Prometic and Renshou Pharmaceutical Establish Joint Venture Backed by Rongyu Capital to Commercialize PBI-Series Drugs in China

Note from VCBeat (WeChat ID: vcbeat): This article is contributed by Touhu.com, a private equity investment platform focusing on the healthcare sector.

This article mainly introduces the establishment of a special fund by Rongyu Capital and Renshou Pharmaceutical to PrometicPractical Cases of Introducing Investigational New Drugs into China.Rongyu Capital, co-founded by Huang Yu, former President of GTJA Capital, applies the concept of “financial capital + industrial intellectual capital” to healthcare investments and has successfully executed the Prometic new drug project.

Historically, overseas technology collaborations have typically involved direct engagements between large pharmaceutical companies and their foreign counterparts. However, the partnership between Prometic, a Canada-listed pharmaceutical company, and Shenzhen Rongyu Capital regarding its investigational new drug has drawn significant attention. This marks the first case in China where an investment institution has spearheaded an overseas collaboration for new drug technology.

Prometic, a publicly listed company in Canada, is an emerging star in the international pharmaceutical industry. Its senior leadership team has previously held executive positions at prestigious medical and financial institutions, including the Roslin Institute (where Dolly the sheep was cloned), Harvard Medical School, DaVita Inc., and California Capital Equity. The company has also been honored with numerous awards by authoritative media outlets and medical award evaluation organizations.

The company was listed on the Canadian stock exchange in 1998 and, through two decades of development, has grown into a multinational corporation with cutting-edge research and development capabilities on a global scale. Prometic’s independently developed products account for more than 65% of the global market share in this industry. Between 2010 and 2015, the company’s market capitalization increased 33-fold in just five years, underscoring its robust strength.

Prometic’s lead therapeutic development candidate, the PBI series, is a Class 1.1 small-molecule drug primarily indicated for diabetes, nephropathy, metabolic syndrome, and hepatic and pulmonary fibrosis. Notably, Phase I and II clinical trials have been completed with favorable results for idiopathic pulmonary fibrosis, chronic kidney complications secondary to diabetes, and type 2 diabetes-associated metabolic syndrome.

Under this collaboration between Rongyu Capital and Prometic, the parties will, through a series of business arrangements, grant affiliates of Rongyu Capital the patent rights for the production and sale in mainland China (excluding Hong Kong, Macao, and Taiwan) of PBI-4050, PBI-4547, and PBI-4425 developed by Prometic, ultimately achieving the research and development, manufacturing, sales, and commercialization of the PBI drug series in mainland China.

“Financial Capital + Industrial Intellectual Capital” is an investment concept pioneered by Huang Yu, former President of GTJA Capital, and his philosophy was perfectly implemented in the investment in Boya Bio-pharmaceutical. In December 2007, GTJA Capital acquired an 85% equity stake in Boya Bio-pharmaceutical for RMB 102 million, becoming its largest shareholder. This also marked the first time that GTJA Capital took a controlling interest in a company in its capacity as an investment firm. It was a practical application of the integration of industry and finance. With the assistance of the financial team led by him, Boya Bio-pharmaceutical reformulated its corporate development strategy, streamlined its corporate governance structure, and significantly enhanced its competitiveness.

In 2012, Boya Bio-pharmaceutical Group successfully listed on the ChiNext board. Leveraging the management team’s network advantages in the healthcare industry, the company achieved vertical integration and horizontal expansion of its industrial chain by sequentially completing the acquisition and integration of Haikang Bio-pharma, Tian’an Pharmaceutical, and Nanjing Xinbai Pharmaceutical. This strategy enabled Boya Bio to successfully establish three major industrial platforms: blood products, biochemical drugs, and specialized chemical drugs. As a result, Boya Bio transformed from a near-bankruptcy enterprise into an industry giant. GaoTeJia Capital, as the investor, also reaped substantial returns from this investment case, further reinforcing Huang Yu’s conviction in the power generated by the integration of “financial capital” and “industrial intellectual capital.”

A decade later, Huang Yu, by then a founding partner of Rongyu Capital, once again targeted China’s pharmaceutical market for investment, applying the “financial capital + industrial intellectual capital” investment philosophy in the deal with Prometic.

Jiangsu Renshou Pharmaceutical Co., Ltd. is a modern high-tech pharmaceutical enterprise invested by Rongyu Capital, integrating the research and development, production, and sales of traditional Chinese medicine (TCM). The company offers 14 TCM products, including 2 exclusive formulations, 3 exclusive dosage forms, 2 exclusive specifications, 11 invention patents, 1 product recognized for premium quality and pricing, 6 products included in the National Reimbursement Drug List, and 3 over-the-counter (OTC) products.

The product portfolio spans multiple therapeutic areas, including gynecology, hepatobiliary disorders, men’s health, and cardiovascular care, demonstrating strong competitive advantages and a robust pipeline. Its flagship gynecological product is acclaimed as the “primary medication for postpartum care.” In June 2016, Renshou Pharmaceutical’s Xinshenghua Granules were selected for the first batch of the Traditional Chinese Medicine (TCM) Standardization Project, as outlined in the reply letter issued by the General Office of the National Development and Reform Commission regarding major engineering packages for emerging industries.

Kong Hui, Managing Partner at Rongyu Capital, stated, “With the advancement of standardization for traditional Chinese medicine (TCM) in China, Renshou Pharmaceutical’s Xinshenghua Granules have become the first postpartum medication selected under the National TCM Standardization Project, securing a clear first-mover advantage and positioning the product for greater competitive strength in the future.” Recently, Rongyu Capital completed its acquisition of the company. Long Yuxiang, Executive Partner at Rongyu Capital, has assumed the role of Executive Director at Renshou Pharmaceutical, fully engaging in the company’s management operations.

Under the terms of the agreement, Renshou Pharmaceutical, a subsidiary of Rongyu Capital Holdings, and Prometic Life Sciences Inc. will jointly establish a joint venture, which will serve as the owner of the intellectual property rights for the PBI series. Prometic will hold a 75% equity stake in the joint venture through a technology contribution, while Renshou Pharmaceutical will hold a 25% equity stake with a cash investment of CAD 33 million.

Following the establishment of the joint venture, Renshou Pharmaceutical will serve as the Marketing Authorization Holder (MAH) for the PBI drug series. Leveraging its extensive industrial resources in China’s pharmaceutical sector, the company will undertake the localization of the PBI drug series, managing subsequent activities including new drug development trials, regulatory submission and registration, manufacturing, and sales, ultimately achieving commercialization of the series in the Chinese market.

In terms of fundraising for this project, Rongyu Capital, a private equity fund manager specializing in the healthcare industry, will establish a special-purpose fund with Renshou Pharmaceutical to invest in Renshou Pharmaceutical, in exchange for corresponding equity stakes. The proceeds from this fund issuance are earmarked specifically to cover the costs associated with the introduction of PBI technology. Therefore, regarding the investment in PBI technology, Renshou Pharmaceutical provides partial funding, while the remainder is covered by the fund issued by Rongyu Capital. This financing arrangement not only alleviates Renshou Pharmaceutical’s financial burden in introducing advanced international pharmaceutical technologies but also enables social capital to participate in new drug investments through other fund investors introduced by Rongyu Capital.

Through the design of this investment structure, Rongyu Capital successfully introduced the PBI drug into the Chinese market, enabling a vast population of patients in China to access targeted therapies. Meanwhile, as a pharmaceutical enterprise, Renshou Pharmaceutical secured the rights to this blockbuster drug in China with a relatively small amount of proprietary capital investment. This will have a significant positive impact on Renshou Pharmaceutical’s corporate value. Furthermore, the equity value of Renshou Pharmaceutical held by investors in the special-purpose fund will also increase accordingly. Should these investors exit through the capital markets, they will ultimately realize substantial investment returns, thereby creating a win-win outcome for all parties involved.

In recent years, the Chinese government has intensively rolled out a series of policies targeting the pharmaceutical market, such as the “Generic Drug Consistency Evaluation” and the “Marketing Authorization Holder (MAH) System.” As a result, the research, development, and introduction of new drugs and promising drug candidates—characterized by high technological sophistication, robust preclinical or early-stage clinical data, and the ability to address urgent unmet clinical needs—have become hotspots for domestic capital investment and key areas prioritized for national policy support.

To address the issue of "drug lag," on January 30, 2015, the China Food and Drug Administration (CFDA) issued the Notice on Releasing the Guidelines for International Multi-Center Clinical Trials of Drugs (Trial), opening the door for China’s participation in international new drug research and development. This trend toward openness continues to expand. In March this year, the CFDA released the Decision on Adjusting Certain Matters Concerning the Registration and Administration of Imported Drugs (Draft for Comment), encouraging overseas unapproved new drugs to conduct clinical trials simultaneously both domestically and abroad after approval, thereby shortening the time gap between market launches inside and outside China. The introduction of this policy will greatly stimulate domestic enterprises’ enthusiasm for participating in international new drug R&D and play a significant role in accelerating the introduction of new drug technologies.

Innovative models for introducing new drug technologies, which combine financial capital with industrial expertise—exemplified by Rongyu Capital, Prometic, and Renshou Pharmaceutical—have gained increasing understanding and adoption. A typical case is Oriental Lue, a company listed on the New Third Board under Oriental Gaosheng Holdings, which focuses on acquiring patents and equity stakes in new drugs from overseas listed companies. As this model of drug technology introduction, characterized by the integration of industry and capital, continues to be promoted and replicated, establishing a professional platform centered on drug marketing authorizations (MAs) as core assets has become the top priority in Rongyu Capital’s overall business blueprint.

Following the introduction of the Marketing Authorization Holder (MAH) system, drug marketing authorization and manufacturing licensing are no longer managed as a bundled package. This reform has significantly stimulated scientists’ motivation for new drug research and development, while also laying a solid institutional foundation for the securitization of drug marketing authorizations and the potential establishment of future trading platforms centered on these licenses.

As Rongyu Capital replicates its model for introducing overseas drug technologies, an increasing number of such technology transfers will be implemented in China. As the license-holding platform, Renshou will continuously accumulate pharmaceutical marketing authorization resources. Beyond optimizing its own product portfolio, Renshou will extensively engage in business collaborations and marketing authorization transactions with mature enterprises across the industry. By internalizing the advanced technological advantages held by the platform into core competitive strengths for China’s vast medical and health enterprises, Rongyu Capital will realize its true ambition. Consequently, the core business focus of Renshou Pharmaceutical will shift from pharmaceutical manufacturing, R&D, and sales to enhancing its capabilities in localizing pharmaceutical products and driving their commercialization.