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Fosun Pharma to float shares in HK

2011-03-02 10:46

SHANGHAI - Shanghai Fosun Pharmaceutical (Group) Co Ltd (Fosun Pharma) plans to float shares on the Hong Kong Stock Exchange, the Shanghai-listed company said in a filing to the Shanghai Stock Exchange on Tuesday. Analysts regarded the move as a further step in the company's internationalization.

Fosun Pharma said it plans to issue stock amounting to a maximum of 20 percent of its total shares after the initial public offering (IPO). The company's board of directors will make the final decision on the number of issued shares, according to the filing.

Yao Fang, president of Fosun Pharma, said the floatation in Hong Kong will not only diversify the company's financing channels, but also will increase its competitiveness globally.

With the implementation of the nationwide medical reform, China's medical industry is quickly expanding in terms of market size and industrial restructuring, as well as mergers and acquisitions.

Fosun Pharma's IPO in Hong Kong is in line with the industry's strategic adjustment and industrial resources restructuring and the raised capital will play a significant role in helping the company build a pharmaceutical group with international competitiveness, said Su Jinjiang, an industrial analyst from Nanjing Securities Co Ltd.

As the nation's largest privately-owned conglomerate by market capitalization, Fosun has quickened its development internationally in recent months. In late December, it announced the formation of a joint venture to explore the domestic medical-device market with Chindex International Inc, a leading independent US-based provider of Western healthcare products and services.

Fosun will hold a 51 percent stake after injecting $20 million, while Chindex will take the remaining 49 percent after shedding its medical device department.

The creation of the joint venture is an important step for Fosun in becoming a more integrated pharmaceutical company, said Zhou Sili, an analyst from Northeast Securities Co Ltd.

"Fosun Pharma's business has covered almost all of the major industrial chain, including research and development, traditional Chinese medicine, retail, medical equipment, and diagnosis," Zhou said.

"The company's further integration, along with floating in Hong Kong, will finally build it into the nation's first privately owned medical investment company with a market capitalization of above 100 billion yuan ($15.22 billion)," Zhou added.

As early as September 2009, Sinopharm Group Co Ltd, jointly owned by China National Pharmaceutical Group Corp and Fosun, floated in Hong Kong. Sinopharm used the capital raised to purchase local medical and logistic distribution companies, and in less than one year, Sinopharm had set up a nationwide pharmaceutical network, consolidating its leading position in domestic pharmaceutical business.

Fosun forecast its net profit in 2010 will be between 850 and 950 million yuan, a decline of up to 65 percent year-on-year. This is because last year the group registered earnings made from Sinopharm's IPO in Hong Kong. Excluding the one-off earnings, Fosun's net profit in 2010 increased from 60 percent to 80 percent over 2009, said Zhou.

Shanghai-listed Fosun Pharma is owned by Guo Guangchang, a Fudan University graduate who has appeared several times on Hurun's Rich List.

Shares of Fosun Pharma rose 2.6 percent to 13.01 yuan each in Shanghai on Tuesday.

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