The board of directors of Luye Pharma Group Ltd., announced yesterday that the Company had entered into an agreement to purchase 57.98% stake of Beijing Jialin Pharmaceutical Co., Ltd. (Jialin Pharmaceutical) for an aggregate consideration of RMB 3.68 billion in cash. The acquisition will add another key product to the Company’s portfolio and enrich product line of cardiovascular system, which is the strategic therapeutic focus of the Company. This acquisition will further strengthen Company’s market position and competitive advantage in cardiovascular system, especially in the area of lipid regulators, and thus maximize the Company’s size and strengths swiftly.
The Company focuses on the development, production, marketing and selling of innovative products in oncology, cardiovascular system, and alimentary tract and metabolism. Cardiovascular system is one of the Company’s key therapeutic area. Jialin Pharmaceutical is a leading player in the PRC pharmaceutical sector principally engaged in the pharmaceutical products in cardiovascular systems. Its leading product in cardiovascular system has become the main product in the area of lipid regulators in China. In addition, Jialin Pharmaceutical has a variety of products in cardiovascular system and its key areas are in tandem with the Company.
According to China Medical and Pharmaceutical Economic Information Network (MENET), cardiovascular system was the third largest overall therapeutic area for pharmaceutical products in China in 2013 in terms of revenue, accounting for 14.4% of the market. The Company’s key cardiovascular system products include Xuezhikang, which is the most influential and best-selling lipid regulators Chinese medicine. Xuezhikang is listed in the National List of Essential Drugs and enjoys exclusivity in China. Jialin Pharmaceutical has the leading product in cardiovascular system .The Company believes that the acquisition will supplement the Company’s already existing cardiovascular system product portfolio, help drive the Company’s market share, significantly increase its strategic competitiveness in the cardiovascular system market, especially in the area of lipid regulators. Meanwhile, the Company has Beixin((acarbose capsules used in the treatment of type 2 diabetes mellitus)–core product in alimentary tract and metabolism. The combination of three products will create substantial synergies and considerably strengthen the Company’s competitive advantage in the key strategic areas of the PRC cardiovascular system and alimentary tract and metabolism market.
The Company has a well-established nationwide sales and distribution network across 30 provinces, municipalities and autonomous regions in China. Jialin Pharmaceutical has also established a wide-coverage sales network through which it sells its products across China. Through the acquisition, the Company can further enhance its sales and marketing coverage and synergies, and take advantages of the multiple channels offered by the combined network.
The Company develops innovative products on the back of its strong research and development capability, and believes that this will form the basis of the Company’s long-term competitiveness and serve as the drivers for the Company’s future growth and development. Jialin Pharmaceutical is a national high-tech enterprise and has rich experience and strong capabilities in product R&D. The acquisition will further enhance the Company’s research and development capability and provide valuable support to the Company’s pipeline R&D projects and other product development.
The acquisition is in line with the Company’s strategic development needs in key therapeutic areas, key product lines, marketing and product research and development. The acquisition is conducive to maximizing the size and strength of the Company and solidifying the Company’s position in cardiovascular system. The combination of the Company and the Jialin Pharmaceutical will produce considerable synergies and fresh impetus to the Company’s better development in cardiovascular system in the future.
