KUALA LUMPUR: Bioalpha Holdings Bhd's subsidiary, Bioalpha (Hainan) Health Biotechnology Co Ltd, has partnered with Suzhou Medicalsystem Technology Co Ltd (MEDIC) to conduct research and development (R&D) and clinical trials for Biolapha's proprietary herbal formulations and products.
Both companies will form a joint venture company (JVCO) in Suzhou Industrial Park (SIP), Jiangsu Province, China.
This, in turn, allows them to register with China's National Medical Products Administration (NMPA) to commercialise in China in the near future.
Under the agreement, the JVCO - Suzhou BioMedic Biotechnology Co Ltd will be incorporated as a subsidiary of Bioalpha Hainan with an initial paid-up capital of RMB5 million.
Bioalpha will make a cash contribution of RMB4.05 million, representing an 81 per cent stake in the JVCO, while MEDIC will invest RMB0.95 million in cash for the balance stake.
"After that, both parties shall inject further capital into JVCO in the near future for business expansion purposes, with Bioalpha's investment in the form of intellectual properties (IPs), such as knowhow and formulations that have the high market potential for commercialisation."
Bioalpha said these IPs might include formulations that aid consumers with type II diabetes and those undergoing hormone replacement therapy (HRT), among others.
SIP is one of China's special economic zones, which comes with various incentives such as lower corporate tax capped at 15 per cent compared to a statutory rate of 25 per cent and R&D subsidies for manufacturing new health-related products.
Bioalpha managing director William Hon said the company has, over the years, worked on many formulations that benefit the greater society.
"Hence we are excited with the prospects of introducing more herbal-based health supplements and formulations in China as we intensify efforts to extend our footprint there," he said in a statement today.
Given MEDIC's familiarity with the healthcare regulatory environment in China, Hon said the company would add value to the group's expansion plans.
"With its experience and network, MEDIC shall assist in expediting the conduct of clinical trials as well as in facilitating the product registration process with China's NMPA before we commercialise the products."
Hon was optimistic about the company's continued expansion into China.
"With MEDIC being in the mix now, we are poised to sustain our present growth trajectory and bring better value to our shareholders.
"Barring any unforeseen circumstances, the capitalisation of the JVCO is expected to be completed within three months from the incorporation," he added.
According to Frost and Sullivan, the market size for antidiabetic treatment in China is projected to reach RMB161.0 billion in 2027, which translates to a compounded annual growth rate of 12.2 per cent based on the 2018 market size of RMB57.3 billion.
MEDIC chairman Kang Weng said the company could potentially explore bringing over its products related to clinical informatics and digital hospital solutions to the Southeast Asian and East African markets, leveraging Bioalpha's presence in these regions.
Founded in 2005, China-based MEDIC is a public-listed company traded on the Main Board of the Shanghai Stock Exchange with a market capitalisation of about RMB3.5 billion.
The company is a market leader in providing hospital information systems in China, offering total solutions in clinical informatics and the digitalisation of hospital processes.
Its solutions are used in hospitals across 32 provinces in China, with connections to 80 per cent of China's Triple-A Grade hospitals.
MEDIC also owns a hospital that specialises in fertility treatment, Haikou Mary Hospital Co Ltd.