Pharmaceutical Companies Accelerate Divestment of Non-Core Assets Amid Intensifying Industry Competition

　　【Pharmaceutical Network - Industry Dynamics] Recently, Hefei Lifeon Pharmaceutical Co., Ltd. announced that it had signed the "Agreement on Change of Marketing Authorization Holder" with Anhui Shuangke Pharmaceutical Co., Ltd. on May 10, 2021. Following an assessment by Zhongming International Asset Appraisal (Beijing) Co., Ltd., Lifeon Pharmaceutical acquired the ownership of the drug technologies for 13 eye drop products, including Jinzhen Eye Drops (hereinafter referred to as the "Target Products"), for RMB 38 million, and became the Marketing Authorization Holder for these Target Products.
 

It is reported that the combined sales revenue of the target products amounted to RMB 30.269 million and RMB 17.312 million in 2019 and 2020, respectively. The data clearly indicates a year-on-year decline in sales revenue for these target products. Therefore, against the backdrop of intensifying competition in the pharmaceutical industry, Lifeon Pharmaceutical’s decision is reasonable. In fact, constrained by multiple factors such as pharmaceutical policies and market competition, an increasing number of pharmaceutical companies have been divesting their product portfolios in recent years. Within the past month alone, multiple transfer transactions have occurred in the industry. Moreover, aside from product divestitures, a significant number of pharmaceutical companies have also been selling assets such as subsidiaries.
 

For example, on April 27, Shanghai Fosun Pharmaceutical (Group) Co., Ltd. issued an announcement regarding the sale of assets and related-party transactions. The announcement stated that, in order to focus on its core business, its controlling subsidiaries, Chancheng Hospital and Fosun Healthcare, intend to transfer their combined 100% equity interest in Foshan Chanxi, as well as the creditor’s rights against Foshan Chanxi arising from shareholder loans as of December 31, 2020, to Yuyuan Shares, for a total consideration of RMB 550 million.
 

Nanjing Gaoke, a company listed on the A-share market, also announced on April 30 that it would publicly list and transfer its 51% equity stake in its controlled subsidiary, Nanjing Chenggong Pharmaceutical Co., Ltd. (hereinafter referred to as “Chenggong Pharmaceutical”), at the Nanjing Public Resources Trading Center. Regarding the reasons for the transfer, Nanjing Gaoke provided an explanation in the announcement: primarily to implement the company’s development strategy for industrial transformation and upgrading, optimize resource allocation, and revitalize existing assets.
 

In a similar vein, on April 10, Shapuaisi also issued an announcement stating that Jilin Province Yueshi Tianbo Pharmaceutical Co., Ltd. intends to acquire 100% equity interest in Qiangshen Pharmaceutical, a subsidiary of Shapuaisi, through public bidding at the Shanghai United Assets and Equity Exchange, with a bidding price of RMB 82 million. According to available information, Qiangshen Pharmaceutical is an enterprise primarily engaged in the production of traditional Chinese medicine preparations, which was acquired by the former actual controller of Shapuaisi in 2015 through a private placement. Originally known as Jilin Qiangshen Pharmaceutical Co., Ltd., its main products include Sizi Tianjing Capsules and Compound Rhodiola Rosea Oral Liquid, among others. Shapuaisi stated that it had invested a total of RMB 480 million in Qiangshen Pharmaceutical.
 

Overall, most pharmaceutical companies attribute their share transfers and asset sales to the optimization of resource allocation. Industry analysts believe that the recent trend of pharmaceutical companies streamlining their operations is driven by the broader healthcare environment, including national policies encouraging innovative drug development, the consistency evaluation of generic drugs, and volume-based procurement. Currently, revitalizing assets and focusing on core businesses have become the choice for an increasing number of pharmaceutical companies. It is expected that as healthcare reforms deepen, more companies will make targeted asset adjustments based on their own development needs, focusing on the growth of their main business activities.