signed a letter of intent last Saturday to establish a joint venture
with Minsheng Pharmaceutical Group of Hangzhou. The JV will focus on
OTC vitamin and mineral products. Minsheng already produces the best
selling product in the sector: 21-Super Vita multivitamin-multimineral
tablets.
For Sanofi-Aventis, the JV will provide an entry into
China's OTC market. Sanofi-Aventis will have the majority share in the
JV. No other financial details were disclosed.
Sanofi-Aventis
and Minsheng already share a Hangzhou-based JV. In May of this year,
Sanofi announced it would invest 270 million RMB ($40 million) to build
a new pharmaceutical packaging plant for the JV in Hangzhou Binjiang
Hi-Tech Industry Development Zone. The new facility will also house the
joint venture, called Hangzhou Sanofi-Aventis Minsheng Pharmaceutical.
The plant, which will be completed in 2012, will have the capacity to
produce 160 million packages.
Although Minsheng has long owned
the biggest share in OTC vitamin and mineral supplements, it is facing
increasing competition from products developed in the west, including
Amway's Nutrilite, Wyeth's (NYSE:
WYE) Centrum and Bristol-Myers Squibb's (NYSE:
BMY) Theragran Gold. By itself, Amway reportedly spent $90 million advertising its Nutrilite product in 2008.
Sanofi-Aventis
has declared that it would pursue joint research projects in China,
rather than establishing an in-house R&D facility there. In recent
years, the company has made several large investments in manufacturing
facilities, expanding its Beijing diabetes drug manufacturing plant and
building a flu vaccine facility in Shenzhen, in addition to the
Hangzhou JV.
Olivier Charmeil, Sanofi-Aventis' senior vice
president for pharmaceutical operations in Asia/Pacific and Japan,
pointed out that China will become the world's second largest OTC
market in 2010. Revenues from China OTC products are currently around
70 billion RMB ($10.3 billion), and it is projected that the market
will increase by double-digit percentages for each of the next five
years.
See our other articles on
Sanofi-Aventis.
Disclosure: none.
