The following press releases and media reports about Chinese companies were carried on June 15-17. To view a full article or story, click on the link next to the headline.
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- EU Free-Trade States Urge Quick Resolution Of Chinese Solar Dispute (English article)
- Beijing Warns Johnson & Johnson (NYSE: JNJ) Over Recall Double Standards (English article)
- Bristol-Myers, Simcere (NYSE: SCR) To Co-Develop Orencia In China (PRNewswire)
- Ming Yang (NYSE: MY) Announces Change Of CFO (PRNewswire)
- Smithfield (NYSE: SFD) Profit Plunges After China Blocks Imports (English article)
I’ve written lots about the huge potential that China offers for drug makers as Beijing rolls out a multibillion-dollar reform of the country’s medical system. But there’s also huge potential for medical equipment makers, whose devices will fill the thousands of smaller local clinics being set up as part of a massive national plan to provide basic medical coverage to hundreds of millions of Chinese who lack access to such services. That potential was on display with the announcement by US-based Medtronic (NYSE: MDT), one of the world’s top medical equipment suppliers, that it would buy New York-listed Chinese peer Kanghui Holdings (NYSE: KH) for a nifty $816 million, in what looks like the biggest acquisition of a Chinese medical device firm by a western company.
A couple of new tie-ups involving major foreign players in pharmaceuticals and computing provide an interesting glimpse at how multinationals are trying to target their China initiatives to be in sync with Beijing’s latest policy agendas. The strategy of working with a local partner isn’t all that new, but in this case what’s more interesting is the targeted approach these two new tie-ups are taking, the first aimed at taking advantage of China’s ongoing massive overhaul of its healthcare system and the second at Beijing’s push to become a leader in cloud computing. Let’s look at the pharmaceuticals deal first, which is seeing Bristol-Myers Squibb (NYSE: BMY) teaming up with local drugmaker Simcere Pharmaceutical (NYSE: SCR) to make and sell a cardiovascular compound in China. (
I’ve generally been quite bullish on China’s ongoing overhaul of its healthcare system and the huge potential it offers drug makers, but Simcere Pharmaceutical’s (NYSE: SCR) latest results show that like everything else, health care reform also has its downside. Simcere reported its revenue was nearly flat in the second quarter this year versus a year earlier, even as profit from operations grew a more respectable 27 percent. (
more focused on sales and marketing, setting them apart from previous efforts that were mostly focused on using China as a base for cheap manufacturing. Both are aimed at capitalizing on an expected spending bonanza that will see China spend billions of dollars each year to provide basic healthcare to its less affluent majority under an ongoing reform plan. One interesting difference here is that Merck has found its partner in a smaller New York-listed company with market cap of about $600 million, whereas Pfizer’s partner is listed in Shanghai with a larger market cap of around $3.2 billion. I tend to like the smaller, overseas-listed companies like Simcere as they are often more entrepreneurial and adaptable to market conditions. Bigger, Shanghai-listed firms like Hisun tend to have better connections, which are obviously important in this major government-led overhaul of China’s health care system. But they also tend to move more slowly, and their decisions are often based as much or even more on non-economic considerations as they are on what’s best for business. Still, both of these partnerships look good to me in light of China’s health care reform, and investors clearly like the Simcere deal, bidding its stock up nearly 5 percent in Friday trading.
