Hengrui Medicine to sell off loss-making unit for $1.85 mln
Shanghai. June 15. INTERFAX-CHINA - Jiangsu Hengrui Medicine Co. Ltd. (Hengrui Medicine), China's leading manufacturer of oncology drugs, has received approval from its board of directors to sell loss-making distribution unit Lianyungang Huachen Medicine Co. Ltd. (Huachen Medicine), for a total consideration of RMB 12 million ($1.85 million), Hengrui Medicine announced June 15.
According to the announcement, Lianyungang Sipai Industrial Co. Ltd. (Sipai Industrial) will acquire a 90 percent stake in Huachen Medicine from Hengrui Medicine for RMB 10.80 million ($1.67 million), along with the remaining 10 percent share from Hengrui Medicine's majority-owned subsidiary, Jiangsu Hengrui Medicine Distribution Co. Ltd., for RMB 1.2 million ($185,211).
Hengrui Medicine acquired Huachen Medicine in 2009 to distribute proprietary OTC drugs. The subsidiary was running at a loss due to high operating costs on account of its parent's focus on prescription drugs, the announcement said.
As of the end of 2010, Huachen Medicine's net assets totaled RMB 11.51 million ($1.78 million), the announcement said, without disclosing the firm's liabilities.
Hengrui Medicine announced the same day it has secured production approval from the State Food and Drug Administration (SFDA) for a Class One innovative drug, imrecoxib tablet and active pharmaceutical ingredient (API), a non-steroidal anti-inflammatory drug (NSAID) used to treat rheumatoid arthritis.
It is Hengrui Medicine's first production approval for a Class One drug, the top category of innovative drugs in China, the announcement said.
According to a research note by China International Capital Corp. Ltd. (CICC), imrecoxib is expected to enter the domestic market in the fourth quarter this year and generate total sales of RMB 500 million ($77.15 million) over the following five year period. Similar products already on the China market include Pfizer's parecoxib sodium injection and celecoxib capsule, the note said.
Hengrui Medicine's shares on the Shanghai Stock Exchange closed flat today at RMB 30.18 ($4.66).
Hengrui Medicine representatives were unavailable for comment when contacted by Interfax.
- MS