Singapore-listed AsiaPharm has bought a 100 percent stake in a Nanjing-based pharmaceutical group, Solid Success. It is paying almost S$69 million in cash and new shares. The acquisition is part of AsiaPharm's plan to expand its oncology business segment.

AsiaPharm already specializes in drugs for orthopedics, neurology, gastroenterology, and herpetology. But the drug-specialty firm is continuing its expansion into the oncology sector. AsiaPharm says it will pay S$69 million for Solid Success - S$65 million in cash and 5 million new shares at 60 cents each.

Solid Success is a holding company for two firms, Nanjing Sike Pharmaceutical and Nanjing Kanghai Pharmaceutical. They specialize in the manufacture and development of oncology drugs from natural ingredients. Both companies posted a combined net profit of nearly S$11million in the financial year 2005.

Liu Dianbo, Executive Chairman, ASIApharm Group, said, "In 2005, the global pharmaceutical industry only had a growth rate of about 5.5 percent but the oncology sector had a growth rate of 18.1 percent. In China and the rest of the world, cancer will be the leading cause of death over the next few years. Therefore, pharmaceutical products for cancer will be the one sector which has the highest growth. So, many pharmaceutical companies and R&D centres in the world have invested large amounts of money to conduct R&D in this sector."

According to China's Ministry of Health, almost 1.7 million new cancer cases are reported in the country annually. The Chinese government is imposing stricter regulations on the country's growing pharmaceutical industry.  But AsiaPharm is unfazed.

Mr Liu said, "Now that the R&D cycle has lengthened, cost has also increased. Product value will also increase. Thus companies like AsiaPharm which have established R&D capabilities and product range, in the future, will be able to roll out more patented products, thus giving us a competitive advantage."

AsiaPharm currently has a reach of about 2,000 hospitals in China and this acquisition will help expand that. Sike and Kanghai employ a combined sales force of 200 specialists and have a reach of more than 100 major distributors and 1,000 hospitals. The company says the new oncology-related products from its acquisition will improve the Group's performance significantly in 2007.

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