Check on China: 3SBio Inc.

A recent study by China's Ministry of Health and the Ministry of Science and Technology said a combination of smoking, poor diet and rampant pollution has caused the nation's cancer rates to swell 80% in the last 30 years, making the disease the leading cause of death in China today, claiming 1.5 million lives every year.

And according to another report published earlier this month, the nation's growing health woes and aging population have caused health-care expenditures to explode. Total health-care spending in China is expected to rise at a compound annual growth rate of 11% between now and 2012.

It should come as no surprise, given the size of the market and the ongoing debate over Chinese drug safety, that regulators at China's State Food and Drug Administration (SFDA) have intensified their oversight and testing measures for drugs. The regulators plan to work closely with their counterparts in the United States, Europe and Australia to coordinate inspections of factories in China that produce pharmaceutical raw materials.

One Chinese company capitalizing on the spike in health-care spending while avoiding drug safety problems is 3SBio Inc. (Nasdaq:SSRX), a Shenyang-based biopharmaceutical products company that specializes in high-quality, low-cost drugs. In stark contrast to the recent disappointing setbacks experienced by a number of other domestic players and multinational pharmaceutical giants such as Merck (NYSE:MRK) and Schering-Plough (NYSE:SGP), 3SBio is thriving.

The company dominates the domestic market (with close to 40% market share) for the drug Epoetin, commonly referred to as Epo, which is used to treat anemia associated with chemotherapy treatments and kidney dialysis by increasing red blood cell production. 3SBio's protein-based therapeutic recombinant human thrombopoietin (Tpo) products, which are used to treat iron deficiency (another side . . .

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