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The Week in Review: Active Week for Pharma Deals
publication date: Dec 18, 2010
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author/source: Richard Daverman, PhD
It was a busy week for life science transactions in China, with companies scrambling to get deals done before the end of the year.
Shanghai Pharmaceuticals Holding (SHEX: 601607) will spend $570 million to buy two China drug distribution-manufacturing companies (see story). In one deal, Shanghai Pharma will pay $225 million for the antibiotics business of its parent company, Shanghai Pharmaceutical Group. And the company finalized the terms on a previously announced transaction, acquiring 65% of China Health System for $345 million.
Royal DSM NV (XAMS: DSM) sold 50% of its anti-infectives unit to Sinochem Group for $291 million, forming a JV between the two companies (see story). Sinochem will use its extensive distribution network to market the JV’s antibiotics in China. DSM claims to be the global leader in beta-lactam antibiotics, the largest selling class in the world that includes penicillin derivatives such as cephalosporins.
Xiangxue Pharmaceutical (SZEX: 300147), a TCM drug company based in Guangzhou, completed its IPO on the ChiNext exchange this week, raising $56 million (see story). The company issued 31 million shares at 33.99 RMB per share, a price-earnings ratio of 83. The company’s stock rose an additional 18% to 40.13 in post-IPO trading.
Shanghai Fosun Pharmaceutical (SHEX: 600196) will acquire a 70% stake in Shenyang Hongqi Pharmaceutical, a company focused on tuberculosis treatments (see story). Fosun will attempt to increase penetration of Hongqi’s TB drugs in the international market. Financial terms of the transaction were not disclosed.
Zhejiang Jolly Pharmaceutical has been approved to IPO on Shenzhen’s ChiNext exchange (see story). The company will offer 20 million shares, representing 25% of the post-IPO capitalization, at an as-yet undetermined price. Zhejiang Jolly intends to use the proceeds to fund research, production and distribution of its Wuling power and capsules, a traditional Chinese medicine that treats depression.
In other news, China will boast the world’s second highest R&D investment next year, edging out Japan (see story). The PRC is expected to spend $153.7 billion in R&D during 2011, an increase of 8.7% from $141.4 billion this year. Japan, meanwhile, will up its R&D investment by a modest $2 billion to $144 billion.
In a move to increase its China revenues, H. Lundbeck A/S of Denmark will begin co-promoting Lexapro®, its SSRI-class treatment for depression in the PRC (see story). Previously, Xian-Janssen was exclusively in charge of China marketing for the drug, under an agreement signed in 2002. Both companies agreed to increase their investment in marketing to further increase sales.
Steve Yang, PhD, who has been Pfizer’s (NYSE: PFE) highly visible Vice-President for Asia R&D, will join AstraZeneca (NYSE: AZN), taking on the same duties (see story). In China, Pfizer has had one of the more innovative pharma business models, with great autonomy to pursue deals and make alliances. Both companies will be watched to see how their business models develop after Dr. Yang leaves Pfizer to assumes his new position at AstraZeneca on January 1, 2011.
Disclosure: none.
Shanghai Pharmaceuticals Holding (SHEX: 601607) will spend $570 million to buy two China drug distribution-manufacturing companies (see story). In one deal, Shanghai Pharma will pay $225 million for the antibiotics business of its parent company, Shanghai Pharmaceutical Group. And the company finalized the terms on a previously announced transaction, acquiring 65% of China Health System for $345 million.
Royal DSM NV (XAMS: DSM) sold 50% of its anti-infectives unit to Sinochem Group for $291 million, forming a JV between the two companies (see story). Sinochem will use its extensive distribution network to market the JV’s antibiotics in China. DSM claims to be the global leader in beta-lactam antibiotics, the largest selling class in the world that includes penicillin derivatives such as cephalosporins.
Xiangxue Pharmaceutical (SZEX: 300147), a TCM drug company based in Guangzhou, completed its IPO on the ChiNext exchange this week, raising $56 million (see story). The company issued 31 million shares at 33.99 RMB per share, a price-earnings ratio of 83. The company’s stock rose an additional 18% to 40.13 in post-IPO trading.
Shanghai Fosun Pharmaceutical (SHEX: 600196) will acquire a 70% stake in Shenyang Hongqi Pharmaceutical, a company focused on tuberculosis treatments (see story). Fosun will attempt to increase penetration of Hongqi’s TB drugs in the international market. Financial terms of the transaction were not disclosed.
Zhejiang Jolly Pharmaceutical has been approved to IPO on Shenzhen’s ChiNext exchange (see story). The company will offer 20 million shares, representing 25% of the post-IPO capitalization, at an as-yet undetermined price. Zhejiang Jolly intends to use the proceeds to fund research, production and distribution of its Wuling power and capsules, a traditional Chinese medicine that treats depression.
In other news, China will boast the world’s second highest R&D investment next year, edging out Japan (see story). The PRC is expected to spend $153.7 billion in R&D during 2011, an increase of 8.7% from $141.4 billion this year. Japan, meanwhile, will up its R&D investment by a modest $2 billion to $144 billion.
In a move to increase its China revenues, H. Lundbeck A/S of Denmark will begin co-promoting Lexapro®, its SSRI-class treatment for depression in the PRC (see story). Previously, Xian-Janssen was exclusively in charge of China marketing for the drug, under an agreement signed in 2002. Both companies agreed to increase their investment in marketing to further increase sales.
Steve Yang, PhD, who has been Pfizer’s (NYSE: PFE) highly visible Vice-President for Asia R&D, will join AstraZeneca (NYSE: AZN), taking on the same duties (see story). In China, Pfizer has had one of the more innovative pharma business models, with great autonomy to pursue deals and make alliances. Both companies will be watched to see how their business models develop after Dr. Yang leaves Pfizer to assumes his new position at AstraZeneca on January 1, 2011.
Disclosure: none.
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