The dynamism and international ambitions of China’s contract research industry were once again in evidence as Beijing-based Venturepharm Laboratories (VPL), a leading provider of pharmaceutical discovery and development services, took a 39% stake in US research and development services company Commonwealth Biotechnologies, Inc (CBI).

The two companies have also formed a joint venture, Venturepharm Asia, to establish what CBI called “the first fully integrated, US-China based pharmaceutical contract research organisation” (CRO).

Venturepharm acquired 2.15 million shares of CBI, representing 39% of the US company’s issued share capital, from PharmAust Ltd for an undisclosed sum.

The investment further raises the international profile of a diversified company that already wields a subsidiary in Hong Kong (Venturepharm Life Science Capital) focused on investment, mergers and acquisitions; a research institute in South Africa pursuing AIDS drug research and development; a marketing company (P K Pharmtech Private) directed at Latin America and Asia; and R&D/pilot production bases in the US and Canada.

CBI said the joint venture would enable it to “leverage Venturepharm’s extensive clinical research capabilities in China in order to provide a comprehensive suite of outsourcing services to the global pharmaceutical outsourcing industry”. The venture built on recent deals between eastern and western CROs and would be “Venturepharm’s ‘shop front’ to the world to access the global customer base for CRO services”, the US company added.

Commonwealth Biotechnologies will provide early-stage drug discovery technologies as well as business development, marketing and quality assurance services to Venturepharm Asia, while VPL will contribute contract manufacturing and clinical trial services.

Dr Paul D’Sylva, chief executive officer (CEO) of CBI, commented: “In establishing this partnership with VPL, CBI is taking account of China’s growing importance in drug discovery and development. Venturepharm Asia brings together the best of what the west and the east can offer in the pharmaceutical outsourcing industry by providing fast, secure, high quality, and innovative services at globally competitive prices.”

Of the estimated $34 billion in global life sciences outsourcing expenditure in 2005, D’Sylva noted, 60% was spent on contract manufacturing, 33% on clinical research and 7% on custom chemical synthesis. The new joint venture was “of enormous strategic value to CBI because it builds upon our high-quality custom synthesis products and services and enables us to expand our suite of services into the large and growing market segments of contract manufacturing and clinical trial management”, he said.

Dr Bill Guo, chairman and CEO of Venturepharm Laboratories, sees the joint venture and the investment in CBI as “the first steps in establishing a growth-oriented and highly profitable business relationship between VPL and CBI. Ultimately, this partnership enhances the product offering of both companies by providing customers with a fully-integrated suite of quality assured drug discovery, development and production services”.

In January, Shanghai-based CRO WuXi PhamaTech moved into the US market with a definitive agreement to acquire AppTec Laboratory Services for around $151 million. WuXi’s stock market value in the US had more than doubled since it launched a $185 million initial public offering in New York in August 2007.

A recent report on outsourcing clinical trials by US-based Arrowhead Publishers put China at the top of a location index that ranked 31 “ascending” markets for clinical development according to seven measures of attractiveness such as study costs, population/patients and disease incidence.

China scored an average index of 6.48 while India was in second place with an average of 5.66. Figures from, the on-line registry established by the US National Institutes of Health in 1997, suggest that China is pulling ahead of India as a preferred location for outsourced clinical trials.