Hutchison China Meditech Ltd. or Chi-Med (HCM.L) announced the establishment of a new joint venture or JV with Sinopharm Group Co. Ltd. The JV would provide distribution and marketing services to both related and third party pharmaceutical companies in China.
Chi-Med, through a subsidiary, would invest nearly $9.8 million cash into Sinopharm Holding HuYong Pharmaceutical (Shanghai) Co., Ltd. for the subscription of 51% of the equity in the enlarged share capital of Huyong, which would mean that Huyong would be consolidated as a Chi-Med unit. The Chi-Med investment would be mainly deployed for expanding future commercial activities, chiefly in the area of third party drug sales and marketing. Sinopharm would hold the balance 49% of the equity in Huyong.
Huyong is a Good Supply Practice certified pharmaceutical and healthcare distribution and marketing company that was originally established in 1993 and subsequently acquired by Sinopharm in 2010. Huyong would be renamed as Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Company Ltd. or "Hutchison Sinopharm".
Hutchison Sinopharm would be reported under the China Healthcare Division of Chi-Med which currently includes 3 companies namely Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine Company Ltd. or HBYS; Shanghai Hutchison Pharmaceuticals Ltd. or SHPL; and Hutchison Healthcare Ltd. The sales of the China Healthcare Division units and jointly controlled entities of Chi-Med were $350.5 million and net profit attributable to Chi-Med equity holders totaled $15.5 million in 2012.
Hutchison Sinopharm said it would provide a platform for synergy across the China Healthcare Division of Chi-Med by utilising the services of nearly 2,800-person prescription drug and over-the-counter drug sales teams of SHPL and HBYS.
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