Shanghai Pharmaceuticals buys out Cardinal Health in China to become top distributor of imported drugs
All-cash offer for 100 per cent stake in subsidiary is worth US$557 million
Shanghai Pharmaceuticals Holding, one of China’s biggest pharmaceutical companies, said on Wednesday it had acquired US pharmaceutical company Cardinal Health’s China operations for about US$557 million, a move that will help it become the top distributor of imported drugs by type on the mainland.
The company said the transaction would be conducted through its wholly owned subsidiary Shanghai Pharma Century Global, which will purchase a 100 per cent stake in the wholly owned subsidiary of Cardinal Health in an all-cash offer. The total value of Cardinal is US$1.2 billion. After deducting amounts owed to its original shareholders and debt holders, and other accounting adjustments, the amount Shanghai Pharmaceuticals Holding will pay to fully buyout Cardinal’s China business is US$557 million.
The acquisition will help expand the company’s product line with an increase in the number of drugs and non-drug products.
“The acquisition of Cardinal Health’s China business will further strengthen our leadership in the distribution and retail pharmacy network, and expedite our transformation into a modern global health care provider,” said Zhou Jun, the chairman of Shanghai Pharmaceuticals Holding.
“This will also facilitate the growth of our pharmaceutical manufacturing business, enabling us to play a significant role in the government’s ‘Healthy China’ initiative.”
Shanghai Pharmaceuticals Holding’s company secretary, Liu Dawei, said the acquisition of Dublin, Ohio-based Cardinal Health’s subsidiary will increase its distribution network coverage from 21 to 24 provinces in China.
Shanghai Pharmaceuticals Holding was the third-largest pharmaceutical distributor in China by revenue last year, while Cardinal ranked eighth with 25 billion yuan (US$3.7 billion) in sales.