China Resources unit mulls US$377m fund to ride on health care sector growth

China Resources Pharmaceutical will commit 12.21 per cent of the capital for the fund, whose partners include other related companies and Structure Reform Fund

PUBLISHED : Wednesday, 25 October, 2017, 11:11am
UPDATED : Wednesday, 25 October, 2017, 11:03pm

China Resources Pharmaceutical Group’s subsidiary, CR Pharm (Shantou), announced that it was considering creating a 2.5 billion yuan (US$376.84 million) fund to make equity investments in Chinese pharmaceutical firms, according to a filing to the Hong Kong stock exchange.

The announcement comes as President Xi Jinping laid out in his 19th Party Congress report health care policies to promote a “healthy China”.

China Resources Pharmaceutical has proposed to commit 305.25 million yuan or 12.21 per cent of the capital for the fund. Other partners of the fund include China Resources Holdings subsidiaries – CR Capital, CR Capital LP, CR Sanjiu, CR Double-Crane, CR Pharmaceutical Investment and CR Pharmaceutical Commercial, as well as CVC, Guoxin and Structure Reform Fund.

The fund will have a maturity of five years, with the option to extend up to two years.

CR Pharm (Shantou) will be the executive general partner of the fund, responsible for the investment, management, utilisation and disposal of the assets.

Shenzhen Harvest Huaji Equity Investment will be the fund manager and entrusted manager, responsible for the investment management, disclosure and filing of information.

The annual management fees will be 1.5 per cent on the accumulated paid-up amount in the first three-year investment period.

Xinhua cited President Xi as mentioning policies during the 19th congress for improving the medical insurance system, implementing healthcare reforms to establish sound modern hospital management, promoting the inheritance and development of traditional Chinese medicine and supporting private medical institutions.

Pharmaceutical stocks have gained in recent days after the China Food and Drug Administration simplified approval procedures for site changes by some drug manufacturers.

“We believe this policy would enhance the competitiveness of large innovative pharmaceutical enterprises, accelerate drug discovery and technology transfer, improve industry concentration and operating efficiency, and stimulate market vitality,” ICBC said in a research note.

China Resources Pharmaceuticals advanced 2.13 per cent to HK$9.60, BBI Life Science surged 10.49 per cent to HK$3.16 and Guangzhou Baiyunshan Pharmaceutical edged up 0.21 per cent to HK$24.

China Resources Pharmaceutical Group

China Resources Double-crane Pharmaceutical Company (CR Double-crane), which is 59.99 per cent indirectly owned by China Resources Pharmaceutical, posted a net profit of 755.9 million yuan for the nine months ended September 30, up 22 per cent on the same period a year earlier. Revenue was 4.76 billion yuan, up 15 per cent on the same period a year earlier. Total assets were 9.29 billion yuan, up 13 per cent on the same period a year earlier.