Asia - Europe Business

WARBURG PINCUS TAKES 22.5% STAKE IN HARBIN PHARMACEUTICAL

Warburg Pincus has achieved China ’s first leveraged buyout, for which it will borrow USD282m in order to buy a 55% stake in the Harbin Pharmaceutical Group (Shanghai SE 600664). According to news sources, the five-year loan is being arranged by Citigroup. Both Warburg and CITIC Capital Markets Holdings have taken a 22.5% stake each in Harbin Pharmaceutical, the other 10% being held by a domestic private equity partner, while the Harbin government owns the remaining 45%.

Harbin Pharmaceutical manufactures more than 700 products, including antibiotics, which is one of the more lucrative sectors of China 's pharmaceutical industry, because they carry a high price tag for consumers but are relatively cheap to produce. The company also specializes in biopharmaceuticals. The company is also a big manufacturer of traditional Chinese medicines and has one of the largest distribution networks in the mainland.

Lisa

Singapore's Biomedical Sector

Singapore‘s biomedical sector is on a roll as far as the pharmaceutical and medical technology sectors are concerned.

Due to the enormous capital cost, long development periods and high risks, biotech companies should rethink their business models as a step towards drawing much-needed investment.

Venture capitalists, however, say that biotech companies do not know how to raise funds as they do not know what investors are looking for. Many biotech companies are too focused on their technology, thinking that it is the most important factor.

In fact, it is only one of the five factors that venture capitalists consider when investing in biotech companies. The other factors are the quality of the management, the product market, ability of the management to maintain its cash flow.

“It is easy to find good scientists but not easy to find good CEO”. So, what is needed is educating scientists to be a good businessman.

Lisa