The deal includes a monopoly on avian influenza tests in China for three years.
Rockeby signed a non-binding but conditional letter of intent with Beijing Anheal Laboratories, a state-backed company. The strategic investment comes in two individual parts: Rockeby acquiring up to 40% interest in Anheal and Rockeby exclusively engaging Anheal as the distributor of its avian influenza antigen (AIV) tests in China.
This strategic investment with Anheal will give Rockeby access to the world’s largest poultry market, with the support of the Chinese government. While Rockeby will provide its product development capabilities to Anheal.
The strategic investment proposes Rockeby acquire an initial 25% stake in Anheal for $2.85 million in March. Rockeby will also have the option to acquire an additional 15% of Anheal in September for $1.9 million. Also, the Anheal board of directors will consist of a representative from Rockeby.
Anheal was appointed by the Chinese Ministry of Agriculture to develop and market diagnostic tests to help combat avian influenza in China. Thus Rockeby’s investment in Anheal will provide it with the only registration and distribution channel for the bird flu screening test.
Under the terms of the agreement, Rockeby, through its Singapore subsidiary, will incorporate a wholly owned foreign enterprise in China, Rockeby China, based in Beijing. Rockeby will assign the IP rights for its AIV test to Rockeby China for the whole of China and set up a bird flu test manufacturing facility in Beijing.
The facility is expected to take six months to come on-stream. Until a locally manufactured version of the AIV test is approved, Rockeby will be importing the AIV test from Thailand into China.
Anheal will assist Rockeby in the China-manufactured AIV test’s registration and certification by the Ministry of Agriculture. Following the granting of the certification by the Ministry of Agriculture, the bird flu test will have a three-year monopoly in China before other rapid tests can be registered with the Ministry of Agriculture.
Anheal will market and promote the tests to both public and private sector customers at the provincial level. It is estimated that China will need 276 million tests per year.