16 Aug 2010 10:43

Jointown Pharma to IPO in Shanghai

Shanghai. August 16. INTERFAX-CHINA - Hubei Province's Jointown Pharmaceutical Group Co. Ltd. plans to launch an initial public offering (IPO) on the Shanghai Stock Exchange, the company announced in a preliminary prospectus released Aug. 13.

According to the prospectus, Jointown Pharma will issue a maximum of 150 million shares comprising 10.56 percent of its total shares after the issuance. The funds raised will be used to build new pharmaceutical logistics facilities across China.

The company plans to invest RMB 150 million ($22.08 million) in a new drug storage center in Shanghai, and RMB 120 million ($17.66 million) in a new distribution center in Hangzhou City, Zhejiang Province. Both facilities will take two years to complete.

It intends to invest RMB 60 million ($8.83 million) to build a storage center in Harbin City, Heilongjiang Province, and RMB 49.8 million ($7.33 million) to build another in Tianjin Municipality.

The company will also deploy RMB 70 million ($10.30 million) to set up a logistics center for traditional Chinese medicine (TCM) materials with a daily distribution capacity of 95 tons in Anguo City, Hebei Province.

"Jointown Pharma is China's largest non-state-owned drug distributor. It has ranked behind the state-owned China National Pharmaceutical Group Corp. (Sinopharm) and Shanghai Pharmaceutical (Group) Co. Ltd. in terms of operating revenue for the last three years," Ye Songtao, an analyst from Changjiang Securities Co. Ltd., told Interfax on Aug. 16.

According to Ye, the drug distribution industry is witnessing a consolidation trend. Jointown Pharma's IPO is likely to reinforce the trend. By the end of March this year, Jointown Pharma had 35 subsidiaries in 16 provinces and cities. Its operating revenue was RMB 19 billion ($2.80 billion) in 2009.

- MS