Grand Pharmaceutical Expands Portfolio with RMB 442.26 Million Acquisition of Chongqing Duoputai Pharma Tech
Recently, Grand Pharmaceutical Group Limited (0512.HK) announced that its subsidiary, Xi'an Beilin Pharmaceutical Co., Ltd. (“Xi'an Beilin”), has entered into a second acquisition agreement with Chongqing Duoputai Pharmaceutical Co., Ltd. (“Duoputai Pharmaceutical”). Upon satisfaction of the relevant conditions, Xi'an Beilin will acquire a 63% equity interest in Chongqing Duoputai Pharmaceutical Technology Co., Ltd. (“Duoputai Pharmaceutical Technology”) for RMB 442.26 million.
In December last year, Xi'an Beilin Pharmaceutical Co., Ltd. signed an equity investment agreement with Duoputai Pharmaceutical. Under the agreement, Xi'an Beilin will acquire a 27% equity stake in Chongqing Duoputai Pharmaceutical Technology Co., Ltd. (Duoputai Pharmaceutical Technology) for no more than RMB 189.54 million, subject to the fulfillment of relevant conditions stipulated in the investment agreement.
Upon completion of this acquisition agreement, Xi'an Beilin Pharmaceutical Co., Ltd. will hold a 90% equity stake in Chongqing Duoputai Pharmaceutical Co., Ltd., which will thereby become a subsidiary of Grand Pharmaceutical Group Limited. As a key party to this transaction, Xi'an Beilin was itself previously an acquiree: in 2016, Grand Pharmaceutical acquired a 77.2% equity interest in Xi'an Beilin for RMB 386 million, and subsequently purchased the remaining equity for RMB 132 million the following year, achieving full ownership.
Duoputai Medical Technology is a core subsidiary wholly established by Duoputai Pharmaceutical, primarily engaged in the production and sales of its core products, Maixuekang Capsules and Maixuekang Enteric-coated Tablets. Through this acquisition, Grand Pharmaceutical Group Limited will obtain the core rights to these two key products, further expanding its product pipeline in the cardiovascular and cerebrovascular fields.
Maixuekang Capsules/Enteric-coated Tablets are included in the National Reimbursement Drug List and the National Essential Medicines List. They offer anticoagulant, antithrombotic, anti-fibrotic, and blood circulation-improving effects, and are indicated for the treatment of cardiovascular and cerebrovascular diseases such as coronary heart disease, acute cerebral infarction, ischemic stroke, and unstable angina pectoris. The main ingredient is leech, which is rich in hirudin. Hirudin exhibits a potent inhibitory effect on thrombin and is the most potent natural specific thrombin inhibitor discovered to date.
Maixuekang is currently the only proprietary Chinese medicine in China that specifies antithrombin activity units (each capsule/tablet is equivalent to 14 antithrombin activity units). Clinical study results demonstrate that Maixuekang offers clinical efficacy comparable to first-line anticoagulant drugs, with a favorable safety profile and minimal adverse reactions. In combination therapy regimens, Maixuekang can enhance clinical efficacy and improve patient prognosis without increasing the incidence of adverse reactions, thereby providing a broader range of treatment options for patients with cardiovascular and cerebrovascular diseases.
Currently, Maixuekang has been included in numerous clinical guidelines, such as the Guidelines for Integrated Traditional Chinese and Western Medicine Diagnosis and Treatment of Cerebral Infarction, Guidelines for Rational Use of Blood-Activating and Stasis-Resolving Chinese Patent Medicines, Clinical Practice Guidelines for Traditional Chinese Medicine in Idiopathic Membranous Nephropathy, and Expert Consensus on the Clinical Application of Maixuekang Capsules (Enteric-Coated Tablets) in the Treatment of Cardiovascular and Cerebrovascular Diseases, achieving a market share of over 70% in China.
According to data released by Chongqing Duoputai Pharmaceutical Co., Ltd., as of December 2023, the company had received orders totaling 28 million boxes of Maixuekang Capsules/Enteric-coated Tablets from across China, with production of 20 million boxes completed in the first three quarters. Furthermore, after years of development, the output value of the Maixuekang Capsules/Enteric-coated Tablets series is projected to have increased from an initial RMB 3 million to over RMB 500 million in 2023.
Cardiovascular and cerebrovascular diseases are the “number one killer” of health. According to the Report on Cardiovascular Health and Diseases in China (2021), these diseases are the leading cause of death among both urban and rural residents in China. Currently, there are approximately 330 million prevalent cases of cardiovascular and cerebrovascular diseases in China, including about 13 million stroke patients and approximately 11.39 million patients with coronary heart disease. With further population aging, the incidence and mortality rates of cardiovascular and cerebrovascular diseases are expected to continue rising. In 2021, the market size of pharmaceuticals for cardiovascular and cerebrovascular diseases in China exceeded RMB 250 billion, with traditional Chinese medicine (TCM) proprietary medicines accounting for approximately 34%. In the future, driven by the growing number of patients with cardiovascular and cerebrovascular diseases and national policies supporting TCM, the market size and share of TCM proprietary medicines are poised for further growth.
Notably, the treatment of cardiovascular and cerebrovascular diseases is one of Grand Pharmaceutical’s traditional areas of strength and has consistently remained a key strategic focus. Prior to the acquisition of Duoputai Pharmaceutical Technology, Grand Pharmaceutical (China), a subsidiary of Grand Pharmaceutical Group Limited, entered into an equity acquisition agreement with Mitsubishi Tanabe Pharma Corporation (“Mitsubishi Tanabe”) in December 2023. Upon satisfaction of relevant conditions, Grand Pharmaceutical (China) will acquire a 75.35% equity interest in Tianjin Tanabe Pharmaceutical Co., Ltd. (“Tianjin Tanabe”) for approximately RMB 367.7 million.
Tianjin Tanabe is primarily engaged in the production and sales of high-quality, originator pharmaceuticals for chronic diseases in the fields of cardiovascular and cerebrovascular disorders, endocrine and metabolic conditions, and gastrointestinal diseases. Its portfolio covers a wide range of chronic disease indications, including hypertension, angina pectoris, coronary heart disease, diabetes, and gastrointestinal disorders. The company’s core products have been included in numerous authoritative clinical guidelines both domestically and internationally.
To date, Grand Pharmaceutical Group Limited has nearly 30 product varieties in its cardiovascular and cerebrovascular emergency care segment, with 14 included in the National List of Essential Medicines for Emergency Rescue and 16 listed in the National Shortage Drug List. Its products cover three major emergency scenarios: in-hospital emergency care, pre-hospital emergency care, and community-based emergency care.
The acquisition of Duoputai Pharmaceutical Technology marks Grand Pharmaceutical’s first M&A transaction this year. With this addition, Grand Pharmaceutical’s portfolio expands further, continuously broadening the company’s industrial landscape.
Since its establishment in 1939, Grand Pharmaceutical Group Limited has acquired more than 30 domestic and overseas enterprises through a strategy of aggressive M&A, with operations spanning China, the United States, Australia, Germany, and other countries. In particular, since 2015, the company has maintained a pace of acquiring or taking equity stakes in one overseas medical device company per year. For instance, in 2015, it acquired Cardinovum GmbH, a high-end medical device company specializing in the research, production, and sales of cardiovascular and cerebrovascular products, and established the joint venture Zhuhai Kaidenuo; in 2017, it invested in Canada’s Conavi Medical Inc., securing exclusive distribution rights for the NOVASIGHT Hybrid™ System, an intravascular ultrasound-optical coherence tomography imaging system independently developed by Conavi, in the Greater China region; and in 2022, it subscribed to shares in ITM, a German radiopharmaceutical company, for €25 million (approximately RMB 179 million).
Major Subsidiaries of Grand Pharmaceutical Group Limited
Image source: Grand Pharmaceutical Group Limited official website
Through continuous expansion via partnerships, investments, and mergers and acquisitions, Grand Pharmaceutical Group Limited has successively entered the fields of liver cancer, high-end cardiovascular devices, tumor immunotherapy, and sepsis treatment. The company has established and put into operation five R&D technology platforms and nine R&D centers worldwide. Its business segments include Respiratory & Critical Care Anti-Infectives, Oncology, Cardiovascular & Cerebrovascular Emergency Care, Ophthalmology, Precision Interventional Diagnosis and Treatment for Cardiovascular & Cerebrovascular Diseases, Radiopharmaceuticals for Oncology Diagnosis and Treatment, and High-Quality Amino Acids. The company has deployed a series of innovative pharmaceutical and medical device products with broad market prospects from countries including the United States, Australia, Germany, and Belgium.
Grand Pharmaceutical Group Limited has currently established three innovative segments: "Pharmaceutical Technology," "Radiopharmaceutical Oncology Diagnosis and Treatment Technology," and "Precision Cardiovascular Interventional Diagnosis and Treatment Technology." It has a total of 133 projects under development, including 48 innovative projects, spanning various stages from preclinical research to New Drug Application (NDA). Among them, the company has more than 50 products on the market, including well-known ophthalmic products such as "Ruizhu," "Nuoming," and "Jieqi."
Behind the Continuous Expansion of Grand Pharmaceutical’s Business Landscape Lies Strong Financial StrengthThe continuous expansion of Grand Pharmaceutical Group Limited’s business landscape is underpinned, on one hand, by its robust financial strength. According to the company’s 2023 interim report released by Grand Pharmaceutical, it achieved a revenue of HK$5.989 billion in the first half of 2023, representing a year-on-year increase of 14.9%. The net profit attributable to shareholders was HK$1.029 billion; after excluding the impact of changes in the fair value of its Telix investment and one-off administrative fines, the adjusted net profit attributable to shareholders amounted to HK$1.124 billion, reflecting a year-on-year growth of 3.1%. Over the past decade, Grand Pharmaceutical’s net profit has surged twentyfold, rising from approximately HK$100 million in 2013 to HK$2.079 billion in 2022. These impressive financial results have empowered Grand Pharmaceutical to pursue an increasingly ambitious merger and acquisition strategy.
On the other hand, it also benefited from the leadership of Dr. Shao Yan, the former CEO of the company and known as the “M&A King” in the pharmaceutical industry. Dr. Shao joined Grand Pharmaceutical Group Limited in 2008 and served as its Chief Executive Officer, overseeing the company’s overall operations, financing, mergers and acquisitions, and investor relations. He announced his departure from the CEO role in 2021 but currently remains an Executive Director of the company.
Before joining Grand Pharmaceutical Group Limited, Dr. Shao Yan stated that Chinese pharmaceutical companies needed to enhance their competitiveness through mergers and acquisitions¹. Since then, M&A has become a core strategy for Grand Pharmaceutical to strengthen its competitive edge. During his 13-year tenure, Dr. Shao played a leading role in numerous significant domestic and international M&A transactions undertaken by the company, including the acquisition of Cardionovum and Beijing Jihe Pharmaceutical in 2015, and the joint acquisition of the listed company Sirtex Medical Ltd. in 2018, among others.
Despite Dr. Shao Yan’s departure, Grand Pharmaceutical Group Limited has continued its merger and acquisition activities under the leadership of its new executive team. Over time, the company has expanded across various segments of the healthcare sector, including active pharmaceutical ingredients (APIs), intermediates, finished formulations, blood products, radiopharmaceuticals, and medical devices, becoming one of the few listed companies in China to focus simultaneously on innovative drugs and high-end medical devices.
References:
1. “Grand Pharmaceutical CEO Shao Yan: Domestic Pharmaceutical Companies Need to Enhance Competitiveness Through M&A”