GlaxoSmithKline (NYSE: GSK) and Shenzhen Neptunus Interlong Bio-Technique Co. Ltd. (NIBT), an established vaccine manufacturer in China, will work together to develop flu vaccines for the China market. The two companies have signed a formal Cooperation Agreement that will lead to the formation of a JV company with $78 million of assets, if certain undisclosed conditions are met.

When the agreement moves on to the JV stage, GSK will contribute $31 million in cash for 40% ownership of the company. NIBT will sign over the equivalent of $47 million in assets to the JV. GSK has the right, during the first five years of the new entity, to increase its equity position and obtain majority control of the JV.

GSK brings to the venture its vaccine adjuvant technology and expertise in vaccine development. NIBT contributes local experience, both with China’s vaccine market and access to local flu antigens. The goal will be vaccines that are effective against seasonal strains as well as pre-pandemic and pandemic flu. Targets will be strains of flu found in China, Hong Kong and Macau.

GSK will run the JV out of its vaccine division, GSK Biologicals, which has facilities, alliances or JVs in 14 sites around the globe.