PHARMA GIANT: Shanghai Pharmaceutical (Group) Co. Ltd., after acquiring two other pharmaceutical companies in Shanghai, becomes the biggest listed pharmaceutical company in China (NAN SHAN)

China's biggest listed pharmaceutical company took its first breath when shares of Shanghai Pharmaceutical (Group) Co. Ltd. (Shanghai Pharma) resumed normal transactions on March 9, 2010.

By the time the closing bell rang at the end of the stock market trading day, the market value of Shanghai Pharma had reached 32.28 billion yuan ($4.73 billion).

Yunnan Baiyao (Group) Co. Ltd. was the second largest that day with a market value of 31.27 billion yuan ($4.58 billion), while Jiangsu Hengrui Medicine Co. Ltd. ranked third with 29.58 billion yuan ($4.33 billion).

When trading in the company's shares was paused on June 18, 2009, Shanghai Pharma had a market value of 14.5 billion yuan ($2.12 billion). During its trading hiatus, Shanghai Pharma was able to double its market value through company reorganization efforts and by acquiring another two listed pharmaceutical companies--Shanghai Industrial Pharmaceutical Investment Co. Ltd. (SIPH) and Shanghai Zhongxi Pharmaceutical Co. Ltd. (Zhongxi).

Local acquisitions

Listed on March 24, 1994, on the Shanghai Stock Exchange, Shanghai Pharma is a state-owned company under the authority of the State-Owned Assets Supervision and Administration Commission of the Shanghai Municiple Government. With 30,000 employees and 3.16 billion yuan ($462.66 million) in registered capital, it is now the country's largest pharmaceutical company with the most complete industrial chains and marketing networks.

Shanghai Pharma, which ranks among China's top 500 companies, is also the pharmaceutical global partner of the World Expo 2010 in Shanghai.

The Shanghai United Textile Industrial Co. Ltd., predecessor of SIPH, is the first joint venture in Shanghai and also the first joint venture listed on the Shanghai Stock Exchange. In June 1997, the Shanghai Industrial Investment (Holdings) Co. Ltd. became the controlling shareholder of the Shanghai United Textile Industrial Co. Ltd., which was renamed Shanghai Industrial Pharmaceutical Investment Co. Ltd. on November 2, 2006. By 2008, SIPH's net assets had surpassed 2 billion yuan ($292.83 million).

Zhongxi, a company with a history of more than 100 years, became listed on March 11, 1994. In June 2009, its total assets surpassed 700 million yuan ($102.49 million).

Shanghai Pharma, SIPH and Zhongxi were all individually listed. According to information from Shanghai Pharma, the reorganization of the three pharmaceutical companies was aimed at improving the quality of their assets and strengthening their competitiveness in the whole industry.

SIPH and Zhongxi share transactions were stopped on February 12, 2010, and Shanghai Pharma has taken over all their assets, debts, business, personnel and relevant rights and obligations.

By acquiring SIPH and Zhongxi, as well as the unlisted assets of Shanghai Pharma and SIPH, the reorganized Shanghai Pharma has become the only listed pharmaceutical company of the Shanghai State-Owned Assets Supervision and Administration Commission.

A research report released by Guosen Securities Co. Ltd. states that the reorganization would promote growth in the new Shanghai Pharma, whose revenue is expected to reach 1.13 billion yuan ($165.45 million) and 1.43 billion yuan ($209.37 million) in 2010 and 2011, with earnings per share rising to 0.57 yuan ($0.08) and 0.72 yuan ($0.11), respectively. In 2009, the earnings per share of Shanghai Pharma stood at 0.13 yuan ($0.02).