Chengda Bio Announces Imminent Change of Control as State-Owned Shareholder Exits

Recently, CDBIO released the "Announcement on the Proposed Change in Actual Controller," which stated that the actual controller of CDBIO is proposed to change from the State-owned Assets Supervision and Administration Commission of Liaoning Provincial People's Government to no actual controller.

The withdrawal of state-owned capital from its position as the controlling shareholder marks a significant adjustment in CDBIO’s equity structure, signaling that this pharmaceutical enterprise, with a market capitalization exceeding RMB 10 billion, is poised to embark on a new chapter of development.

According to the announcement released by Liaoning Chengda, the controlling shareholder of CDBIO, Liaoning Chengda recently completed the re-election of its board of directors. The controlling shareholder of Liaoning Chengda will change from Liaoning Provincial State-owned Assets Operation Co., Ltd. to Shaoguan Gaoteng, and the actual controller will change from the Liaoning Provincial State-owned Assets Supervision and Administration Commission to no actual controller. Shaoguan Gaoteng is a wholly-owned subsidiary of Guangdong Private Investment Co., Ltd. (Yue Min Tou).

Following the change in control of Liaoning Chengda, Shaoguan Gaoteng will indirectly hold a 54.67% equity stake in CDBIO through Liaoning Chengda, thereby fully triggering the mandatory tender offer process. Guangdong Minsheng Investment Group will launch a tender offer to all circulating shareholders except Liaoning Chengda at a price of RMB 25.51 per share, with an offer period of 30 calendar days. As of the market close on February 14, the market value per share of CDBIO was RMB 27.60, which is higher than the tender offer price.

Regarding the impact of this change in control, CDBIO stated that there would be no significant changes to its management and operational team, and it would not have a substantial impact on the company’s daily production and operations. There are no circumstances that would harm the interests of the company and its investors, particularly minority shareholders. Following this change in control, the company will continue to diligently implement and advance its established development strategy, enhance its core competitiveness, and consistently create value for its shareholders.

CDBIO is a leading domestic vaccine enterprise that has established four core technological platforms: bacterial vaccines, viral vaccines, multivalent and combination vaccines, and recombinant protein vaccines, providing a solid technical foundation for vaccine research and development. Leveraging these four platforms, CDBIO has developed a pipeline of multiple vaccine candidates in clinical trials, including freeze-dried human rabies vaccine (human diploid cell), quadrivalent/trivalent influenza vaccines, 15-valent HPV vaccine, 13-valent and 20-valent pneumococcal conjugate vaccines, recombinant zoster vaccine, group B meningococcal vaccine, multivalent hand-foot-and-mouth disease vaccine, and rabies monoclonal antibodies. These investigational products span multiple therapeutic areas and hold broad market prospects.

Among these, the company’s core product, the freeze-dried rabies vaccine for human use (Vero cell), has maintained a leading market share in China for 16 consecutive years. It is marketed and sold in more than 30 countries and regions, with cumulative safe administration exceeding 450 million doses to over 100 million individuals. No cases of immunization failure have been reported among those who received the complete course of vaccination in accordance with standard protocols.

However, CDBIO has faced certain performance pressures in recent years. Apart from 2021, when revenue increased but profits did not, both revenue and net profit showed a downward trend from 2022 to the first three quarters of 2024. The decline in CDBIO’s performance is closely linked to market competition for its main products. Currently, the company’s primary revenue and profit sources are the production and sales of human rabies vaccines and inactivated Japanese encephalitis vaccines. With a relatively single product structure, any abnormal fluctuations in the production, sales, or market conditions of existing products will significantly impact its operational performance. Furthermore, the increase in approved license numbers and batch release quantities for human rabies vaccines in China has intensified competition in this market, thereby affecting CDBIO’s market share and competitiveness.

For Guangdong Private Equity Investment, key investment focuses have consistently included the vaccine-related industrial chain, the upstream pharmaceutical supply chain, critical resource commodities, specialized medical services, and innovative technology platforms. Therefore, the participation of Guangdong Private Equity Investment will help integrate CDBIO’s resource advantages, enhance overall competitiveness, and support its development in the biopharmaceutical sector.

Liaoning Chengda also emphasized in its announcement that it would “continue to support the development of CDBIO.” By leveraging Guangdong Minsheng Investment Group’s industrial resources, both new and existing shareholders are joining forces to focus on advancing the vaccine pipeline and global expansion, thereby further mitigating operational volatility risks.

In recent years, changes in the equity structure of pharmaceutical companies have become increasingly common. In 2023, Zhuzhou Qianjin Pharmaceutical acquired partial equity stakes in Qianjin Xiangjiang Pharmaceutical and Qianjin Xieli Pharmaceutical, held by entities including Zhuzhou State-owned Investment Group, through share issuance, with a transaction value of nearly RMB 624 million. This acquisition was one of the key measures taken to strengthen group control and accelerate the implementation of its corporate strategy. In December 2024, Lamei Pharmaceutical issued the "Announcement on Public Solicitation of Transferees for the Proposed Transfer of Partial Company Shares by the Controlling Shareholder via Agreement," indicating that the company may once again undergo a change in ownership.

Behind these events lie both the strategic adjustments of state-owned capital and the intrinsic development needs of the enterprises themselves. The withdrawal of state-owned capital often signals that a company will gain greater scope for market-oriented operations, but it also brings uncertainty regarding business strategies and management teams.

In recent years, state-owned asset supervision policies have become increasingly stringent, requiring state-owned enterprises to focus on their core responsibilities and main businesses while optimizing resource allocation. Coupled with intensifying market competition in the pharmaceutical industry, which has also shown a trend toward industry consolidation, it has become commonplace for large enterprises to expand their scale and market share through mergers and acquisitions.

The exit of state-owned capital from CDBIO may be aimed at aligning with this industry trend, enabling CDBIO to better integrate into the wave of industry consolidation and achieve optimized resource allocation.

For CDBIO, the exit of state-owned capital and the implementation of the tender offer will bring new opportunities and challenges. On one hand, this signifies a transition in the company’s background from state-owned to private enterprise. In the future, its organizational structure and mechanisms will become more flexible and adaptable, while investors will inject greater flexibility and vitality into the company. This will facilitate deeper integration and empowerment of capital and industry, thereby injecting new momentum into the company’s development. On the other hand, the company needs to rapidly adapt to and optimize its management under the new equity structure to achieve sustainable growth.

Against the backdrop of intensifying competition in the pharmaceutical industry, changes in a company’s equity structure may significantly impact its market competitiveness, R&D capabilities, and profitability. The recent change in CDBIO’s shareholding structure marks a pivotal turning point in its development trajectory. How the company will achieve high-quality growth under this new equity framework warrants continued attention.