Private equity

PAG buys Chinese biotech firm as SOE reform gathers pace

This acquisition will be the largest private equity investment in China’s biotechnology industry to date.

Asia-focused private equity firm PAG said on Thursday that it has agreed to acquire a controlling interest in Hisun BioRay Bio-pharmaceutical, another example of state-owned enterprise reform in China.

PAG will buy 58% of Hisun BioRay for Rmb3.8 billion ($540 million) from its parent company, Shanghai Stock Exchange-listed Zhejiang Hisun Pharmaceutical which will continue to retain the remaining 42%.

Headquartered in Taizhou, Zhejiang province, Zhejiang Hisun Pharmaceutical is controlled by China’s government.

As China allows increasing amounts of outside capital into its economy, the country's private equity players are seeing more and more opportunities for investment.

“This transaction marks an important milestone in mixed ownership reform of China’s state-owned sector. By bringing in foreign direct investment to support the development of China’s biopharmaceutical industry, Hisun Pharmaceutical can sharpen its focus while supporting Hisun BioRay’s future development,” said Jiang Guoping, chairman of Zhejiang Hisun Pharmaceutical in a statement on Thursday.

This transaction is just one example of the state-owned enterprise (SOE) reforms that started in 2015. The Chinese State Council said in April this year that almost 70% of SOEs in China had begun mixed-ownership reform, allowing more social capital to hold stakes in SOEs.

In another example, Zhuhai-based state-owned home appliance manufacturer Gree Electric Appliances said in a statement on Tuesday that two bidders were competing for a 15% stake in the group.

Zhejiang Hisun Pharmaceutical picked PAG over around forty other potential investors.

“PAG has extensive experience completing complex transactions and partnering with leading companies in the state-owned sector,” said Xiao Suining, partner and chairman of China for PAG, who has also been appointed as the chairman of Hisun BioRay. Xiao was formerly chairman of Ping An Bank and Shenzhen Development Bank.

Established in January this year, Hisun BioRay has been active in R&D, manufacturing and the sales of biologic antibody-based drugs within the Hisun Pharmaceutical group. Hisun Pharmaceutical entered into the biological pharmaceuticals segment in 2003.

Hisun BioRay has developed a portfolio in the auto-immune and oncology treatment areas. It currently manufactures and markets Anbainuo, which is used to treat auto-immune disorders, and plans to launch Anjianning, one of China’s first adalimumab biosimilars, around the end of this year. The company employs more than 700 staff with offices in Taizhou, Hangzhou and Shanghai.

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