CJ Healthcare, the pharmaceuticals unit of South Korea’s CJ Group, is embarking onto China’s fast-growing antiulcer treatment market valued at an estimated 3 trillion won ($2.65 billion), through a major drug licensing deal with Shandong Luoxin Pharmaceutical Group.

The Korean pharma firm said Sunday that it has sealed a license agreement in Shanghai with Luoxin Pharma to transfer the development and commercialization rights to CJ-12420, a drug to treat regurgitation gastritis and gastroesophageal reflux disease, in China.

CJ said it is expecting to reap around $91.79 million in profits through the deal, including an initial $18.5 million payment for the technology transfer and commercialization rights as well as royalties on the drugs’ expected sales.

The drug is scheduled to begin domestic sales in 2018, after which it will be exported to countries across Asia including China and Vietnam, racking up an expected 300 billion won in annual profits, according to CJ Healthcare.

“This agreement with Luoxin marks an opportunity to confirm CJ-12420’s potential to become a blockbuster drug upon commercialization, said CJ Healthcare CEO Kang Seok-hee.

“We hope to introduce new treatments for patients suffering from various gastrointestinal and gastroesophageal diseases through this partnership with Luoxin,” he said.

CJ began developing CJ-12420 after purchasing the drug’s base chemical from Japan-based RaQualia Pharma in 2010. The drug is currently undergoing Phase III clinical trials after successfully concluding Phase II clinicals in Korea last year.

Compared to existing antiulcer drugs, CJ-12420 has been shown in clinicals to relieve symptoms more quickly with prolonged effects, according to CJ Healthcare. The drug was also chosen last year as part of a new drug development project launched by the Korean Ministry of Drug and Food Safety.

By Sohn Ji-young (jys@heraldcorp.com)