(Yicai Global) Oct. 18 – China Resources Pharmaceutical Group Ltd. has finally released its stock prospectus on Oct. 17 after years of speculation it would list on Hong Kong's stock exchange, with a view to acquiring other domestic drugmakers. The move has prompted other pharmaceutical companies to target similar mergers and acquisitions
"There has been a trend toward resource integration in the pharmaceutical industry in recent years, and the pace of integration is expected to speed up after the financing deal at CR Pharmaceutical. As a result, the expectation is that listed pharmaceuticals such as Sinopharm Group Co. [HK:01099] and Shanghai Pharmaceuticals Holding [SH:601607] will follow suit and ramp up their M&A efforts," a pharmaceutical industry analyst told Yicai Global reporter.
"The company has already selected some targets for acquisition in Shannxi and Chengdu, and established a long-term internationalization development strategy, which is why the group chose Hong Kong for their share offering." said Mr. Wang Chuncheng, CEO and president of CR Pharmaceutical.
At present, however, the company attaches greater emphasis to the domestic market and aims to set up a nationwide pharmaceutical distribution network by 2020.
The company plans to issue 1.54 billion shares in Hong Kong, and up to HKD 15.6 billion will be raised in the IPO, with 45 percent of the proceeds to be used for strategic acquisitions of Chinese pharmaceutical producers and distributors. The listing is expected for Oct. 28, and CR Pharmaceutical will become the sixth HK-listed company under China Resources Group, according to their prospectus.
Once the IPO is complete, all members of the 'CNY100 billion club' in the Chinese pharmaceutical distribution industry, Sinopharm, Shanghai Pharmaceuticals Holding and CR Pharmaceutical will be listed in Hong Kong. The IPO is expected to be the biggest deal of the year on the capital market in Asia.