Pharma deal could prove among sector’s biggest consolidations yet
CR Pharma agrees to take controlling stake in state-owned rival Jiangzhong, as China seeks to slash medicine costs and improve quality assurance
China Resources Pharmaceutical Group (CR Pharma), one of the nation’s largest drug makers and distributors, has confirmed it is in talks to buy a controlling stake in the country’s fifth largest Chinese traditional medicine maker, as part of industry consolidation encouraged by Beijing to cut health care costs.
Hong Kong-listed CR Pharma’s move on state-owned Jiangzhong Group is part of a “long-term strategic cooperation” pact the firm wants to forge with the Jiangxi government, and is aimed at “promoting development” of the province’s pharmaceutical industry, it said in a stock exchange filing on Wednesday. The company’s shares closed up 3.38 per cent at HK$11 (US$1.4).
Jiangzhong is 41.54 per cent-owned by the provincial government, and also owns a 43.03 per cent stake in Shanghai-listed Jiangzhong Pharmaceutical, which had a market capitalisation of 7.6 billion yuan (US$1.19 billion), before it was suspended from trading on May 2.
At current prices, the deal could be worth in excess of 3.9 billion yuan, making it one of the largest pharmaceutical deals yet within China’s consolidation of the sector.
“The detailed restructuring plan [of Jiangzhong Group] still has to be further discussed and agreed,” Wednesday’s filing by CR Pharma said, pending binding agreements and approvals by various authorities.
