After much hype, Pfizer finally pulls away from Chinese JV

Pfizer bowed out of a joint venture with China's Hisun Pharma, which sells branded generic drugs in China.

Talk about Pfizer abandoning its shares in a Chinese joint venture with Zhejiang Hisun Pharma has been circling around for at least a year, and now the talk has become reality. Pfizer has officially sold all of its 49% stake to an investment fund.

Sapphire I Holdings, indirectly controlled by the private equity firm Hillhouse Capital, will step into the JV, which was founded by the two companies in 2012 with registered capital of $250 million to develop, manufacture and sell branded generic drugs in China and beyond.

The deal gave Hisun, an API manufacturer founded in 1956, an opportunity at the finished drug market. Hisun-Pfizer’s portfolio includes branded generics covering cardiovascular disease, infectious disease, oncology, mental health and other therapeutic areas.

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But reports emerged in 2016 that Pfizer, which now has its own plants in China, was considering a divorce, speculation that Hisun later admitted in a December 2016 disclosure at the request of the Shanghai Stock Exchange. At that time, the JV was suffering as its pillar product, Tazocin, an injectable containing piperacillin and tazobactam, experienced supply issues caused by a manufacturing upgrade-related suspension at Pfizer’s facility in Italy.

According to Hisun’s previous disclosure (Chinese, PDF), Tazocin supply reached a peak of over 5.4 million doses in 2014, and were almost completely sold out, returning 1 billion Chinese yuan in sales. Then supply sharply dropped to less than 180,000 doses in 2015 and 260,000 in 2016. Hisun was hit again in November 2015 when the U.S. FDA issued an import alert over its API factory. As a consequence, Hisun’s profits that year crashed by more than 90%, to just 13.6 million Chinese yuan from about 308 million Chinese yuan in 2014.

Hisun has said Tazocin supply from Pfizer’s Italian plant would resume to normal in June.

Pfizer said in a statement that it will provide technical, manufacturing and regulatory support services and “will continue to support a technology transfer process to ensure that the products that had previously been licensed to Hisun-Pfizer Pharmaceuticals by Pfizer, will in the future, be manufactured locally in China.” Such technology transfer, as specified in a release (Chinese, PDF) from Hisun, will be completed in five years.

The breakup followed a similar partway in 2015, when Merck & Co. bowed out of a Chinese joint venture formed in 2012 with Simcere, which also focused on producing branded generic drugs.

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