Biohit Oyj rose the most in more than five months after the Finnish health-care company said it’s setting up a joint venture in China to manufacture and sell its Gastropanel test to screen gastric disorders.
Biohit will provide expertise, intellectual property and production technologies valued at about 13 million yuan ($2.1 million) and will own 40 percent of Biohit Biotech (Hefei) Co. in China’s Anhui province. Liu Feng’s Anhui Wisdom-Win Investment Co. will own 60 percent with an initial investment of 20 million yuan, Biohit said in a statement. Biohit shares rose as much as 28 percent in Helsinki, where the company is based.
Biohit is expanding in China after identifying the country as a key market. A genetic mutation common among east Asian people inhibits their ability to process acetaldehyde, which is present in food such as fruits and is also a byproduct of consuming alcohol. Half the world’s stomach cancer cases occur in eastern Asia, mainly in China, according to the World Health Organization’s International Agency for Research on Cancer.
“This investment is enough to get business going in China and to get production going,” Biohit Chief Executive Officer Semi Korpela told reporters today. “China is our most important market at the moment.”
Biohit share rose as much as 1.48 euros to 6.76 euros, the biggest advance since Jan. 11. The stock was up 19 percent at 6.27 euros as of 12:51 p.m., taking the gain to 57 percent this year.
Gastropanel is a test to diagnose infections with Helicobacter pylori, a bacterium that causes low stomach acid levels and exposes patients to acetaldehyde. H. pylori infection has been linked to stomach cancer.
Biohit last month appointed Hefei Medicine Co. to distribute its diagnostic products in China, replacing a deal signed in the first quarter of 2012 with CanAg Diagnostics. Hefei Medicine will sell the products until the joint venture has started operations, scheduled by the end of 2014, Korpela said.
Biohit is also working with China’s Grand Pharmaceutical Co. to distribute the Finnish company’s Acetium product. The capsule reduces the amount of the cancer-causing substance acetaldehyde in people whose stomachs can’t process it.
Regulatory approvals in China are pending for the joint venture with Anhui Wisdom-Win. The venture will be profitable in two to three years, Korpela said.