GlaxoSmithKline ($GSK) is on the verge of a buyout that would give it an important foothold in China. Sources are telling various newspapers that GSK is getting close to a deal for Nanjing MeiRui Pharma, probably valued in the "low hundreds of millions of dollars." Not a big deal, to be sure, but it's yet another step for GSK into the fast-growing Chinese market.
As the Wall Street Journal notes, Nanjing MeiRui has a strong presence in the urology business in China, which could give GSK's prostate drug Avodart a boost. GSK could leverage the Chinese company's relationships with urologists to promote the drug. The Nanjing MeiRui deal would follow last year's joint-venture with Shenzhen Neptunus Interlong Bio-Technique, in which GSK and the Chinese company agreed to make and sell flu vaccines in that country.
China is fast becoming the most-targeted drug market in the world. Already the third-largest in terms of sales, the country is expected to vault into second place by 2015. Discouraged by slow growth in mature Western markets, Big Pharma has been scrambling to grow its presence in China to gain a share of that rapid expansion, fueled in part by a government health reform initiative.