PE firms eye Shanghai Pharma

One of China’s largest pharmaceutical groups is attracting interest from private equity firms after reportedly announcing that it wants to sell a large stake to foreign buyers.

Shanghai Pharmaceutical Group, one of the largest players in China’s $10 billion drugs industry, has announced plans for a strategic partnership with a foreign investment group in order to raise capital for expansion and stave off competition from rivals, according to a report in the Financial Times.

The report quoted ‘people close to the situation’ as saying that the firm had held preliminary discussions with private equity groups believed to include Carlyle Group and CVC Capital Partners over the sale of a stake worth at least RMB2 billion (€205 million; $247 million).

However, it also reported that any private equity deal is likely to be held up for the foreseeable future by the ongoing developments at parent group China Worldbest, which is currently being bailed out by state company China Chengtong.   

Shanghai Pharmaceutical has one of the largest drug distribution networks in China and specialises in the production of Western drugs and some traditional Chinese medicines.

The firm recently won a licence from Swiss pharmaceutical giant Roche to produce a version of Tamiflu, the anti-viral bird flu treatment, for sale in mainland China. It says it is hoping to manufacture about 200,000 tablets a month in about six months’ time.

Last month, private equity firms Warburg Pincus and CITIC Capital Markets acquired 22.5 percent stakes each in Shanghai-listed Harbin Pharmaceutical Group. The deal was reported to be worth around $282 million.