Home » Business » Manufacturing
Shanghai Pharma braces for HK IPO
By Ding Yining |
April 27, 2011, Wednesday
|
Print Edition
Print Edition
SHANGHAI Pharmaceutical Holdings Co, China's largest listed drug maker by revenue, has been given the green light to raise as much as 13 billion yuan (US$2 billion) in an initial public offering in Hong Kong as early as next month.
More than half of the new capital is expected to be used for merger and acquisitions to improve the company's distribution channels across the Chinese mainland.
Shanghai Pharma already has set up three major distribution systems in east, north and south China. More acquisitions are expected to further consolidate its dominant market position.
Earlier reports also said it may even be eying a controlling stake in German drug retailer Celesio. Shanghai Pharma has declined to comment on specifics of its acquisition plans.
"Expanding distribution channels is expected to accelerate the company's pace of growth faster than that of its domestic counterparts in the next few years," Guotai Junan Securities analyst Yi Jingming said.
As a pharmaceutical group headquartered in Shanghai, business operations of Shanghai Pharma range from research and development of over-the-counter as well as prescription drugs, manufacturing and retailing of medicines and health care products. It currently operates and franchises a network of retail pharmacies across nine provinces, municipalities and autonomous regions.
The company plans to issue up to 763.85 million shares in Hong Kong at a minimum HK$14.70 (US$1.89) apiece.
In early April, Shanghai Pharma completed acquisition of a 100 percent stake in China Health System, giving it control of Citic Pharmaceutical Co, a drug retailer with estimated 2010 sales of 6 billion yuan that focuses on north China's market. Lu Mingfang, chairman of Shanghai Pharma, said the company's strategy is to expand nationwide from its base in the Yangtze River Delta region.
"The acquisition of China Health System, following that of Beijing Aixin Weiye Medicine Co, has laid down a basic framework for Shanghai Pharma to move nationwide," China International Capital Corp's Sun Liang wrote in a research report.
Further acquisitions will be made through these units, a Shanghai Pharma official said.
Shanghai Pharma paid 225 million yuan for a 52.24 percent stake of Aixin Weiye in a deal completed in November.
Shanghai, Beijing and Zhejiang Province rank as the top three drug markets in China in terms of sales volume, according to data compiled by China International Capital. Picking up subsidiaries in those areas makes perfect sense in Shanghai Pharma's expansion plans, analysts said.
Shanghai Pharma expects revenue from the takeovers of China Health and Aixin Weiye to contribute a combined 10 billion yuan from Beijing alone this year, while overall revenue from distribution channels could reach 45 billion yuan.
China was ranked the world's third-largest pharmaceutical market by consultancy firm IMS Health Inc. National sales are estimated at US$50 billion this year.
The Chinese market will enjoy significant growth in the next 10 years, Shanghai Pharma's Lu said. It's essential for the company to make use of the first three years of that time frame to build up a nationwide network, he added.
Shanghai Pharma bought a 51 percent stake in drug company Guangzhou ZSY earlier this month for 140.9 million yuan. ZSY penetrates 70 percent of counties in the populous and prosperous Pearl River Delta region and has about a 15 percent market share, according to its General Manager Tan Lining.
ZSY sales could reach 8 billion yuan by 2015, compared with annual revenue of about 2 billion yuan in recent years, estimated Xu Guoxiong, president of Shanghai Pharma.
Shanghai Pharma said its target is 100 billion yuan in annual sales within the next five years. Last year, sales at its distribution outlets grew 23 percent year on year to 29.1 billion yuan, accounting for 78 percent of total income. Other income is generated by drug manufacturing as well as research and development gains.
Consolidation in the domestic pharmaceutical industry is expected to accelerate in the next 10 years, and Shanghai Pharma is likely to emerge as one of the winners as weaker players are thinned from the market, according to a recent research note by China Venture Investment Consulting Group.
As part of its 12th Five-Year Plan that began this year, the Chinese government has set forth targets to encourage more integration in the pharmaceutical industry and to prod domestic drug companies to look for overseas investment.
Shanghai Pharma also acquired a top five pharmaceutical distributor in Zhejiang Province last month to form Zhejiang Taizhou Shanghai Pharmaceutical Ltd through a company restructuring.
The outcome of Shanghai Pharma's strategy will be closely watched by investors.
Its major competitors include Hong Kong-listed Sinopharm Group Co.
"Whether Shanghai Pharma can successfully establish its dominant position on a nationwide level depends on how it merges its existing business with the acquired assets, and it could take quite a long time before the gains from these small units are reflected in its profits and income," Xiangcai Securities analyst Ye Kan said.
Major Acquisitions by Shanghai Pharma since 2009
? A 52.24 percent stake in Beijing Aixin Weiye Medicine Co for 225 million yuan (US$34.47 million).
? A 100 percent stake in Citic Pharmaceutical Co for 3.57 billion yuan.
? A 51 percent stake in Guangzhou ZSY for 140.9 million yuan.
? In 2009, it acquired Shanghai Industrial Pharmaceutical Investment Co and Shanghai Zhongxi Pharmaceutical Co through a share swap and also acquired unlisted assets in their parent, the Shanghai Pharmaceutical Group.
More than half of the new capital is expected to be used for merger and acquisitions to improve the company's distribution channels across the Chinese mainland.
Shanghai Pharma already has set up three major distribution systems in east, north and south China. More acquisitions are expected to further consolidate its dominant market position.
Earlier reports also said it may even be eying a controlling stake in German drug retailer Celesio. Shanghai Pharma has declined to comment on specifics of its acquisition plans.
"Expanding distribution channels is expected to accelerate the company's pace of growth faster than that of its domestic counterparts in the next few years," Guotai Junan Securities analyst Yi Jingming said.
As a pharmaceutical group headquartered in Shanghai, business operations of Shanghai Pharma range from research and development of over-the-counter as well as prescription drugs, manufacturing and retailing of medicines and health care products. It currently operates and franchises a network of retail pharmacies across nine provinces, municipalities and autonomous regions.
The company plans to issue up to 763.85 million shares in Hong Kong at a minimum HK$14.70 (US$1.89) apiece.
In early April, Shanghai Pharma completed acquisition of a 100 percent stake in China Health System, giving it control of Citic Pharmaceutical Co, a drug retailer with estimated 2010 sales of 6 billion yuan that focuses on north China's market. Lu Mingfang, chairman of Shanghai Pharma, said the company's strategy is to expand nationwide from its base in the Yangtze River Delta region.
"The acquisition of China Health System, following that of Beijing Aixin Weiye Medicine Co, has laid down a basic framework for Shanghai Pharma to move nationwide," China International Capital Corp's Sun Liang wrote in a research report.
Further acquisitions will be made through these units, a Shanghai Pharma official said.
Shanghai Pharma paid 225 million yuan for a 52.24 percent stake of Aixin Weiye in a deal completed in November.
Shanghai, Beijing and Zhejiang Province rank as the top three drug markets in China in terms of sales volume, according to data compiled by China International Capital. Picking up subsidiaries in those areas makes perfect sense in Shanghai Pharma's expansion plans, analysts said.
Shanghai Pharma expects revenue from the takeovers of China Health and Aixin Weiye to contribute a combined 10 billion yuan from Beijing alone this year, while overall revenue from distribution channels could reach 45 billion yuan.
China was ranked the world's third-largest pharmaceutical market by consultancy firm IMS Health Inc. National sales are estimated at US$50 billion this year.
The Chinese market will enjoy significant growth in the next 10 years, Shanghai Pharma's Lu said. It's essential for the company to make use of the first three years of that time frame to build up a nationwide network, he added.
Shanghai Pharma bought a 51 percent stake in drug company Guangzhou ZSY earlier this month for 140.9 million yuan. ZSY penetrates 70 percent of counties in the populous and prosperous Pearl River Delta region and has about a 15 percent market share, according to its General Manager Tan Lining.
ZSY sales could reach 8 billion yuan by 2015, compared with annual revenue of about 2 billion yuan in recent years, estimated Xu Guoxiong, president of Shanghai Pharma.
Shanghai Pharma said its target is 100 billion yuan in annual sales within the next five years. Last year, sales at its distribution outlets grew 23 percent year on year to 29.1 billion yuan, accounting for 78 percent of total income. Other income is generated by drug manufacturing as well as research and development gains.
Consolidation in the domestic pharmaceutical industry is expected to accelerate in the next 10 years, and Shanghai Pharma is likely to emerge as one of the winners as weaker players are thinned from the market, according to a recent research note by China Venture Investment Consulting Group.
As part of its 12th Five-Year Plan that began this year, the Chinese government has set forth targets to encourage more integration in the pharmaceutical industry and to prod domestic drug companies to look for overseas investment.
Shanghai Pharma also acquired a top five pharmaceutical distributor in Zhejiang Province last month to form Zhejiang Taizhou Shanghai Pharmaceutical Ltd through a company restructuring.
The outcome of Shanghai Pharma's strategy will be closely watched by investors.
Its major competitors include Hong Kong-listed Sinopharm Group Co.
"Whether Shanghai Pharma can successfully establish its dominant position on a nationwide level depends on how it merges its existing business with the acquired assets, and it could take quite a long time before the gains from these small units are reflected in its profits and income," Xiangcai Securities analyst Ye Kan said.
Major Acquisitions by Shanghai Pharma since 2009
? A 52.24 percent stake in Beijing Aixin Weiye Medicine Co for 225 million yuan (US$34.47 million).
? A 100 percent stake in Citic Pharmaceutical Co for 3.57 billion yuan.
? A 51 percent stake in Guangzhou ZSY for 140.9 million yuan.
? In 2009, it acquired Shanghai Industrial Pharmaceutical Investment Co and Shanghai Zhongxi Pharmaceutical Co through a share swap and also acquired unlisted assets in their parent, the Shanghai Pharmaceutical Group.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
