China Nepstar Chain Drugstore Plans NYSE Listing

by: Timothy Roe

China Nepstar Chain Drugstore Ltd., the second largest drug and retailer in mainland China, plans to list on the NYSE in November 2007, as reported by Sinocast via thenewsroom.com.

Founded in 1995 in Shenzhen, Guangdong Province, Nepstar has benefited from the rapid economic development of southern China. Government healthcare reform efforts have also helped, as the Ministry of Health tries to introduce retail competition into a pharmaceutical market dominated by hospital pharmacies. For the past 2 years management has opened ~200 outlets per year, located in fast growing southern and eastern cities such as Shenzhen, Guangzhou, Kunming, Chengdu, Shanghai, Hangzhou, Suzhou, Ningbo, Dalian, Weifang, Tianjin, Qingdao.

Rapid expansion has fueled strong revenue growth. For 2006 the company reports revenues of CNY 2.18 billion (US$291 billion) from 1,700 outlets, and company reportedly plans to expand to 10,000 stores over the next five years. The expansion has been fueled by a reported US$40 million invest by Goldman Sachs (NYSE: GS).

Nepstar is a subsidiary of Neptunus Group, the Shenzhen based healthcare conglomerate. Neptunus has listed 2 other subsidiaries publicly: Shenzhen Neptunus Interlong Bio-Tech Co. [HKG:8329], a producer of human interferon, interleukin, and influenza vaccine, and Shenzhen Neptunus Bioengineering Co., Ltd.[SHE:0078], a collection of pharmaceutical manufacturing and distribution companies.

Disclosure: Author has a long position in GS