hydrogel eye patches.

According to the plan of Zhejiang Xianju Pharmaceutical Co., Ltd., the investment will be used for the reconstruction and development of the 19-acre land owned by NeuroIZ, transforming it into a comprehensive R&D base with fully equipped facilities, including an integrated R&D support building and dedicated R&D buildings.This base primarily hosts the R&D and operations of Zhejiang Xianju Pharmaceutical Co., Ltd.’s platforms for oral solid dosage forms, semi-solid dosage forms, injectables, and inhalation products.

It remains uncertain how much revenue this land will ultimately generate for Xianju Pharmaceutical, leading to a rather conservative investment strategy.Phase I: Zhejiang Xianju Pharmaceutical Co., Ltd. allocated an investment budget of RMB 80 million, with the construction period spanning from January 2020 to June 2022, for the development of one comprehensive R&D support building (approximately 25,500 square meters) and two R&D buildings.

Xianju Pharmaceutical stated that once the hardware infrastructure at its Hangzhou R&D base is established, the completed project will create favorable conditions for attracting high-level R&D talent, thereby facilitating the establishment and upgrading of its R&D platform. Should the project progress smoothly, the company may consider further capital investment.

In the face of the gradual advancement of healthcare reform and the expansion of volume-based procurement,Active Pharmaceutical Ingredient (API)The integrated development of drug formulations has become a major pathway for pharmaceutical companies to transform. From the perspective of supply chain construction, the formulation facilities and platforms hosted at the production base can complement their existing active pharmaceutical ingredient (API) products, helping to establish cost advantages. For Zhejiang Xianju Pharmaceutical Co., Ltd., this may help strengthen its competitive barriers to some extent.

In recent years, Zhejiang Xianju Pharmaceutical Co., Ltd. has focused on its core business while making strong strides into overseas markets.

Earlier this year, Zhejiang Xianju Pharmaceutical Co., Ltd. publicly listed its loss-making dental hospital for transfer and also withdrew from participating in the establishment of an industrial fund with Hangzhou Chengchang Investment Co., Ltd.

Today, Xianju Pharmaceutical once again demonstrated its resolve to “cut losses” by announcing in a public filing that it would waive its preemptive rights to acquire equity and subscribe for additional capital increases in SoGen Biopharma, a first-in-class innovative drug company. As a result, Xianju Pharmaceutical’s stake in the company will decrease from 20.57% to 14.8%.

Stripping Away Non-Essentials, Xianju Pharmaceutical Is Also Expanding Its Global Business. Currently, Xianju Pharmaceutical has established subsidiaries in countries and regions such as the United States, Luxembourg, and Italy. It has also built business relationships with API manufacturers, finished dosage form producers, and traders in more than 30 countries, including the United States, India, and the United Kingdom.

The groundwork has been laid, but Zhejiang Xianju Pharmaceutical Co., Ltd. still faces a critical weakness: the lack of support from high-end R&D talent. According to Yiou Health’s review of the company’s 2019 semi-annual report, technical personnel accounted for only 15% of its workforce, while sales staff numbered more than twice as many. In the first half of this year, Xianju Pharmaceutical’s sales expenses reached RMB 571 million, standing in stark contrast to its R&D investment of RMB 66 million.

Behind the establishment of a new R&D base lies Xianju Pharmaceutical’s emphasis on high-end R&D talent; however, investing in infrastructure does not guarantee a steady influx of such talent. What requires greater optimization and reflection is Xianju Pharmaceutical’s awareness and intensity of its commitment to R&D investment.

Editor: Guo Mingzi

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