- Local healthcare specialist floats 50:50 JV with Japanese firm
- To carry out clinical trials, new drug developments and manufacture niche products for local and mega South Asian markets
- On the sidelines of New World Securities Investment Forum, first-of-its-kind announcement made in Tokyo Stock Exchange by a Sri Lankan corporate
Nisthar Cassim reporting from Tokyo
December 7: In a first-of-its-kind move which is likely to transform Sri Lanka’s healthcare and pharmaceutical manufacturing industry, Nawaloka Holdings Ltd. today in Tokyo announced a groundbreaking joint venture with Japanese biotechnology specialist Mebiopharm Co Ltd.
The announcement was made at a press conference at the Tokyo Stock Exchange jointly by Tokyo Alternate Investment Market (AIM)-listed Mebiopharm Co Ltd., CEO and President Tadashi Fujisawa and Nawaloka Holdings Ltd. and Nawaloka Hospitals Plc Director Harshith Dharmadasa. It was also the first time that a Sri Lankan corporate is involved in an announcement in Tokyo or any other world-renowned stock exchange.
The move follows the two companies signing the JV earlier in the day. Harshith signed the agreement on behalf of Nawaloka Holdings and Nawaloka Hospitals Chairman Jayantha Dharmadasa. Nawaloka Holdings is the controlling shareholder of listed Nawaloka Hospitals.
In a partnership facilitated by New World Securities, which is currently promoting investments in Sri Lanka via a forum and one-to-one meetings in Tokyo for a group of Sri Lankan firms, the joint venture headquartered in Colombo will manufacture clinical and other niche products in Sri Lanka for the local market as well as tap vast potential for exports in South Asian region.
Under the first phase, the joint venture will bid for Government tenders whilst the second phase involves setting up the manufacturing plant, whilst after one year the joint venture will be listed on the Diri Savi Board, Harshith Dharmadasa told the Daily FT in Tokyo after signing the deal.He said Nawaloka via this unique venture was leveraging on its strong brand value in healthcare sector, in which it has kicked off an aggressive expansion plan. According to Dharmadasa, the two companies’ origins, mission and future vision had the correct DNA for a perfect partnership.
He said that the joint venture would result in a paradigm shift in Sri Lanka’s healthcare and pharmaceutical manufacturing industry, encouraging world-renowned multinationals and regional giants engaged in healthcare to consider Sri Lanka as a hub for niche products and services.
Mebiopharm CEO Fujisawa said the Sri Lankan venture was the first of its kind for his firm, which is involved in the development of medicines that hold promise for people and places particular emphasis on anticancer drugs with special Drug Delivery System (DDS) capabilities.
Mebio is a drug developing company aiming to deliver pharmaceutical products developed proprietary to the medical practitioners in the world. Mebio has been conducting clinical trials on its pharmaceutical products in US and Europe, and accumulated its knowhow and experiences on drug developments. Since its establishment in 2002, Mebiopharm has developed NCEs (New Chemical Entities) focusing on cancer treatment, aiming to deliver it to the market. It extensively uses nanotechnology for its work.
Through establishment of the joint venture, Mebio will prepare the infrastructure needed for early stage of clinical trials in Sri Lanka; extend the basic researches on its technology in Sri Lanka; and deliver pharmaceutical products which have not been launched in Sri Lanka from the world through cooperation with doctors in Nawaloka Hospitals, utilising its knowhow of procuring raw API from the world.
As per the announcement made at the press conference attended by financial press in Japan, the 50:50 joint venture will be formally established in January 2012, with an initial capital of Rs. 20 million (project investment is Rs. 750 million).
The JV will thereafter establish its wholly-owned subsidiary within two weeks after its own establishment to conduct the following businesses: SMO business, import business of pharmaceutical products which have not been launched in Sri Lanka and new drug development.
The agreement specifies that Mebio is to provide its knowhow and operating support in Sri Lanka, and Nawaloka is to provide knowledge and advices regarding the hospital network and regulatory matters in Sri Lanka, and be the first client of the JV.
Nawaloka is the only private sector healthcare provider engaged in global clinical trials, according to Dharmadasa.
The JV will operate life science business through its subsidiary and plans to list on the Diri Savi Board of Colombo Stock Exchange after raising capital upon completion of the first full operating fiscal year.
Revenue from the operations during the first full fiscal year ending March 2013 is expected to be JPY 170 million (over Rs. 250 million) and the JV will strive to generate JPY 2,500 million (Rs. 3.7 billion in current exchange rate basis) in five years (March 2018).
Explaining the rationale for selection of Nawaloka and Sri Lanka for its first-of-its-kind venture, Mebiopharm said Sri Lanka has achieved a high economic growth through economic cooperation with neighbouring country, India (the bilateral FTA of March, 2000).
“After 30 years of civil war, Sri Lanka has achieved GDP real growth rate of 8% in 2010. In addition, its stock exchange market has grown with the largest growth rate among 82 world markets. Sri Lanka has continued to grow strongly even comparing with other emerging countries in recent years, Mebiopharm said.
“Sri Lanka offers a sizeable population of quality workers with reasonable costs in comparison with those of other Asian countries, and its legal frameworks of taxation, company laws and others are much easier to understand than those of India’s. Sri Lanka is also under economic cooperation with Middle Eastern countries. Therefore, establishing a company in Sri Lanka, markets in India and Middle East become within a reach of the joint venture,” the Japanese firm’s President and CEO Fujisawa said.
He also emphasised that the growing population in Sri Lanka has preferred to choose private hospitals for costs over free-of-charge public hospitals in order to receive better medical services and higher medical technology.
Nawaloka Hospitals PLC is one of the 15 companies which Nawaloka Holdings holds and the biggest private hospital group with 400 beds in Sri Lanka. Nawaloka Hospitals was awarded ISO9001-2008 in 2011 and successfully conducted a live-donor liver transplant and a lung transplant, first in Sri Lanka; the proof of high medical skills. Moreover, Nawaloka Hospitals is listed on the main board of the Colombo Stock Exchange with the market capitalisation of Rs. 5.6 billion.
Nawaloka and Mebio decided to establish a joint venture for healthcare industry in Sri Lanka to be grown to conduct clinical trials with the world standard, through providing SMO (Site Management Organisation) business, import business of pharmaceutical products and through new drug development.
SMO is the organisation which supports clinical trial works of the medical institutions under contract. It differs from CRO (Clinical Research Organisation) and SMO serves hospitals/medical institutions instead of pharmaceuticals/sponsors.