Chinese firms acquire Ansell’s condom business for US$600m
Two Chinese firms are investing US$600 million to acquire the world’s No 2 condom maker, owned by Australian giant Ansell, in a bid to tap a lucrative market boosted by Chinese people’s rising awareness of the health benefits of protected sex.
Humanwell Healthcare Group, a Wuhan-based company, has teamed up with state-owned Citic Capital Partners to take over the glove and surgical mask maker’s condom and lubricants business, according to a statement by Ansell.
The deal will give the two firms a ubiquitous condom brand, Jissbon, which sounds like “James Bond” in Chinese. Ansell is second only in terms of market share to Reckitt Benckiser which owns the Durex brand in China.
“A lot of China’s health care companies are on the hunt for acquisition targets to bolster their prospects, but it is interesting to see this anaesthetics provider [Humanwell] branch out to a pure consumer business,”said Serena Shao, head of China health care with CLSA.
China is the fourth largest maker of condoms in the world, and its domestic market is predicted by American market researcher Reportlinker to witness “significant growth” thanks to increasing emphasis on public education about measures to prevent sexually transmitted diseases such as Aids.
“We feel that Humanwell and Citic are committed to the space and are intending, as far as we know, to invest aggressively in the business,” said Magnus Nicolin, chief executive officer of Ansell, in a conference call with analysts.
As part of its push to control the spread of Aids, the Chinese government has provided condoms or condom vending machines in 90 per cent of hotels and other unspecified public areas since 2011.
Meanwhile, sex education at schools has become less taboo, especially with the rising percentage of Chinese youth having premarital sex. In March, a textbook discussing sex and homosexuality was added to the curriculum of several Chinese elementary schools and subsequently went viral online.
Transparency Market Research, another American market intelligence firm, predicted China’s condom market would almost triple from US$1.84 billion in 2015 to US$5.04 billion by 2024.
Analysts believe Chinese urbanites’ yearning for a premium lifestyle will lend special cachet to Reckitt Benckiser’s Dure, Ansell’s Jissbon and Japanese rubber product manufacturer Okamoto’s namesake brand, which consumers consider are of better quality.
Yet analysts caution that the competitive landscape will lead to mounting marketing expenses for the Chinese companies.
“The condom business is of a very different nature from Humanwell’s core business, and it needs a lot of investment in marketing to retain its lead,” Shao said.
Humanwell and Citic Capital did not reply to emailed requests from the South China Morning Post for comment.