Australian blood plasma giant CSL is to strengthen its footprint in China with a $352 million deal for an 80 per cent stake in a Chinese plasma factionator.
CSL will acquire the stake in Wuhan Zhong Yuan Rui De Biological Products (Ruide) from Humanwell Healthcare Group, a Shanghai-listed pharmaceutical company, CSL said in a statement on Tuesday. The deal is subject to regulatory approval.
The deal – the first foreign purchase of a major Chinese blood producer – underscores international appetite for a stake in China's fast-growing healthcare market and, according to one analyst, may open the way for more such deals.
CSL shares soared to a record high in Sydney on optimism the deal will allow the company to expand plasma collection and introduce new products into its fastest-growing market. CSL's share price was up 37 percent for the year so far as of yesterday.
Ruide develops and manufactures plasma-derived blood products for the Chinese market. It operates four plasma collection centres and one manufacturing facility in the central Chinese city of Wuhan.
Chris Kallos, a Sydney-based health-care analyst at Morningstar Australasia Pty, said the deal “makes strategic sense”. While CSL has been supplying imported plasma to China for over 20 years, Chinese regulators allow imports of only one blood product: albumin. Adding Ruide to its manufacturing portfolio will allow CSL “to broaden their product mix and their product portfolio in China,” Kallos said in a phone interview.
Paul Perreault, CSL’s chief executive, said in the statement the investment in China would support the company's mission statement "to save lives and protect the health of people around the world".
Although moderate in size, the purchase paves the way for international plasma companies to gain on-the-ground access to the fast-growing market through more acquisitions, Kallos added.
China spends just 5.5% of its GDP on healthcare, compared to 17.1% for the United States, and its population is fast aging.
China's blood market has grown rapidly in recent years, driven by a liberalised price policy.
According to the market data firm Research and Markets, sales of blood products in China rose 16.7% to RMB23.8 billion in 2016. The market is expected to grow to RMB47.5 billion in 2021, as a result of rising downstream demand, expansion of plasma stations and improved profit margins.
“The plasma market is three times larger in the US than China, even if the population is four times larger in China,” Kallos said.
CSL expects annual sales of Ruide to grow to $100 million five years after the transaction. The fractionator generated revenue of $30 million last year.
The investment by CSL represents something of a reversal: Chinese companies had shown a strong interest in health-related businesses Down Under. Just last month, Humanwell Healthcare joined with a Chinese investment fund to pay $200 million for the condom manufacturing business of Australia's Ansell. Last year, Shanghai Pharmaceuticals and private equity fund Primavera Capital teamed up to bid $238 million for Australian vitamin maker Vitaco.
