Acquisition
June 26 2003 - 8:31AM
UK Regulatory
RNS Number:8237M
Cathay International Holdings Ld
26 June 2003
Cathay International Holdings Limited
Investment in the biotechnology and pharmaceutical industry in China
Cathay International Holdings Limited ("Cathay") announces a USD2.65 million
investment in the biotechnology and pharmaceutical industry in the People's
Republic of China ("China").
The Board of Cathay has identified the biotechnology and pharmaceutical market
in China as one with high growth potential. This is a strategic investment for
Cathay which is in line with the company's objective of seeking new business and
investment opportunities in China which are expected to provide high growth
rates and generate improved shareholder returns.
This first investment in the pharmaceutical industry in China is being made with
a group of industry professionals from China. Through this strategic investment,
Cathay will benefit from the business synergy of combining their management and
technical expertise in the biotechnology and pharmaceutical industry with
Cathay's extensive investment experience, in-depth knowledge of the market, and
management expertise in China. This will position Cathay to capture further
business opportunities in the high growth biotechnology and pharmaceutical
market in China.
Cathay's strategy is to build a portfolio of biotechnology and pharmaceutical
projects with the aim of providing a steady stream of products to be
manufactured and marketed in China. Cathay will also focus on the acquisition
of pharmaceutical projects which are already generating cashflow. The strategy
will gradually develop to include the manufacture and distribution of medical
products in China. The pharmaceutical businesses will become one of the future
profit centres of Cathay. The industry professionals, who are Cathay's partners
in this investment and form the key management of Cathay's pharmaceutical
businesses, will play a central role in the sourcing, evaluation and development
of biotechnology and pharmaceutical projects, as well as the marketing and
distribution of medical products.
On 25 April 2003, a wholly-owned subsidiary of Cathay entered into an agreement
to acquire newly issued shares resulting in a 74.58% interest in Cathay
International Changchun Biotechnology and Pharmaceutical Limited ("Changchun
Biotechnology") for a consideration of RMB 22.00 million (USD 2.65 million).
The agreement was subject to certain conditions precedent, which have now been
fulfilled, and the approval of the board of directors of Cathay, which has now
been given. Cathay will finance the investment from existing cash resources.
The other shareholders, who will hold the remaining 25.42% of shares in
Changchun Biotechnology, are the group of medical science and management
professionals mentioned above, and whose biographies are attached in a
background note to this release. They have agreed to contribute the rights they
own to certain technologies and specialist expertise valued at RMB 7.50 million
(USD 0.90 million).
Changchun Biotechnology, with the technologies contributed by the group of
industry professionals and the proceeds of Cathay's investment, will acquire a
95.2% interest in Changchun Botai Medicine and Biological Technology Company
Limited ("Botai"). Botai is a sino-foreign joint venture company based in
Changchun, the capital city of Jilin Province in the north east of China. The
city of Changchun is renowned in China for its advanced biotechnology and
pharmaceutical research and science. The other shareholder of Botai will be the
Tongtuo High-tech Development Center of Jilin University. Jilin University,
which is located in the city of Changchun, is one of China's leading scientific
research universities, and in particular a major research institution for
biotechnology, pharmaceutical and medical science. The Tongtuo High-tech
Development Center will contribute technology to Botai, and provide scientific
and research equipment and professionals to Botai. Botai will invest in a
number of research and development projects which are at advanced stages of
development. Following the completion of the funding from shareholders, Botai
will have net assets of RMB 31 million (USD 3.73 million).
Cathay expects to make further investments in the biotechnology and
pharmaceutical industry in China, and will make announcements at the appropriate
time.
Inquiries to:
Cathay International Holdings Limited
25/F Standard Chartered Bank Building
4-4A Des Voeux Road Central
Central District
Hong Kong
Attention: Stephen Hunt, Director
Tel: + 852 2828 9289
Background Note:
According to surveys conducted by bodies such as Scrip World Pharmaceutical
News, IMS Health and the State Drug Administration of China, the pharmaceutical
market in China currently has annual sales of over USD 10 billion. Over the last
decade, the market has enjoyed high annual growth rates of 10% - 15%. It is also
estimated that the Chinese economy will grow at a rate of 6 - 7% per annum over
the next five years. However, compared to the US and Europe, pharmaceutical and
healthcare expenditure in China currently represents a relatively small
percentage of personal income. As China's economy develops, and particularly
with the increasing affluence and interest in healthcare of the population, it
is expected that future expenditure per capita on pharmaceutical and healthcare
products will increase at a rate exceeding GDP growth. IMS Health Asia has
forecast that China's pharmaceutical market will continue to enjoy double-digit
growth over the next three years.
The medical science and management professionals who will contribute technology
and skills to Changchun Biotechnology combine leading academic expertise with in
depth commercial experience, both in China and worldwide.
Professor Zhu Xun is a former Vice President of Norman Bethune University of
Medical Sciences in Changchun. He has held senior positions in a number of
Chinese state organisations, including Committee Member of the State Drug
Administration New Drug Advisory Committee and Director of the China Medical
Science and Biotechnology Association. His work, which focuses on immunology,
is widely published, and has received many national awards.
Dr Li Jingli was formerly a senior scientist in the department of Biochemistry
at Imperial College, London. Prior to this, Dr Li was a Research Fellow with
the Wellcome Research Institute, and a researcher for Medeva and Celltech based
in the United Kingdom. He holds a PhD. in molecular biology from King's
College, University of London, as well as a BSc. from Nankai University in
Tianjin, China.
Dr Wu Danxing holds a PhD. from Monash University, Australia, and an MSc. in
pharmacology from the Norman Bethune University of Medical Sciences. Following
a period of training and medical research in Australia, she has been working as
a Chief Information Officer and Project Manager for a biotechnology research
centre in Changchun.
Mr Li Haifeng is a qualified accountant who has held senior management positions
in both Chinese companies and sino-foreign equity joint ventures. Mr Li holds a
Master's Degree in International Finance from Jilin University.
Dr Dan Chung holds a B.A. (1st Class Honours) from Oxford University, and an
M.A. and a PhD from Princeton University. Prior to joining Cathay, Dr Chung was
a senior project manager with the Boston Consulting Group in Hong Kong and
Boston offices, specializing in business strategy and in the biotechnology,
pharmaceutical and healthcare industries.
This information is provided by RNS
The company news service from the London Stock Exchange
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