Place your bets: TCM, biotech asset reshuffles highlight Chinese deals

SINGAPORE--Harbin Gloria Pharmaceuticals will pay RMB 2.39 billion to acquire an 85% stake in Shanxi Powerdone Pharmaceutics, one of two domestic deals in late January involving mainland firms reshuffling biotech assets and traditional Chinese medicines (TCM).

Harbin Gloria signed a share-transfer agreement with 5 out of 8 shareholders from Shanxi Powerdone on Jan. 23. After a two-month suspension on share-trading, Harbin Gloria plans to raise RMB 6 billion in a private placement plan to pay for the acquisition of Shanxi.

Powerdone plans to supplement working capital and invest in the production of ginkgolide B injections at Guangzhou Xinhuacheng Biotech.

Harbin Gloria acquired a 30% stake in Guangzhou Xinhuacheng Biotech for approximately RMB 150 million in December with unanimous approval from the board of directors.

Shanxi Powerdone is a company engaged in developing, making and selling chemical drugs and compound preparations of traditional Chinese and western medicines.

Separately, looking to position itself as the biggest player in the rapidly growing TCM market in China, the TCM arm of Chinese state-owned Sinopharm Group is planning on a $1.3 billion acquisition of an industry rival and the sale of a biotech subsidiary to channel resources to the development of its TCM business, a move that will help consolidate the market.

China Traditional Chinese Medicine (China TCM) announced the acquisition of approximately 81.48% of the registered capital of Jiangyin Tianjiang Pharmaceutical on Jan. 27.

On the same day, a wholly owned subsidiary of China TCM, the Guangdong Medi-World Pharmaceutical, announced the disposal of 31% equity interest in Guizhou Zhongtai Biological Technology, to channel resources to developing the TCM business.

"Tianjiang Pharmaceutical and GD Yifang are two of the six enterprises approved by CFDA to manufacture concentrated TCM granules in the PRC. The two companies together have managed to take more than a 50% market share in the PRC's concentrated TCM granules market in terms of revenue in 2013. We, therefore, believe that the acquisition allows the company to gain access to this alluring market and take advantage of such industry growth," said Wu Xian, chairman of China TCM.

Tianjiang Pharmaceutical was first to gain approval from the China Food and Drug Administration as an "experimental manufacturing enterprises of concentrated TCM granules." It is also the first manufacturer of TCM granules to receive the Good Manufacturing Practice (GMP) certification for pharmaceutical products in China.

China Biotechnology, a wholly owned subsidiary of CNPGC, which is the ultimate holding company of Sinopharm, bought a total of 80% equity interest in Guizhou Zhongtai Biological Technology from Medi-World and another vendor.

In November last year, Sinopharm Group moved to raise HK$5.55 billion ($716 million) from a share sale to expand distribution in China.

- here's the Harbin report Harbin (Chinese)
- and the China TCM release (PDF)

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