Walgreens Pumps $418 Million Into China's Top Pharmacy Chain
(Bloomberg) -- Walgreens Boots Alliance Inc. took a 40 percent stake in the leading retail-pharmacy network in China, boosting its investment in the country where an expanding middle-class consumer segment offers growth opportunities.
The U.S. drugstore chain will invest $418 million in Sinopharm Holding Guoda Drugstores Co., a subsidiary of China National Accord Medicines Corp. that has operated retail pharmacies across China since 2004, Walgreens said in a statement Wednesday. The Deerfield, Illinois-based company, which has been present in the Asian country for about a decade, said it's “well positioned” to provide expertise to Guoda and support its growth.
The deal is being forged as demand for medicines in the world's second-biggest pharmaceutical market surges with an aging population which faces rising rates of chronic diseases such as cancer and diabetes. A growing middle-class segment is also increasingly able to afford more expensive drugs including innovative treatments.
“The emerging middle class is a fantastic favorable wind for the industry,” Stefano Pessina, chief executive officer of Walgreens, said in an interview with Bloomberg TV on Thursday, speaking from a conference in Guangzhou. “The market is changing, the separation between prescriptions and delivery created opportunities.”
Shares of Walgreens rose 1.2 percent in New York on Wednesday, paring the decline this year to 14 percent. Sinopharm Group Co., the majority shareholder of Guoda's owner China National Accord, rose as much as 4.5 percent in Hong Kong on Thursday before paring gains to trade little changed at the midday break.
--With assistance from Rachel Chang and Li Hui
To contact the reporter on this story: Natasha Rausch in New York at nrausch@bloomberg.net.
To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, K. Oanh Ha at oha3@bloomberg.net, Subramaniam Sharma, Jeff Sutherland
©2017 Bloomberg L.P.
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