(Yicai) Jan. 2 -- Shanghai Pharmaceuticals Holding is paying CNY995 million (USD136.3 million) to increase its holdings in its joint venture Shanghai Hutchinson Pharmaceuticals, also known as SHPL, to become the majority shareholder so as to strengthen the Chinese drugmaker’s traditional Chinese medicine portfolio.

Shanghai Pharma will hike its stake in SHPL, which is an equal JV between Shanghai Pharma and Hutchison China MediTech, by 10 percent to 60 percent, the Shanghai-based company said yesterday. The transaction will boost the marketing capabilities, brand awareness and internationalization of Shanghai Pharma’s TCM medicines, it added.

Hutchison China, also known as Chi-Med, has agreed to sell a 45 percent stake to Shanghai Pharma and firms designated by Jinpu Healthcare Fund in a deal worth CNY9.95 billion (USD1.3 billion), according to the share transfer agreement penned by the three parties on Dec. 31. 

Jinpu will pay CNY3.4 billion (USD465.8 million) for a 35 percent stake, while Chi-Med, which has been divesting its TCM assets in recent years, will keep a 5 percent indirect stake. Chi-Med expects to make USD477 million before tax from the sale.

SHPL is the producer of the Shexiang Baoxin pill, a widely-used treatment for coronary heart disease, which accounted for 90.4 percent of the company’s revenue in 2023. And its Danning tablets, for the treatment of biliary tract infections, have been given the greenlight to go to market in Canada.

The success of these medicines is expected to help promote sales of Shanghai Pharma’s own TCM medicines both at home and abroad, the firm said.

The transaction will further optimize Hutchison China’s capital and debt structure, allowing resources to be concentrated on its core business areas of targeted therapies and immunotherapies, including next-generation antibody-drug conjugates, said Chi-Med. 

Chi-Med has been saying for the past three years that it is considering selling non-core businesses, such as SHPL. In 2021, the Shanghai-based company sold its entire stake in Guangzhou Baiyunshan Hutchison Whampoa Chinese Medicine.

Little moved by the news, Shanghai Pharma’s share price [SHA:601607] was trading down 1.6 percent at CNY20.66 (USD2.80) as of 2 p.m.

Editor: Kim Taylor