Actavis has reached an agreement to divest its stake in a Chinese joint venture as it follows through in plans to reduce its presence in what it regards as a “risky” market.
The Ireland-based company said it had reached an agreement to sell its interest in Actavis (Foshan) Pharmaceuticals – a specialist in the manufacture of antibiotics, gastrointestinal and cardiovascular drugs – to Zhejiang Chiral Medicine Chemicals for an undisclosed sum.
The new comes hard on the heels of comments by Actavis chief executive Paul Bisaro told the Bloomberg news agency at the JPMorgan healthcare conference that the Chinese market has become a difficult place to do business.
“If we’re going to allocate capital, we’re going to do so where we can get the most amount of return for the least amount of risk,” he said, noting that the company had already sold off one Chinese business.
Actavis has not been drawn into the corruption investigations that have rocked GlaxoSmithKline and other top-tier companies in recent months, but it has suggested that one of the reasons for its aversion to siting operations in China is the unpredictable regulatory environment.
Actavis has a lot on its hands at the moment, as it is still redrawing the boundaries of its business following its $5bn acquisition of Warner-Chilcott last October, and a few days ago announced the sale of active pharmaceutical ingredient (API) operations in seven Western European countries to Indian firm Aurobindo.
At the time Actavis’ president Sigurdur Oli Olafsson said the move would allow the firm to prioritise investment in emerging markets in Central and Eastern Europe and Southeast Asia. In China the company will continue its commercial operations via “collaboration with its preferred business partners”.
Commenting on the latest divestment, he said: “Our operations in Foshan were limited in scope and we believe that their value will be better capitalised on by Chiral, which will add manufacturing and marketing capabilities allowing them to expand their portfolio and strengthen their position in the Chinese market.”