China Medicine Corp. is a developer and leading distributor of prescription and over-the-counter drugs, traditional Chinese medicine products, nutritional and dietary supplements, and medical devices and formulations in China.
The company announced today that through its wholly-owned subsidiary in China, Konzern Pharmaceuticals, it has signed an equity transfer agreement to acquire 100% of equity interests in Sinoform Limited, a British Virgin Islands corporation which is the sole shareholder of Guangzhou LifeTech Pharmaceuticals. LifeTech Pharmaceuticals is a developer, manufacturer and marketer of pharmaceutical products and traditional Chinese medicines in China.
The acquisition is expected to close before the end of the year and China Medicine will acquire Guangzhou LifeTech for 57 million renminbi or about $8.3 million cash and the assumption of about $13.2 million in debt. Upon closing of the acquisition, the company will receive all of LifeTech’s assets, including a portfolio of 39 Western and traditional Chinese medicine products. LifeTech’s top-selling drug, Houerhuan Xiaoyan Capsules, for the treatment of throat infections and acute laryngitis, is projected to account for 66% of LifeTech’s annual sales in 2009 and has a gross margin of 60%-70%.
China Medicine expects the LifeTech acquisition to be accretive to earnings, generating revenues of between $10 million and $12 million and net profit margin of at least 40% in 2010. The acquisition of Guangzhou LifeTech is another step in the company’s evolution to becoming a vertically integrated pharmaceutical company.