Healthy outlook for Sinovac Biotech

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While it's well known that international corporate giants are funneling big bucks into research institutes in China, lesser known is the Chinese government's efforts to make the nation a world leader in medicine, science and technology. Examples of its push to beef up innovation can be seen at state-run research labs such as the China Academy of Sciences, a broad collection of R&D facilities currently undergoing significant reforms and expansion that officials hope will become a major high-tech incubator. The Academy already has a leadership role in the field of biotech.

One of the Academy's partners in China's race to innovate in the biotechnology industry is Sinovac Biotech Ltd. (AMEX:SVA). Sinovac researchers have worked closely with government scientists to tackle illnesses (such as the outbreak of bird flu in Hong Kong). The company does business under its majority-owned subsidiary, Sinovac Beijing, and its wholly owned subsidiary, Tangshan Yian. A leading domestic vaccine producer, the biopharmaceutical company is engaged in the research, development and commercialization of agents that protect against human infectious diseases including hepatitis, influenza and SARS.

Sinovac's portfolio of State Food and Drug Administration-approved products consists of Healive, a vaccine against hepatitis A virus; Bilive, which is used to prevent infection from hepatitis A and B; and Anflu, a seasonal influenza virus vaccine. Four pipeline drugs are also in development. They include two vaccine candidates for the H5N1 strain of bird flu (pandemic influenza) as well as a vaccine for the Japanese encephalitis virus, and another for SARS (Severe Acute Respiratory Syndrome), a potentially deadly virus with flu-like symptoms that attacks the lungs.

Compared with Big Pharma drugs designed to battle cancer, high blood pressure, depression and high levels of bad cholesterol, pharmaceuticals such as those produced by Sinvac maintain a decidedly lower profile. But the vaccine maker doesn't seem to mind, especially given growing concerns about the threats posed by hepatitis, Avian flu, SARS and drug-resistant new viruses.

After all, in the aftermath of the 7.9 magnitude earthquake that rocked China on May 12, business was a good for Sinovac, as provincial CDCs stocked up on vaccines to inoculate children against possible outbreaks of hepatitis A and B. Immediately after the disaster, China's Ministry of Health purchased $2.86 million worth . . .

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