Retailing, Franchising, and Consumerism Business Intelligence in China

Foreign Firms Invest In China's Booming Healthcare Sector

Medipal Holdings Corporation and Mitsubishi Corporation have each purchased 20% of shares in major Chinese pharmaceutical wholesaler Sinopharm Group Beijing Tianxingpuxin Bio-med Sinopharm Holding Company Ltd. in Beijing.

Terms and price of the share purchase have not been disclosed.

As part of efforts to gain a foothold in China's booming healthcare business, Medipal and MC signed a comprehensive strategic alliance in October 2009 with Sinopharm Group Company Ltd. (Sinopharm Group), China's largest pharmaceutical distributor and wholesaler. The alliance began with Medipal and Mitsubishi Corporation acquiring shares in Sinopharm Group's affiliate, Sinopharm Group Beijing Huahong Company Ltd.

The acquisition of additional shares, this time in Tianxingpuxin, goes towards strengthening that partnership. Through this investment, the Sinopharm Group, Medipal and Mitsubishi Corporation partnership will develop a top class health care business in Beijing, one of China's biggest health care markets, and lay a strong foundation for taking advantage of reforms occurring in China's rapidly advancing health care system.

Over the last five years, the Chinese pharmaceutical industry has achieved an average growth of 25% per annum. However, a complex inefficient distribution network of more than 10,000 second and third-tier pharmaceutical distributors has led to increases in the cost of medical treatment. This in a context in which the challenge of reducing medical costs is more and more pressing given China's aging population and low birthrate.

Sinopharm's expertise and well-established foundation in the Chinese healthcare market combined with the know-how gained by Medipal and Mitsubishi Corporation in streamlining distribution and sales and the delivery of efficient hospital solutions in the Japanese market creates a strong China-Japan collaborative presence, which is well-positioned to help streamline the distribution of medical supplies, materials and equipment, and improve supply processing and distribution services in hospitals, ultimately contributing to the reduction of medical costs in China.

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