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Alliance Boots completes joint venture in China
29 January 2008Following receipt of final government and regulatory approvals, Alliance Boots announces completion of the formation of its 50:50 joint venture company, Guangzhou Pharmaceuticals Corporation (“GP Corp”) for a total consideration of approximately £41 million. The Chinese partner in the joint venture company is Guangzhou Pharmaceutical Company Ltd. Alliance Boots has made its investment through its subsidiary company, Alliance BMP Limited.
GP Corp is the fourth-largest pharmaceutical wholesaler nationally with around a 3% market share, and is the leader in its home province of Guangdong with a market share of approximately 16%. Guangdong has a population of some 80 million and enjoys one of the fastest growing GDP per capita in China. GP Corp reported revenue of around £515 million for 2006, operates eight depots and has around 2,000 employees. The new business will report to Ornella Barra, Board Member and Wholesale and Commercial Affairs Director of Alliance Boots.
China is the seventh-largest pharmaceutical market in the world. It is experiencing rapid economic growth which is driving even higher growth rates for healthcare expenditure. As a result, China is expected to be the fifth-largest pharmaceuticals market by 2010. The Chinese pharmaceutical wholesale and distribution market is fragmented and largely regionally-based and principally involves supply to hospital pharmacies.
Stefano Pessina, Executive Chairman of Alliance Boots, comments: “We are delighted to announce completion of this deal now that we have received all final approvals from the relevant authorities. China is an exciting market for us to enter and this joint venture is in line with our strategy of growing our international presence by penetrating important new geographical territories. Bringing together the experience of Alliance Boots with GP Corp's excellent local knowledge and market position will make GP Corp a powerful business, well placed to benefit from both the rapid expansion of the Chinese healthcare market and further consolidation opportunities as they arise.”