China Biotech In Review: Simcere Pharma Accepts $495 Million Go-Private Deal

Includes: JNJ, SCR, SIEGY
by: ChinaBio Today

Deals and Financings

Simcere Pharma's (NYSE: SCR) Board of Directors officially accepted a $9.66 per ADS go-private offer from its Chairman/Founder Jinsheng Ren and related parties (see story). The transaction price was raised marginally from the original offer of $9.56, made in March when the buyout was first announced. The deal values Simcere at $495 million. Shareholders must still vote on the proposal, but the acquiring syndicate already owns 78% of the shares, so the outcome is not in doubt.

Xilong Chemical (SHE: 002584) signed a Letter of Intent to acquire a 75% interest in Fujian Newland Life Technologies. The price will be set somewhere in a range between 75 million RMB and 120 million RMB ($12-$20 million). Both companies are in the reagents business though pharmaceutical reagents will be a new field for Xilong. Newland Life is a subsidiary of Newland Group.

Winteam Pharma (HK: 00570 will sell its 51% stake in Guizhou Zhongtai Biological Technology for 101 million RMB ($16.5 million), representing a small gain of $2.5 million. Zhongtai is a plasma-based biopharma with operations in mainland China. In May, Winteam bought Tongjitang Chinese Medicines, paying $393 million, making it seem likely that Winteam is raising cash and focusing its operations.

Company News

Johnson & Johnson (NYSE: JNJ) emphasized the importance of China by restructuring its China operations and putting a single high-powered executive in charge of all three of its China business segments (pharmaceuticals, medical devices/diagnostics and consumer healthcare) (see story). To show that it is serious about China, J&J selected Jesse Wu, who had been Global Head of Consumer Healthcare for the company, to oversee its China operations. Mr. Wu's Consumer Healthcare division generated $14.4 billion of revenue for J&J last year, while China was responsible for a much smaller $2.5 billion of the company's sales. Apparently, J&J wants to make sure its China operations are fully optimized.

Siegfried Holdings, a Swiss contract manufacturer, began building a new pharma manufacturing plant in Nantong last month, the first Siegfried facility in China. The new plant will have a capacity of 300 cubic meters. Siegfried offers contract manufacturing for APIs, intermediates and finished oral drugs, along with other development services. Currently, Siegfried has plants in Switzerland, Malta and the US.

Siemens Shanghai Medical Equipment (NYSE: SI), located in Shanghai International Medical Zone, completed the construction of a new building for X-ray machines (see story). The company will offer imaging equipment for basic healthcare, a recent priority for SSME in China. The new facility will be used for both R&D and manufacturing. The entire Shanghai site, which includes the new building, is Siemens' largest R&D and manufacturing base in Asia as well as one of the largest hi-tech medical device companies in Shanghai.

Disclosure: none.