Actavis Divests from Subsidiary Interest in "Risky" China
Almost two weeks after its CEO faulted China as “too risky” for biopharmas, Actavis said it sold off its interest in its Chinese subsidiary Actavis (Foshan) Pharmaceuticals to Zhejiang Chiral Medicine Chemicals—the second selloff of international operations in as many weeks. The price was not disclosed.
“Our operations in Foshan were limited in scope, and we believe that their value will be better capitalized on by Chiral, which will add manufacturing and marketing capabilities allowing them to expand their portfolio and strengthen their position in the Chinese market,” Actavis president Sigurdur Oli Olafsson said in a statement issued late Friday.
Actavis said it intends to continue further commercial operations in China, but in collaboration with preferred business partners: “Actavis is focused on strengthening our investment in high-growth markets where our size and scale allow us to maintain a competitive presence with the leading companies in the market,” Olafsson added.
That contrasts with comments made January 15 by Actavis CEO Paul Bisaro, who said China offered an “unfriendly environment” to pharmaceutical companies.
“If we’re going to allocate capital, we’re going to do so where we can get the most amount of return for the least amount of risk. And China is just too risky,” Bisaro said in a Bloomberg interview during the JP Morgan 32nd Annual Healthcare Conference.
Bisaro expressed concerns that China did not offer all companies the proverbial level playing field—“You need a certain consistency in application of rules, and I’m not certain China has achieved that consistency yet”—and that Actavis would not be dealt with fairly if it were to face corruption charges that have befallen GlaxoSmithKline and some other biopharmas.
“If something goes wrong, you need to be able to go to the government and say, ‘Help me.’ And if the government says, 'no,' that’s a problem.”
He added that China accounted for between just €4–5 million (about $5.5–6.8 million) in annual profits for Actavis, which racked up more than $4.6 billion in net revenue during the first nine months of 2013, 53.5% above January–September 2012.
Founded in 1998, Zhejiang Chiral is located within China’s Zhejiang Nanyang Economic Development Zone and employs about 200 people, of whom about 20% are R&D staffers. Zhejiang Chiral specializes in generic APIs and pharmaceutical intermediates, though in recent years the company has developed its own products, including three whose manufacture won FDA approval last year following inspection—the seizure and pain treatment gabapentin, the Parkinson’s disease drug carbidopa, and Etodolac.
Headquartered in Dublin, with U.S. administrative headquarters in Parsippany, NJ, Actavis has more than 30 manufacturing and distribution facilities around the world, as well as a U.S. pharmaceutical product distributor, Anda.