BEIJING, Feb. 6 -- Huayi Group plans to invest about 100 million yuan in a pilot project to manufacture a medicine for diabetics that it developed through its own research.

    "The board has approved the project which will be launched in the third quarter of this year," said Zhang Peizhang, chairman of Shanghai Huayi Group.

    A plant to make the medicine will be located in Shanghai's Nanhui International Medical Science Park and will cover an area of about 5 hectares when completed.

    The new drug, named "Yishengtai," is "China's first effort in developing drugs for diabetics by using its own intellectual property rights," said Wu Dengxi, director of the Shanghai Huayi Bio-Lab Co Ltd.

    "It will be put into production in two years if things go on smoothly," said Zhang.

    The company has applied to the state for a patent, he said.

    Clinical experiments on the drug began in 2004 after it was registered with the State Drug and Food Administration.

    "Much valuable data was collected from these experiments, proving that the new drug is helpful to those who are suffering from type-II diabetes," said Li Guangwei, a professor at the Sino-Japan Friendship Hospital, who has been involved in the experiments.

    Li said diabetes is one of the world's three most deadly diseases. The other two are cardiovascular disease and cancer.

    The world is expected to have 300 million diabetic patients by 2025, of which China will account for 100 million, he said.

    At present, China has more than 50 million diabetic patients, a number that is growing by 2 million annually.

    Huayi started development of the new drug in early 2000 with a large financial investment, said Wu, but he did not release a specific figure.

    The company said the new drug will be better than those already available from overseas pharmaceutical companies because it will both stimulate insulin secretion and inhibit glucagon secretion when blood glucose is elevated.

    The company will select 240 diabetic patients as required for clinical trials to be held at seven hospitals in Beijing, Tianjin, Shanghai and Nanjing in Jiangsu Province.

    A third phase of tests will start in March of next year and continue until 2009.

    "If everything goes smoothly, the new drug will be on sale in late 2009," Wu said.

    Due to the lower production costs, the new drug is expected to be much cheaper than those made in foreign pharmaceutical factories, Zhang said.