Coined Medicilon-MPI Preclinical Research, the new venture will be based at the Zhangjiang Hi-Tech Park in Shanghai until later this year, when operations will be transferred to a new 50,000 sq. ft preclinical testing facility in the Chuansha Economic Park.
Together, the two firms said they will establish a facility, expected to be fully operational by 2009, that provides both good laboratory practice (GLP) and non-GLP preclinical services including investigatory new drug (IND) enabling studies and assistance with IND submissions and new drug applications (NDAs) for the US and other regulated markets.
MPI Research is one of several firms trying to forge a path for themselves in the growing preclinical contract services arena, which is dominated by Charles River laboratories and Covance.
Among its clients it counts US biotech firms such as Advanced Cell Technology, whom this year it contracted with to undertake an extensive preclinical program, including pilot studies for its retinal pigmented epithelial (RPE) program designed to find new treatments for degenerative retinal disorders.
However, as biopharma companies continue to migrate towards sourcing preclinical services in China, MPI Research has had its eye on a slice of the pie and has been looking for three years for the right firm with which to form a partnership in the country.
There appears to be plenty of opportunity at present for firms who establish themselves in the early-phase arena to grow extensively - China is fast becoming one of the best destinations to outsource preclinical work, which is often highly specialised and difficult to perform.
According to a recent Bloomberg report, China's largest preclinical services provider, WuXi Pharmatech, will this year overtake Pfizer, the world's largest pharmaceutical company, in the number of chemists it employs.
The contract research organisation (CRO) went public four months ago and since then it has doubled in value.
Meanwhile, in November, China's second largest CRO ShangPharma attracted $30m from US private investment firm TPG and is planning a growth assault to try and gain some ground on its larger domestic rival.
Moreover, the country's emergence as a favourite destination for outsourcing drug development has been reflected in a flurry of activity in this field of late involving several large pharma firms including AstraZeneca, Merck & Co, Pfizer, Novartis and Eli Lilly.
"The Chinese scientific community has identified this as a niche area and the government has been working to provide an environment where these studies can be conducted to the satisfaction of global sponsors and regulatory bodies so that the country can become a leader in the field', DA Prasanna, vice chairman & managing director of Manipal Acunova recently told Outsourcing-Pharma.com.
The speed of studies conducted in China has also contributed to the country's appeal, as is the low cost base the country is able to offer to those partaking in the high risk world of drug discovery.
According to a recent report published by the UK Trade and Investment (UKTI) department, the local Chinese industry estimates that Phase I trials can be conducted in China for around 15 per cent of the equivalent cost in a Western country, while Phase II studies cost 20 per cent of the price in the west.
China also has a large and untapped domestic market which further adds to its attraction.
Even so, a recent survey reveals that Western pharma companies are still largely shying away from outsourcing preclinical work to Asia.
Lehman Brothers carried out the survey, and only 32 per cent of those interviewed said their companies were planning to outsource preclinical studies to Asia, and even then, nobody said they planned to do this "immediately".
For those planning to shy away from Asia for the indefinite future, the biggest hurdles cited in the survey were distance, intellectual property risks, and lack of quality control in how studies are carried out.
"While most respondents did not plan on outsourcing preclinical studies to Asia, there was interest, although it still remains off the horizon", said Lehman Brothers Equity Research analysts Douglas Tsao and Lawrence Marsh.
For the majority of companies, it appears to be more of a long-term plan, with 30 per cent stating they would wait five years or longer; 26 per cent said 4 years; 20 per cent indicated they would wait 3 years; while only 14 per cent intended to do so in 2 years; and 11 per cent within the next 12 months.
"Almost half indicated they expected to begin outsourcing studies to Asia within the next three years", said the analysts.
"Interestingly, we suspect this roughly matches the timeline that the major US preclinical services providers are expected to begin offering [good laboratory practice] GLP- compliant testing services in China".
Charles River Laboratories is scheduled to begin GLP-testing in the country in 2009 and Covance is expected to soon follow suit, the analysts said.