Hong Kong-based private equity firm, Zendex Bio Strategy has partnered with two respiratory product companies to set up Kinnovata Pharmaceutical Company in Tianjin, hoping to take advantage of China's increasing demand for asthma-related medical products.

The two partners are Chippenham, U.K.-based Vectura Group and Tianjin KingYork Group Company, a Chinese pharmaceutical company.

Zendex Bio Strategy was founded in 2003 with registered capital of $50 million. The private equity firm specializes in investing in advanced bio-technologies suitable for the Chinese market.

Tianjin KingYork holds 50% of the joint venture, with Vectura holding 35% and Zendex 15%.

The joint-venture, Kinnovata Pharmaceutical will develop and manufacture respiratory products for the rapidly growing domestic Chinese and other Asian regional markets.

It will first market Vectura’s dry powder inhalers to meet the increasing needs in the Asian asthma and chronic obstructive pulmonary disease (COPD) markets. COPD is a type of chronic breathing disease.

It is estimated that the overall asthma population in China is more than 25 million people. In addition, approximately 42 million people suffer from COPD in China. That population is estimated to grow to 56 million by 2021.

The growing patient population is driven by population growth, increasing urbanization and aging. China also has one of the highest smoking rates in the world, with 75% of adult male either current or former smokers.

Tianjin KingYork and Zendex Bio Strategy are expected to contribute assets of RMB260 million of cash, technology assets, intellectual property and land to Kinnovata, which will establish its factories at KingYork's pharmaceutical business park in Tianjin.

Chris Chan, previously an advisor to Zendex, is appointed CEO of Kinnovata.

Vectura will receive royalties through to 2030 on certain products sold by Kinnovata, and is expecting an exceptional non-cash gain of approximately $20.55 million in relation to the acquisition of the 35% stake in Kinnovata.

Kinnovata is expected to be loss-making for at least 24 months following its establishment.

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