Nov 1, 2007: China Sky One Medical (CSKI), a Nevada corporation, is a holding company whose principal operations are through its subsidiaries, which are engaged in the manufacturing, marketing and distribution of pharmaceutical, medicinal and diagnostic kit products. The company’s wholly owned subsidiaries are American California Pharmaceutical Group, Harbin Tian Di Ren Medical Science and Technology Company, Kangxi Medical Care Product Factory and Harbin First Bio-Engineering Company Limited. CSKI’s principal revenue source is the manufacture and sale of over-the-counter pharmaceutical products. In an email interview with BioSpectrum, Mr Yan-qing Liu, CEO, President & Director of CSKI, explains how he is steering CSKI on the right track.

CSKI got listed through reverse merger. Can you explain how this strategy has benefited the company?
On May 11, 2006, American California Pharmaceutical Group entered into a Stock Exchange Agreement with the shareholders of Comet Technologies Inc., a Nevada corporation. China Sky One became a listed company at OTCBB through a reverse merger. The company went public through a reverse merger by acquiring Comet. CSKI now holds 93 percent shares in the merged company. This acquisition allows us to raise capital in the US using our shares and financial support and it supports accelerated growth of
our business.

Is China Sky One planning to foray into stem cell/ cord blood banking business?
Yes. In 2006, the company established Harbin Tian Qing Biotech Application Company (Harbin Biotech) as a wholly owned subsidiary, to conduct research and development in the areas of tissue and stem cell banks. The strategy was formed due to the following analysis:

Huge market demand in China: Stem cells from umbilical cord blood (UCB) are known to treat over 70 diseases. There are numerous advantages of cord blood stem cell bank over traditional marrow transplants, including a higher success rate; lower rejection rate; richer source of cord blood; simple inspection and quick application and low matching requirements. We have concluded that the market for this business in China is enormous.

Due to traditional culture and ‘one child, one family’ state policy, most Chinese parents are willing to use UCB bank services to maximize their children’s chances for healthy life. In China, with rapid economic growth and increasing per-capita income, more people are now able to afford UCB bank services.

Policy: Chinese government has granted exclusive rights to establish one UCB bank in each region in China. So far, only five regional UCB banks have been approved. We are proud to be an exclusive and single provider for the entire Northeastern China region, and our exclusivity will last until 2020.

Market potential: NE China region consists of three provinces, Heilongjiang, Jilin and Liaoning with a total population of 100 million. Considering a birth rate of 1.3 percent, or 1.3 million new babies every year and assuming that 1.5 percent of the annual birth will use a UCB bank, we can potentially have 19,500 new customers every year. Each customer needs to spend RMB 12,000 per year for UCB storage and services, totaling RMB 234 million, or $30 million.

What are the future plans for the company?
Our long-term objective is to develop CSKI into a leading bio-engineering company. In the near future, we will focus on developing diagnostic kits and drugs and develop a successful stem cell bank.