Sinopharm distribution joint venture in China

RNS Number : 8467V

Hutchison China Meditech Limited

18 December 2013

 



Hutchison China MediTech Limited ("Chi-Med")

(AIM: HCM)

Chi-Med and Sinopharm form China drug distribution and marketing joint venture 

London: Wednesday, 18 December 2013:  Chi-Med, the pharmaceutical and healthcare company based primarily in China, today announces the establishment of a new joint venture with Sinopharm Group Co. Ltd. ("Sinopharm").  Sinopharm is the largest distributor of pharmaceutical and healthcare products and a leading value added supply chain service provider in China.  The joint venture will provide distribution and marketing services to both related and third party pharmaceutical companies in China.

Chi-Med will, through a wholly-owned subsidiary, invest approximately US$9.8 million in cash into Sinopharm Holding HuYong Pharmaceutical (Shanghai) Co., Ltd. ("Huyong") for the subscription of 51% of the equity in the enlarged share capital of Huyong, which will mean that Huyong will be consolidated as a Chi-Med subsidiary. The Chi-Med investment will be largely deployed for expanding future commercial activities, particularly in the area of third party drug sales and marketing.  Sinopharm will hold the balance of 49% of the equity in Huyong. 

Huyong is a Good Supply Practice ("GSP") certified pharmaceutical and healthcare distribution and marketing company that was originally established in 1993 and subsequently acquired by Sinopharm in 2010.  Huyong will be renamed as Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Company Limited ("Hutchison Sinopharm"). Huyong's profit before tax for the year ended 31 December 2012 was US$1.0 million, and had gross assets at 31 December 2012 of US$29.9 million.

Hutchison Sinopharm will be reported under the China Healthcare Division of Chi-Med which currently comprises three companies: Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine Company Limited ("HBYS"); Shanghai Hutchison Pharmaceuticals Limited ("SHPL"); and Hutchison Healthcare Limited ("HHL").  The 2012 sales of the China Healthcare Division subsidiaries and jointly controlled entities of Chi-Med were US$350.5 million and net profit attributable to Chi-Med equity holders was US$15.5 million. 

Hutchison Sinopharm will provide a platform for synergy across the China Healthcare Division of Chi-Med by utilising the services of the approximately 2,800-person prescription drug and over-the-counter drug sales teams of SHPL and HBYS.  A major aspect of the Hutchison Sinopharm business strategy will be to provide sales, distribution, and marketing services to major domestic and multi-national third party pharmaceutical manufacturers.   It will also provide a broadened sales and marketing platform for HHL's products and potentially the future novel drugs registered by Hutchison MediPharma Limited, Chi-Med's Drug R&D Division.

This transaction is subject to regulatory approval in China.

Christian Hogg, Chi-Med CEO said: "This strategic investment widens the scope of our China Healthcare Division dramatically by allowing Chi-Med's commercial organisation to market third party pharmaceutical products.  We are honoured to partner with Sinopharm in the area of drug distribution and marketing and expect to build a material business based on the complementary strengths of our two groups over the coming years."

Ends

Enquiries

Chi-Med     Christian Hogg, CEO	Telephone:      [phone]
Panmure Gordon (UK) Limited     Richard Gray     Andrew Potts     Grishma Patel	Telephone:      [phone]
Citigate Dewe Rogerson     Anthony Carlisle     David Dible	Telephone:      [phone] Mobile:             [phone] Mobile:             [phone]

 

About Chi-Med

Chi-Med is the holding company of a healthcare group based primarily in China and was listed on the Alternative Investment Market of the London Stock Exchange in May 2006.  It is focused on researching, developing, manufacturing and selling pharmaceuticals and health oriented consumer products.

Chi-Med is majority owned by Hutchison Whampoa Limited, an international company listed on the Main Board of The Stock Exchange of Hong Kong Limited.  For more information, please visit: www.chi-med.com.

 

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