German pharmaceutical giant Bayer announced on March 3 that it has signed an agreement to buy privately-held Chinese traditional herbal medicine (TCM) maker Dihon Pharmaceutical Group, reports the website of Shanghai’s Xinmin Evening News.
While the two companies refused to reveal further details of the deal, a former senior executive at Dihon stated that the acquisition could be worth up to 3.6 billion yuan (US$587.3 million).
Kunming-based drug maker Dihon makes a range of popular over-the-counter (OTC) and TCM products, including dandruff and scalp disorder treatment Kang Wang and an antifungal cream Pi Kang Wang. It also produces TCM Dan E Fu Kang, which is used to treat various conditions that affect women.
“We aim to strengthen our life sciences portfolio with strategic bolt-on acquisitions globally,” said Olivier Brandicourt, chief executive of Bayer HealthCare. “Adding the strong OTC brands from Dihon to our portfolio will significantly advance our business in China and position us well for future growth.”
“Equally important is the foothold we will gain in traditional Chinese medicine, which makes up for about half of the OTC segment in China and is a well-accepted and sought after line of natural science-based alternative therapies for consumers looking for trusted solutions for their healthcare needs,” Brandicourt added.
Guo Zhenyu, chairman and CEO of Dihon, said “We believe that Bayer, with its marketing, sales, distribution and research expertise is well positioned to take our success to the next level.”
“This acquisition will further strengthen the Yunnan pharmaceutical industry and offer the potential to further expand TCM to other parts of the world,” Guo said.
The deal is expected to be completed during the second half of this year, a Bayer spokesman revealed.
Yang Weiqiang, an industry expert, said that international pharmaceutical companies had been reluctant to invest in TCM production because it remained a mystery to them. However, a number of European pharmaceutical firms have found that some of the components in TCM products can be more effective than western chemical medicines, and they are now more willing to invest in the sector.
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