Beijing Med-Pharm Expands Chinese Distribution Network

| About: BMP Sunstone (BJGP)

Beijing Med-Pharm Corporation (BJGP) has made another acquisition that extends its pharmaceutical distribution network in China. Beijing Med-Pharm was the winning bidder for a 63% stake in Shanghai Rongheng Pharmaceutical Co., which distributes pharmaceuticals in Shanghai, China’s largest city, with 17 million inhabitants.

Beijing Med-Pharm, based in Pennsylvania, is in the business of distributing western drugs in China. It produced $21 million in revenue in the preceding 12 months.

In January, Beijing Med-Pharm formed a joint venture with Alliance Boots, a pharmacy/distributor in the UK, to buy Guangzhou Pharma, the third largest pharmaceutical wholesaler in China (see story), which operates in Guangzhou province. As its name implies, Beijing Med-Pharma’s original distribution operations are in Beijing. The company’s stated goal is to expand its network to cover the entire country.

Rongheng distributes 400 pharmaceutical products to over 250 hospitals in Shanghai, including most of the top-tier hospitals. It had revenues of $12 million in 2006. Beijing Med-Pharm won the bidding in January, and it has now signed a final agreement with Rongheng. It expects the deal to close in Q2 of 2007, after government officials approve.

A transition team, including David Geo, CEO of Beijing Med-Pharm, has been formed, and it is already involved in running Rongheng. The current general manager of Rongheng, Zhou Jianwei, will stay on.

Besides distribution, Beijing Med-Pharm offers pre-market entry analysis, clinical trial management, product registration, market research, and marketing to physicians.

Disclosure: none.

BJGP 1-yr chart
bjgp chart