GlaxoSmithKline has signed a deal with Shenzhen Neptunus to manufacture influenza vaccines for the Chinese market.

Under the terms of the agreement, GSK will take a 40% stake in a joint venture and put in cash and assets equivalent to £21 million. Shenzhen Neptunus will hold a 60% stake but GSK is expected to buy additional shares and obtain a majority interest in the JV within the next two years. The deal is expected to close in the fourth quarter of 2009, subject to local regulatory approval, and comes seven months after the firms signed “an exclusive cooperation agreement” as a preliminary step to forming a JV.

Jean Stephenne, president of GSK Biologicals, said the alliance enables the firm to “build new vaccines capability in a critical emerging market such as China”. The JV will gain access to “specific local influenza antigens and make available new vaccines to benefit public health in China and neighbouring territories”, he added.

The alliance will develop and manufacture vaccines for seasonal, pre-pandemic and pandemic influenza in mainland China, Hong Kong and Macau. Shenzhen Neptunus will provide additional local manufacturing capacity and R&D expertise, GSK noted and both companies will provide further investment to make the vaccines.

The deal makes much sense for GSK as it expands its presence in emerging markets and has been set up at a time when the threat of a swine flu pandemic prevails. The company has received a number of governmental orders to produce a vaccine for the A(H1N1) flu strain.