China economy

Walgreens agrees 2.76 billion yuan deal with China’s largest health care retailer for pharmacy stake

Sinopharm to work with Walgreens and explore opportunities in other markets

PUBLISHED : Wednesday, 06 December, 2017, 11:00pm
UPDATED : Wednesday, 06 December, 2017, 11:11pm

Global pharmacy and health care company Walgreens Boots Alliance said on Wednesday it had signed an agreement with Sinopharm Group, China’s largest retailer of pharmaceutical and health care products, in a deal worth 2.76 billion yuan (US$417 million).

The agreement, between Sinopharm subsidiary China National Accord Medicines and Walgreens Boots Alliance, the largest retail pharmacy and health care chain across the United States and Europe, will see the latter purchase a 40 per cent stake in Sinopharm Holding Guoda Drugstores, as it seeks to take advantage of the growing interest in health care among Asian consumers, according to Sinopharm.

“We have had a presence in China for around 10 years, initially through Alliance Boots, and we are excited about the opportunity to further invest in the country’s fast-growing retail pharmacy sector,” said Stefano Pessina, the Walgreens chief executive. The transaction is subject to review and approval from relevant regulatory authorities in China.

“The strategic collaboration between Chinese and global pharmacy retail giants will mark a new chapter in realising the company’s great vision in the pharmacy retail industry,” Sinopharm said.

“Sitting in a leading position in the industry and supported by Walgreens Boots Alliance’s deep pharmacy expertise and retail experience around the world … Guoda will further upgrade operation standards, improve efficiencies and transform its business model to differentiate from domestic competitors.”

Sinopharm said it would work with Walgreens Boots Alliance to explore opportunities in the broader Asian and global markets, in keeping with Beijing’s Belt and Road Initiative.

Sinopharm Group will hold the remaining 60 per cent stock.

Its announcement comes during a busy week for the pharmacy space after the Walgreens rival CVS announced it would spend US$70 billion to acquire Aetna, one of the largest health insurers in the US. The deal was one of the largest this year.