(Yicai Global) Oct. 23 -- Zhejiang Conba Pharmaceutical will set up a Shanghai subsidiary to meet a Hong Kong listing requirement for its unprofitable affiliate Genor Biopharma.

Conba will use CNY960 million (USD137.1 million) of its own or self-raised funds to establish a subsidiary with the tentative name of Shanghai Kangjia Medical Science and Technology in the city's Pudong New Area, the Hangzhou-based parent company said in a statement today. Kangjia's business scope will include development and services in the fields of biotech, new energy, and machinery.

The new unit is being formed to adjust the shareholding structure of Shanghai-based Genor so that it can go public under the Hong Kong bourse's new rules for listing biopharma companies. A lack of profits is no longer an impediment. After the rule change, two other unprofitable Chinese drugmakers -- Ascletis Pharma and Hua Medicine -- listed successfully.

Since May, Conba has paid a total CNY952 million for an accumulative 27.45 percent of Genor Biopharma worth CNY134.1 million based on its registered capital.

Genor, which develops treatments for cancer, autoimmune and metabolic diseases, hasn't turned a profit in the more than 10 years since it was founded because its products are still in development. The company's loss widened to CNY54 million last year on revenue of CNY36 million.

So far, Genor has won domestic and foreign regulatory approval for clinical trials using 10 drugs. Two or three of those may go to market in the next three years.

Editor: Emmi Laine