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Growing network with dose from IPO
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Sinopharm Group Co, China's largest drug distributor, said yesterday it expects to raise as much as HK$8.7 billion (US$1.1 billion) in an initial public offering in Hong Kong to expand its network and import medicines.

Sinopharm plans to sell 546 million shares, equivalent to 25 percent of its enlarged share capital, at a maximum HK$16 each, according to a document filed to Hong Kong Stock Exchange. State-owned China National Pharmaceutical Group Corp will retain its 51 percent in Sinopharm after the IPO, according to document.

Subscriptions to the IPO will run through next Tuesday and shares will start trading on September 23. "The listing in Hong Kong could consolidate the company's No. 1 position in the industry," Capital Securities Corp wrote in a research note. "Meanwhile, the government's support measures will accelerate the industry reshuffle and benefit larger operators."

China has announced it would invest 850 billion yuan (US$124 billion) in the healthcare industry before 2011 to enable more of its people greater access to drugs and services.

"We believe that we are well-positioned to benefit from the healthcare reform plan and pharmaceutical industry trends, and (the IPO) adds to our leading market position in China," Sinopharm said in the document.

Forty-five percent of the proceeds from the IPO will be used to build up regional distribution centers or take over smaller distributors. About 25 percent will be used to import drugs. Sinopharm, founded in 1998, said it also plans to establish logistics facilities in Shanghai and Tianjin with 10 percent of the proceeds.

The firm's net income will reach at least 840 million yuan this year, a jump of 43 percent from a year earlier. In 2008, its net earnings soared 53.8 percent to 586 million yuan while revenue rose 23 percent to 38.2 billion yuan, the firm said.

The Beijing-based company has attracted nine investors to buy US$195 million worth of shares, including Bank of China Group Investment Corp and Martin Currie Investment Management Ltd.

(Shanghai Daily September 11, 2009)

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