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STAR's search for new treatments spans several research projects across multiple therapeutic areas to discover new ways of treating illness and disease, and deliver a steady stream of innovative new products that enhance human health.

Through our in-house R&D efforts and collaborations with research institutes in China, we have successfully developed and obtained production approvals for a total of 71 pharmaceutical products. Currently, we manufacture and sell 51 of these 71 pharmaceutical products.

We are in the process of conducting research and clinical trials on and seeking production approvals for more new pharmaceutical products and will commence production and sale of some of these products pending the outcome of the research & testing and production approval applications. Using modern technology and methodology, we maintain a healthy product pipeline which ensures a flow of new products to people in need.

Government Grants

The PRC government awards grants to small and medium pharmaceutical manufacturers in the PRC to fund the development of pharmaceutical products. Such government grants are only awarded to enterprises who fulfill certain criteria such as being involved in the development and manufacture of technologically advanced products, being of a good financial position, having a good financial management structure in place, as well as possessing a management team with strong market exploitation capabilities.

We have received grants for the development of some of our products. For example, the development of Ropivacaine Mesilate Sodium Chloride Injection obtained the financial assistance of the "Innovation Fund of Small and Medium Technological Enterprises" awarded by the State Science and Technology Department. We received grants amounting to RMB590,000 in FY2004. We have not received any grants in FY2005.

Evaluation Of R&D Projects

We have created a structured process for undertaking R&D development. We believe that this method is well-suited for identifying market needs, addressing the activities required to develop and release new products and bringing development projects to the market successfully.

The basis on which we select and evaluate R&D projects are as follows:-

  1. whether the proposed R&D project is in line with our Group's growth direction;
  2. the financial potential and profitability of the project;
  3. the commercial viability of the R&D project;
  4. whether the R&D project may potentially infringe any third party's intellectual property and whether we will be able to obtain intellectual property registration therefore; and
  5. the expected R&D period of the project.

The evaluation of R&D projects is undertaken by a project selection team led by our Deputy General Manager, Mr Gong Tonglin, and comprising six other staff from our R&D and Sales and Marketing departments. In the course of evaluating R&D projects, we also engage external professionals such as academics or medical professionals to provide additional technical expertise and advise our project selection team in the evaluation process.

Beida Shijia Technology Development Co., Ltd.

Our subsidiary, Hainan STAR Pharmaceutical Co., Ltd., has entered into a Share Transfer Agreement on 17 April 2006, to acquire 60% equity interest in Beida Shijia Technology Development Co., Ltd ("Beida Shijia"). Peking University (北京大学) holds the remaining 40% of Beida Shijia.

Beida Shijia is a National High-Tech Enterprise and a leading research institute specialising in the R&D of innovative TCM-formulated drugs. It is also the only research institute under Peking University engaged in the R&D of innovative TCM-formulated drugs. Backed by a strong research team of over 100 research specialists, including 3 researchers from the Chinese Academy of Sciences and 50 PhDs and postgraduate researchers, Beida Shijia has received R&D grants from the Innovation Fund of the Ministry of Science and Technology of the P.R.C. Beida Shijia is also active in international research cooperation through exchange programs with universities and academics in Japan, Korea, France and ASEAN countries.

Beida Shijia's research pipeline shows excellent potential. It currently has 15 TCM-formulated prescription drugs in various stages of development, holding great market potential in addressing a wide spectrum of medical needs. These include products for the treatments of various diseases such as diabetes(糖尿病), hepatitis (肝炎), rheumatics (风湿), osteoporosis (骨质疏松) and senile dementia (老年性痴呆). 2 out of the 15 TCM-formulated drugs under development are Category-I drugs, i.e. drugs which have not previously been marketed in the PRC and/or worldwide.

Collaboration With Other Research Institutes

In order to meet the needs of developments in medical technology and enhance our R&D and innovation capabilities, we collaborate with various research institutions on joint research projects.

Typically, we will select an R&D project in consultation with the research institute. After deciding on the project, the research institute will carry out preliminary research on the project. We will co-operate with the hospitals to formulate a human body clinical trial for each project and implement the clinical trial. The results are then collated and submitted to the SFDA for production approval.

Our R&D staff participate in part of the research work in every project with the research institutes up to the completion of each research project. Pursuant to the terms of our collaboration arrangement, the research institute is responsible for completing the pharmacology, poison study and quality analysis, and we are responsible for completing the technological exploration for testing and scale production, clinical trial, information collation and application for approval, as well as all expenses incurred in the course of the research. Upon successful development of a drug, the production rights and relevant licenses to the drugs will be owned by us.

Currently, we have entered into collaboration agreements with the following research institutes:-

  • China Best Drug Research Co., Ltd (南京神州佳美药物研究有限公司)

    China Best Drug Research Co., Ltd was originally known as Nanjing Xingyin Drug Research Institute (南京星银药物研究所) which was established in 2000. In 2002, it was renamed as China Best Drug Research Co., Ltd ("China Best Drug"). It is a technological enterprise specialising in foundation research and application and development of new drugs. Since collaborating with the company in 2000, we have jointly developed and launched two drugs, Cefepime Hydrochloride for Injection and Potassium Sodium Dehydroandrographolide Succinate Lyophilised Powder for Injection, with it. We are currently also jointly developing four new drugs with China Best Drug.

    Aside from jointly developing new drugs with us, we have also entered into a long-term strategic partnership agreement with China Best Drug. Pursuant to this agreement, we have the first right of refusal to acquire all its R&D results and we will propose at least 10 drug research topics to China Best Drug annually.

  • Beijing Furuikangzheng Medicines Technology Research Institute (北京福瑞康正医药技术研究所)

    Beijing Furuikangzheng Medicines Technology Research Institute was established in 1998. It is a medical technological enterprise specialising in the research of chemical drugs, TCM-formulated drugs, natural drugs and health products. Since collaborating with the institute in 2000, we have jointly developed Mecobalamin Injection, Mecobalamin Tablets and Ropivacaine Mesilate Sodium Chloride Injection.

  • Harbin Sanyuan Yangpu Pharmaceutical Technology Co. Ltd (哈尔滨三元阳普医药科技有限公司)

    Harbin Sanyuan Yangpu Pharmaceutical Technology Co. Ltd ("Harbin Sanyuan") mainly engages in the R&D of chemical drugs and natural drugs. Since collaborating with the company in 2002, we have jointly developed two new products, Puerarin Injection and Vinpocetine for Injection,. We are also currently jointly developing a new product, Troxerutin and Cerebroprotein Hydrolysate for Injection, with Harbin Sanyuan.

  • Shandong University of Traditional Chinese Medicines (山东中医药大学)

    Shandong University of Traditional Chinese Medicines was established in 1958. In 1978, it was awarded the status of "State Focused Support Chinese Medical School" (全国重点扶持中医药院校). It was also the first medical school in the PRC to award bachelors' and masters' degrees recognised by the State Council Degree Committee. Shandong University of Traditional Chinese Medicines was also approved as a Post-Doctorate Scientific Research Workstation in 1998. This accreditation is only awarded to research centres which meet certain R&D capability requirements. We are currently jointly developing a new product, Bawei Shumai Capsules (八味舒脉胶囊) with it. We have completed the first stage of clinical trials for the drug and are in the process of conducting the second stage of clinical trials.

  • Nanjing Yatian Drug Research Co., Ltd (南京亚天药物研究有限公司)

    Nanjing Yatian Drug Research Co., Ltd ("Nanjing Yatian") mainly engages in developing medical technology. It also provides consultancy services for the development of medical science and new drugs. We are currently jointly developing two new products with Nanjing Yatian. These two products are classified as "Category 1" drugs by the SFDA as they have not been previously marketed in the PRC and/or worldwide. As at 30 June 2005, we have invested RMB33.5 million into the development of these drugs and this amount has been capitalised as product development in progress. Under the terms of the development agreement with Nanjing Yatian, in the event that the development of the drugs is not successful or if we are unable to obtain the necessary new drug certificates and production approvals, we are entitled to a refund of 90% of the development cost which we had invested.