Eastday-Alliance Boots buys stake to grow

ALLIANCE Boots, the owner of Europe's largest pharmacy chain, will buy 12 percent in China's Nanjing Pharmaceutical Co for about 56 million pounds (US$91 million), Alliance said in a statement yesterday.

The deal, initially announced over a year ago, will strengthen Alliance Boots' ties with China's government and regulators. Alliance Boots Executive Chairman Stefano Pessina said China is committed to improving its health care sector.

Pessina, who turned his family's wholesale pharmaceutical company in Italy into a business empire through a blizzard of mergers and acquisitions, is now eying 20-30 percent of the Chinese pharmaceutical distribution market.

"In 10 years, I hope we will be one of the major players in China or we will be, together with other companies, part of one of the major players in China," Pessina said.

Shanghai-listed Nanjing Pharmaceutical is China's fifth-largest pharmaceutical wholesaler, with sales of about 20 billion yuan (US$3.2 billion) in 2011, and has a market capitalization of US$682 million. The Jiangsu Province-based company has distribution centers in 12 cities across eight provinces and one autonomous region.

Alliance Boots will become Nanjing Pharmaceutical's second-largest shareholder with board representation after the deal, which is conditional on regulatory approvals. It first entered the Chinese market in 2008 via its Guangzhou Pharmaceuticals Corp joint venture. Alliance Boots is 45 percent owned by US-based Walgreen Co.

Pessina said his company is likely to expand in Latin America through direct investments similar to its deal in China.

In Southeast Asia, Pessina said he will look to distribute products through franchises, similar to a model already used in the Gulf states.

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Eastday-Alliance Boots buys stake to grow