GlaxoSmithKline Plc agreed to buy China’s Nanjing MeiRui Pharma Co. Ltd. for about $70 million in cash, increasing its share of a fast-growing market that is expected to become the world’s second-largest in a few years.
Glaxo will buy 90 percent of the shares owned by Pagoda Pharmaceuticals Ltd. and the remaining 10 percent from Sweden’s Allergon AB, the London-based company said in a statement today.
The U.K.’s biggest drugmaker and rivals are looking to expand their presence in emerging markets such as China to replace revenue being lost to patent expirations. Glaxo said it will gain access to the Chinese company’s products as well as its sales and marketing staff and a manufacturing plant in Nanjing City. The deal is expected to be completed by the end of the month, pending regulatory approval.
Sales of pharmaceuticals in emerging markets are expected to expand as much as 17 percent in the five years through 2014, compared with growth of as much as 6 percent in developed markets, according to IMS Health Inc., a Norwalk, Connecticut-based market research company. China will likely be the world’s second-largest market by 2015, with sales expected to grow 25 percent next year to $50 billion, IMS said.
Glaxo shares closed up 5 pence, or 0.4 percent, to 1,242 pence at 4:35 p.m. in London trading.
Nanjing MeiRui’s products include a treatment for enlarged prostate and overactive bladder syndrome. It has 22 products in its pipeline, including cancer diagnostics, according to the company’s website.
Pagoda is registered in the British Virgin Islands and organized Nanjing MeiRui in 1996 as a joint venture, according to its website. Allergon produces allergen source material, which is used in allergy tests and treatment.
Sanofi-Aventis SA last month agreed to buy BMP Sunstone Corp., the maker of the Hao Wa Wa brand of children’s cough and cold treatments, for $520.6 million in cash.