Insight
Fosun Pharma's "123" strategies
Last Updated: 2016-10-24 13:43 | CE.cn
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By Li Zhiguo

Recently, Shanghai Fosun Pharma (Group) Co., Ltd. announced to purchase an India pharmaceutical company, Gland Pharma, with USD 1.26 billion, creating the largest overseas M&A among Chinese pharmaceutical companies. Fosun Pharma's chairman, Chen Qiyu, said that purchasing the Gland Pharma is the core of Fosun Pharma's strategic framework, and hoped to enter the European and American, Japanese and other markets based on the merger and acquisition, thus making it an important research and development platform to enter India.

A goal: layout of global market

Gland Pharma is the first injection drug manufacturing enterprise in India approved by the U.S. FDA, and its business revenue mainly comes from the United States and Europe. Chen Qiyu said, at present, the company was oriented by Fosun Pharma to be an independent company for operation. In the next stage, Fosun Pharma would promote Gland Pharma to form its complete marketing system, combining its global manufacturing capacity with Chinese research and development capability.

The core of Fosun Pharma's international strategy is to enter the European and American, Japanese and other markets, so this M&A is very important for entering the Indian market and then global market in the future. "In the future, we will keep selecting excellent local enterprises in the United States and Israel for M&A," said Chen Qiyu.

In fact, in recent years, Fosun Pharma has launched several M&As in succession, and the M&A will continue according to Fosun Pharma's international strategic layout. "We mainly focus on objects having a synergistic effect with the company. Fosun Pharma is very careful when selecting objects for M&A, hoping invested enterprises will suit Fosun Pharma's strategy and create an effect, one plus one is larger than two, on the development of both parties," said Chen Qiyu.

However, at the present stage, it will mainly focus on perfectly processing the M&A of Gland Pharma. In addition, recently Fosun Pharma also keeps cooperating with some hospitals in the mainland of China, and M&A projects are gradually advancing.

Insiders thought that strengthening M&A in the field of overseas pharmaceutical had been an important point for Chinese pharmaceutical enterprises to improve research and development level and speed up to the international market. Chen Qiyu said, resource grafting between the two pharmaceutical enterprises in China and India would be good for accelerating the pace of internationalization for Chinese pharmaceutical enterprises in terms of research and development and innovation, as well as generics export.

Walking on two legs: combination of imitation and innovation

In the field of biological medicine, Fosun Pharma will have internal development in addition to epitaxial M&A. Chen Qiyu told the journalist that at present, the company had built several teams in research and development of biological medicine.

In fact, pharmaceutical enterprises, Fosun Pharma, Luye Pharma and Tasly Pharm as representatives, have been the "fist echelon" in Chinese innovative drug research and development.

Statistics indicated that in the first half of 2016 Fosun Pharma spent RMB 488.6492 million yuan in research and development (including capitalization), growing 37.06 percent compared with the same period in 2015. Among them, the research and development expenses in drug manufacturing and research and development sector was RMB 242.5450 million yuan, accounted for 5 percent of the business revenue of drug manufacturing and research and development sector. As of June 30, 2016, Fosun Pharma had owned 172 projects in new drug research, generics, similar biological medicines and vaccine, and there were 22 products obtaining clinical approval only in the first half of this year. Among them, there are up to 37 patent applications in the drug manufacturing and research and development sector, including 13 U.S. patents and 2 PCT applications; obtained 13 patent grants are all patents of invention.

From the point of view of realization path of innovative medicine, Fosun Pharma has started to explore its own characteristics. At present, Fosun Pharma is improving the drug research and development system of "combination of imitation and innovation", having created an efficient research and development platform in the field of small molecular chemical innovative drugs, macromolecular similar biological medicine, high value generics and special preparation technology. Fosun Pharma's president and COO, Wu Yifang, told the journalist: "Fosun Pharma's research and development innovation will have 3 stages: recently, we will focus on creating innovative capability, including construction of talent structure, infrastructure facilities and clinical competence; in the middle stage, we will take the path of "imitation and innovation"; In the far stage, we will try to become a completely innovative enterprise."

Since new drug registration and listing in the United States have been recognized as an important symbol for entering the international market in the field, Fosun Pharma, in recent years, starts to set up R&D centers and related organizations in the United States while focusing on innovation and research and development, cooperating with scientists and excellent teams with the spirit of entrepreneur at home and abroad through innovation systems, such as "partner system", to speed up international communication and cooperation and gradually explore an international project cooperation model, "Chinese power grafted with global resources", which creates a new road for Chinese medicine products to register and sell in European and American countries.

Power from three aspects: marketing, service and instrument

Apart from strengthening overseas M&A and new drug research and development, Fosun Pharma releases its power in three aspects, marketing system, medical service and medical instrument, trying to make a foundation for multi-level and multi-field development in the future.

Chen Qiyu indicated that Fosun Pharma's professional marketing team had been taking shape for now. Particularly, after more than 10 years of development, Sinopharm, stock participated and invested by Fosun Pharma, has been the largest distributor of pharmaceuticals and health care products and advanced supply chain service provider in China and owns and operates the largest drug distribution and delivery network. At present, Sinopharm's subordinate distributing network has covered 31 provinces, districts and cities in China. Fosun Pharma and Sinopharm stay in strategic cooperation which can fully play a synergistic role of both parties.

In the field of medical service, Fosun Pharma also accelerates space of layout. Chen Qiyu told the journalist: "the future layout of Fosun Pharma's medical service will mainly aim at special and general hospitals in second-tier and third-tier cities; meanwhile, we will keep consolidating the construction of United Family hospitals in Beijing and Shanghai; it is expected that there will be a large scale of United Family Hospital open in Guangzhou early next year to satisfy demands from high-end medical service market in advance. Just in the first half of this year, Fosun Pharma participated in "Phase II Project of Qingdao Qilu Hospital of Shandong University" and reorganization of relevant medical institutions' medical industry belonging to Xuzhou Coal Mining Group, invested Wenzhou Geriatric Hospital was opened, and started to operate hemodialysis linkage through Hunan Jingren.

In the field of medical instrument, Chen Qiyu said, medical instrument industry grew fast in recent two years and had the ability and potential of sustainable development. Now instrument and drug markets in the United States respectively occupy "half of the country", but the ratio in Chinese market is only 1:5. It is based on the judgment that Fosun Pharma, in 2013, merged Alma Lasers, a Israel laser beauty medical instrument company, and keep expanding the global market, focusing on Chinese, Indian and other emerging markets so as to strengthen new products in advance, especially development of medical instruments so that the product line extends to the field of clinical treatment.

"Look forward to the future, Chinese pharmaceutical industry has full of challenges." Chen Qiyu said to the journalist, Fosun Pharma would strengthen product innovation and the company's core competitiveness to promote their business performance on the basis of the rapid growth of the Chinese pharmaceutical market and generic drugs in the mainstream market in Europe and the United states; They would increase the mergers and acquisition and integration of excellent enterprises in the industry and keep optimizing and integrating resources of the medical industry chain. At the same time, the company would continue expanding financing channels at home and abroad to create better conditions for sustainable development of the company.

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