GlaxoSmithKline plc (GSK) has entered into a definitive agreement to form a new Joint Venture with Shenzhen Neptunus Interlong Bio-Technique Co. Ltd (Shenzhen Neptunus) focused on developing and manufacturing influenza vaccines for the Chinese market.

Jean Stéphenne, President and General Manager of GlaxoSmithKline Biologicals, said, "This new alliance enables GSK to build new vaccines capability in a critical emerging market such as China. The new Joint Venture will combine the potential of GSK's adjuvant technology and expertise in vaccine development together with the extensive experience of Shenzhen Neptunus in the Chinese vaccines market. Together we will gain access to specific local influenza antigens and make available new vaccines to benefit public health in China and neighbouring territories."

The alliance will develop and manufacture influenza vaccines for China, Hong Kong and Macau. This will include vaccines for seasonal, pre-pandemic and pandemic influenza. It is expected that these vaccines will become available over the next few years. The Joint Venture is expected to benefit from the differing expertise that both companies have in developing vaccines. Specifically, GSK will provide access to its proprietary adjuvant system which helps to improve efficiency and optimise production by increasing the number of vaccine doses that can be produced using a smaller amount of antigen. Shenzhen Neptunus will provide additional local manufacturing capacity and R&D expertise. Both companies will provide further investment in manufacturing.

GSK will take a 40% stake in the Joint Venture for a contribution of cash and assets equivalent to £21m. Shenzhen Neptunus will take a 60% stake in the Joint Venture for a contribution of cash and assets equivalent to £31m. Profits attributable to these assets are negligible.

Under the terms of the agreement, GSK is expected to purchase additional shares and obtain a majority equity interest in the Joint Venture within the next two years.

Completion of the transaction is expected in the fourth quarter of 2009, subject to local regulatory approval.

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