China’s Kangmei Pharma to invest in $728M healthcare industry fund with partners

China’s Kangmei Pharma will help establish a $728M healthcare industry fund.

China’s Kangmei Pharma, a company focused on oral traditional Chinese medicine, intends to pour 1 billion Chinese yuan ($146 million) into the establishment of a healthcare industry fund.

According to the company’s filing (PDF, Chinese) to the Shanghai Stock Exchange, in addition to the 1 billion Chinese yuan that Kangmei will invest, a funds management company will put up 1 million yuan, while another state-owned trust company will fill in what’s left for the fund to total 5 billion Chinese yuan ($728 million).

The fund will be directed exclusively toward the healthcare industry, including hospital M&As and new medical facilities. As the filing shows, the fund will run for seven years, and can be renewed once for two years upon agreement by all partners.

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The Chinese pharma has seen significant growth in its core traditional Chinese medicine businesses, which range from crop plantation and drug manufacturing to programs with hospitals and pharmacies. 

Kangmei, for example, rolled out a digital pharmacy program in 2015 in collaboration with several Chinese hospitals famous for their traditional Chinese medicine capabilities. The program uploads prescriptions from physicians at those hospitals to Kangmei, which then coordinates the decoction of the herbs and final delivery to patients. Patients can also initiate the process from a mobile app.

Such programs have paid off. The company posted sales revenue of 18.1 billion yuan ($2.64 billion) in 2015, a 13% year-over-year growth, and a 2.8 billion yuan profit that was up 21%. That momentum has continued in the previous fiscal year, with revenue in the first three quarters in 2016 growing 22%.

This is not the first time Kangmei has invested in the industry. At the end of 2015, the company set up a traditional Chinese medicine talent fund, pledging that for every new member in the field selected to sit on the Chinese Academy of Engineering or the Chinese Academy of Sciences, it would award that person 1 million yuan in cash.

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