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Firms agree on drug joint venture
By Zhang Lu (China Daily)
Updated: 2004-05-27 08:49
Guangzhou Baiyunshan Pharmaceutical Co Ltd and Hong Kong business giant
Hutchison Whampoa (China) Ltd are going to form a 50-50 medical joint venture in
Guangzhou, the capital of South China's Guangdong Province.
The two firms signed a preliminary letter of intent on Monday,
Shenzhen-listed medicine maker Baiyunshan revealed yesterday.
According to the announcement, the joint venture will mainly involve research
and development and the production and marketing of traditional Chinese
medicines (TCM).
The new firm is being temporarily named Baiyunshan Hutchison TCM Co Ltd, and
the co-operation will last for 50 years, the announcement said.
The Guangzhou firm will put its subsidiary Guangzhou Baiyunshan TCM Plant
into the new venture.
While Hucthison, owned by Hong Kong tycoon Li Ka-shing, will make a capital
investment equivalent to the evaluated asset value of the plant (excluding the
Baiyunshan trademark).
The two companies also agreed that the new joint venture could freely use the
trademarks "Baiyunshan" and "Hutchison" in both the domestic and overseas
markets.
The TCM plant's asset value is expected to be no less than 500 million yuan
(US$60.4 million), though asset evaluation has not been carried out, company
sources said.
The plant, the backbone business arm of the listed company, had a sale volume
of about 500 million yuan (US$60.4 million) last year, with net profits of some
50 million yuan (US$6.04 million).
And it has invested a total of more than 100 million yuan (US$12 million) in
the restructuring project.
It has also passed the Good Manufacturing Practice authentication, which is
required by the State Food and Drug Administration.
Hou Dakun, president of Beijing KevinKing Management Consulting Co Ltd, a
leading consultant in the drug making industry, said the deal shows overseas
investors' growing interests in the commercial potential of the millennia-old
TCMs.
"Eyeing the future growth of the TCM market, Hutchison Whampoa has adopted a
strategy to co-operate with big domestic TCM makers to expand its business in
this field," he said.
Hutchison Whampoa agreed with China's well-known TCM maker Tongrentang to
form a US$239 million pharmaceutical investment venture last
December.
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