Boots invests in Chinese pharmaceutical distributor Nanjing

Swiss pharmacy-led health and beauty group Alliance Boots GmbH said it would invest some GBP56m (USD91m/EUR69.2m) in Nanjing Pharmaceutical Company Ltd (SHA:600713) in exchange for a 12% stake in the Chinese pharmaceutical distributor, under a strategic alliance agreement.

The move will see Alliance Boots becoming Nanjing Pharmaceutical Company’s second largest investor with representation in the target’s board and operational management, the buyer said.

The alliance marks a step forward in Alliance Boots’ long-term strategy for China, its executive chairman Stefano Pessina said in a comment, adding that his company sees significant potential in working together with Nanjing Pharmaceutical to create a great healthcare distribution network.

In turn, Nanjing Pharmaceutical’s chairman Zhou Yaoping described the partnership with the Swiss group as a move of great significance given the slowdown in the global economy and the reforms in the Chinese medical and healthcare sectors. With Alliance Boots advanced supply chain management technology and experience, Nanjing Pharmaceutical will improve its management practices and boost performance, he added.

Nanjing Pharmaceutical, whose biggest shareholder is Nanjing Pharmaceutical Group Limited, claims to be China’s fifth largest pharmaceutical wholesaler, generating some GBP2bn in sales last year. Based in the Jiangsu province, the company runs distribution centres in 12 cities across eight provinces and one autonomous region.

Alliance Boots stepped into the Chinese pharmaceutical distribution market in 2008 via its joint venture Guangzhou Pharmaceuticals Corporation. The group is present in over 25 countries with more than 116,000 employees.

Completion of the deal is subject to various regulatory clearances.