First Sino-US Joint Venture Pharma Sold: An Era Comes to an End

On September 12, an email circulated within the industry showed:Bristol-Myers Squibb to Sell in China60% Equity of Sino-American Shanghai Squibb, as well as several drugs that are manufactured and sold only in the Chinese mainland market, may be taken over by Hillhouse Capital.

Sino-American Shanghai Squibb has a history even older than Bristol-Myers Squibb: In 1982, it was jointly established by the U.S.-based Squibb Corporation and the predecessor of Shanghai Pharmaceutical Group, the Shanghai Pharmaceutical Industrial Company. This marked the first Sino-American joint venture pharmaceutical company in China.Earlier than Xian Janssen and Sino-American Shanghai Squibb. The current Bristol-Myers Squibb Company was formed in 1989 through the merger of Bristol-Myers Company and Squibb Corporation.

In 2023, Janssen exited, and Johnson & Johnson renamed Xian Janssen to "Johnson & Johnson Innovative Pharmaceuticals"; in July this year, Sino-American GlaxoSmithKline also exited the historical stage. If the equity transaction of Sino-American Shanghai Squibb is successful this time, these three enterprises, which were among the first batch to enter China after the reform and opening up:Sino-American Shanghai Squibb, Xian Janssen, and Sino-American SmithKline will all exit the historical stage.

Many medicines under Sino-American Shanghai Squibb are also familiar to most people. For instance, it has broughtThe First "Pril Class" Antihypertensive Drug in China: Captopril Tablets, the "miracle drug" for lowering blood sugar, Metformin Hydrochloride Tablets, the third-generation anti-hepatitis B drug, Entecavir Tablets "Baraclude", andMultivitamin Tablets "Centrum", Cold Medicine "Tylenol Cold"OTC drugs.

In the past, antibiotics from Sino-American Shanghai Squibb were also once a mainstay in China's anti-infective field, such as the classic first-generation cephalosporin drug "Pioneer 6" cefradine capsules, and the second-generation oral cephalosporin "Cefprozil Tablets (Schroff)."China's First Fourth-Generation Cephalosporin Drug "Maxipime" Comes from This Pharmaceutical CompanyWith these heavy-duty drugs, in 2016, the operating income of Sino-American Shanghai Squibb reached 4.72 billion yuan.Sales revenue and profit indicators reached a record high.

Sino-American Shanghai Squibb has also brought many new experiences to China's pharmaceuticals industry. For instance, it was the first pharmaceutical company to establish a professional medical sales team and pioneered the academic promotion model for hospital doctors. It also built the first over-the-counter (OTC) drug promotion team in China, among other achievements. Additionally,Sino-American Shanghai Squibb is also the first to pass FDA certification., a joint venture exporting Western medicine preparations to the United States.

But in recent years, the situation for Sino-American Shanghai Squibb has likely been deteriorating, primarily due to the successive inclusion of core products in centralized procurement. In the third round of procurement in 2020,The price of generic Captopril and Metformin has been reduced to one cent per tablet., the original research product of Sino-American Shanghai Squibb failed to win the bid.

In addition, in the anti-infective field, under fierce competition from generic drugs in China, Sino-American Shanghai Squibb chose to "lie flat". As early as 2019, Sino-American Shanghai Squibb voluntarily proposed to stop producing "Maxipime" due to raw material shortages and canceled its listing and supply nationwide in China.

Although Sino-American Shanghai Squibb still produces a number of varieties, its prices no longer have market competitiveness, and the brand is showing signs of aging. It is not difficult to understand why Hillhouse took over.These original research drugs, although off-patent, are still recognized by consumers in the Chinese market.After restructuring and cutting costs, these old drugs can still make money. Previously, the case of Haisen Bio, orchestrated by CBC Group, was a typical example. It repeatedly acquired mature products sold off by multinational pharmaceutical companies, and by integrating teams and centralizing production to reduce costs, even out-of-fashion old drugs could generate substantial profits.

The establishment of joint-venture pharmaceutical companies has always been a "test field" for the policy of reform and opening-up. Today, China has opened its manufacturing sector to foreign investment.Multinational pharmaceutical companies can enter China and operate solely., the mission of these joint venture pharmaceutical companies has also been successfully completed. In this situation, more foreign enterprises may choose to exit the joint venture model in the future.

By reporter Fang Taozhi

Editor: Jiang Yun, Jia Ting

Operator | Chenxi

Illustration | Visual China

Statement: Original content by Jian Shi Ju, please do not reprint without permission.

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