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Published on : Jun 15, 2015

Shanghai Fosun Pharmaceutical Group Co. has expansion plans for developing drugs overseas and to spend 5 billion yuan on the prospective venture. China’s fragmented pharmaceutical industry needs consolidation through good research and development, marketing and sales, as well as through good mergers and acquisitions by drug makers, according to the group’s Chairman Chen Qiyu. 

In China there are many small pharmaceutical companies competing for manufacturing low-cost generic drugs and the foreign companies have the major share in innovative drugs market. Fosun wants to change this and upgrade China’s drug making. The company has been involved in many mergers and has surpassed state backed large companies according to data from Bloomberg. Fosun wants to spend only a 10th or 5th of the amount that foreign companies from U.S. or U.K. spend to develop a drug. Additionally the cost of labor is cheaper in China so it helps this goal.

Chen wants to multiply Fosun’s overseas revenue by 40% in five years by investing in business opportunities such as online consulting, and mobile health devices. Fosun has merged with an American biotech company Ambrx Inc., with three investors. An analyst with Capital Securities Corp., is of the opinion that Fosun plans to acquire oversees distributors over the next five years and expand its capabilities.

Fosun’s investment is in small molecule chemical and biosimilar drugs and the company aims to build an economical yet sizable research and development center. This would help China enter the global market for drug innovation. The company makes scientists shareholders of the R&D subsidiaries to inspire them to make drugs and to control cost factors. 

The pharmaceutical company has a branch company named Shanghai Henlius Biotech Co., hat works on biotech related drugs. This company is focused on development of biosimilars to treat autoimmune diseases and cancer.