China's Luye Group Said to Join Fray for Drugmaker Ethypharm

  • French drugmaker received interest from other Chinese firms
  • Winning offer for Ethypharm may be chosen before the summer

Luye Group Ltd., which controls a Chinese drugmaker and health-care provider, is among bidders for French pharmaceutical company Ethypharm, people familiar with the matter said. Shares of Luye’s listed arm plunged.

The sale of Ethypharm, owned by private-equity firm Astorg Partners, has also attracted interest from other Chinese companies looking to expand in Europe, the people said, asking not to be identified because the process is private. Astorg is working with financial adviser Rothschild on the sale of Ethypharm, which may fetch 700 million euros ($785 million) to 800 million euros, people familiar with the matter said in October.

Chinese drugmakers are benefiting from increased insurance coverage and rising health-care spending by an expanding middle class. Companies from China announced $30.4 billion of acquisitions in the medical industry last year, more than double the activity in 2014, data compiled by Bloomberg show.

Luye Pharma Group Ltd., the group’s publicly-listed drugmaking arm, fell as much as 15 percent Wednesday to hit a record low. They were down 11 percent to HK$5.15 at 1:26 p.m. in Hong Kong.

Astorg may choose a buyer before the summer, the people said. A spokeswoman for Luye Group and Luye Pharma said she doesn’t have any information on the matter, while representatives for Astorg declined to comment.

Luye Pharma sells medicines for conditions including cancer and cardiovascular disease. On Tuesday, the company reported net income of 754.5 million yuan ($116.4 million) for 2015, missing the median estimate of 796 million yuan from four analysts surveyed by Bloomberg. Its shares have fallen 36 percent in Hong Kong trading this year, giving the company a market value of about $2.2 billion.

Bain, PAI Bids

Founded in 1977, Ethypharm specializes in the treatment of pain and addictions, as well as difficult-to-produce generic drugs for cancer patients, according to its website. Revenue in 2014 was 167 million euros, with 44 percent coming from France. Other parts of Europe, as well as China and North America, generated most of the remaining sales.

Private-equity firms Bain Capital and PAI Partners have made offers, people with knowledge of the matter said earlier this month. The U.K.’s Mundipharma International is also bidding, people familiar with the situation said. A Mundipharma spokeswoman declined to comment.

More than $115 billion of drugs were sold in China last year, according to researcher IMS Institute for Healthcare Informatics, making it the world’s second-largest market after the U.S. Luye Group, run by Chinese professor-turned-businessman Liu Dian Bo, said earlier this month it’s seeking acquisitions overseas to tap rising demand from more affluent Chinese for higher-quality medical services. 

The company agreed in December to buy Healthe Care Australia Pty, the nation’s third-largest private hospital operator, for $688 million. It has also acquired Singapore-based Vela Diagnostics to venture into precision medicine.

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