(Yicai) June 11 -- Shares in Shandong Sito Bio-technology slumped by as much as 3.1 percent today after the Chinese producer of steroid-based drug intermediates said it will sell all its equity in its struggling Italian subsidiary for the symbolic price of EUR1 (USD1.10) and write off its losses.

Sito’s share price on the Shenzhen stock exchange’s ChiNext board [SHE:300583] closed down 1.2 percent at CNY12.44 (USD1.70). Earlier in the day it sank to CNY12.21.

Sito intends to sell its 90.4 percent stake in Laboratorio Italiano Biochimico Farmaceutico Lisapharma through a Hong Kong subsidiary, the Heze-based firm said on June 7. It will waive the repayment of CNY34 million (USD4.7 million) worth of debts owed to the Hong Kong unit due to the very small chance of this being repaid, it added.

Sito injected EUR10.8 million (USD11.6 million) into the Como-based biomedical developer between July and October 2019 for a 83.08 percent stake, which it then hiked to 90.43 percent, despite the Italian company already failing to make money.

The acquisition was expected to improve Sito’s research and development and preparation of steroid medicines by equipping it with highly standardized methodologies. Steroid drugs are the second-biggest category of medicines after antibiotics and are used in the treatment of rheumatoid arthritis, inflammatory bowel disease, asthma and many other conditions.

However, after nearly five years of losses, Lisapharma had amassed liabilities of CNY34.7 million (USD4.7 million) as of the end of April. To avoid having its whole business performance dragged down by the troubled unit, Sito decided to sell it.

Editor: Kim Taylor