Viva Biotech (Shanghai) Ltd, a subsidiary of Viva Biotech Holdings, has announced plans to acquire an 80 per cent stake in the contract development manufacturing organisation (CDMO) Zhejiang Langhua Pharmaceutical for 2.56 billion yuan ($368 million).
Viva will pay cash to acquire the stake from Langhua’s shareholders that include Ninhua Group, Nuobai Investments, and Zhining Investments, the company said in a filing to the Stock Exchange of Hong Kong on August 9.
Viva has already paid a deposit of 20 million yuan ($2.9 million), and the rest will be settled through two installments. It will also provide an irrevocable bank guarantee of 640 million yuan ($87 million) to Langhua, and will get four board seats in the company.
The deal is pending approval from the stock exchange and Viva’s shareholders.
Upon the completion of the deal, Langhua will serve as Vivia’s CDMO platform, providing contract-based drug manufacturing and development services for healthcare companies. Viva, founded in 2008, develops preclinical stage innovative drug services for global biotechnology and pharmaceutical giants and claims to have served 438 clients globally as of December 2019.
The acquisition will help Viva expand its CDMO business, and maximise competitive capacity of offering one-stop drug development service, according to the filing. “This will help customers improve the efficiency of their R&D of new drugs, effectively control manufacturing costs, expand its service offerings and enhance market competitiveness,” said Viva in the announcement.
Langhua, located in East China’s Zhejiang province, is engaged in the manufacture of small-molecule active pharmaceutical ingredients (APIs), intermediates, and CDMO. As of 2019, its assets under management stood at 316 million yuan ($45 million).
Viva closed two rounds of funding from Shenzhen Zhongjince Investment and an undisclosed investor in 2010 and 2018, respectively.
According to Frost & Sullivan, the global contract manufacturing market is expected to grow to $43.2 billion by 2022, from $23.8 billion in 2017. In the same period, the Chinese market is estimated to grow at a compounded annual growth rate of 20.4 per cent and touch $4.9 billion.