Leading drug maker has big plans to branch out

PUBLISHED : Tuesday, 07 February, 2012, 12:00am
UPDATED : Tuesday, 07 February, 2012, 12:00am

Shanghai Pharmaceuticals, one of the mainland's biggest drug makers and distributors, is buying Changzhou Kony Pharma to broaden its product portfolio and strengthen the manufacturing of special active pharmaceutical ingredients (APIs).

APIs refer to the substance in a drug that is biologically active.

The state-owned company said it would pay 300 million yuan (HK$368 million).

Shanghai Pharmaceuticals said that this year it would step up mergers and acquisitions, using proceeds from its H-share listing last May. The company bought a 51 per cent stake in Jinhe Bio-Technology last month.

Shanghai Pharmaceuticals will buy a 70 per cent stake in Kony Pharma and acquire the remaining 30 per cent in the next two years.

'We will also continue to seek M&A deals which facilitate our development and accelerate our moves to develop nationwide presence,' said chairman Lu Mingfang (pictured).

Based in Jiangsu province, Kony Pharma is a drug manufacturer specialising in APIs, with a focus on nucleoside antivirus APIs and losartan antihypertensive APIs, used in heart and vein medications.

Industry consultant IMS Health estimated the global generic drug market would grow 9 to 12 per cent over the next five years, after already outstripping the broader pharmaceutical industry in recent years.

Shanghai Pharmaceuticals, which now makes more than 400 products, said the growth in generic drugs would rapidly boost the demand for special APIs and present a great opportunity for specialist API companies.

Kony Pharma exports 50 per cent of its products, and is preparing to pass European Union's CEP and the United States' FDA certification.

Kony Pharma's revenue from special APIs was 63 million yuan in the first half of 2011, with a net profit of 17.25 million yuan. The revenue for 2011 is expected to reach 115 million yuan.

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