DaVita Collaborates with 3SBio
In order to offer dialysis services in northeastern China, DaVita Inc. (DVA) announced a joint venture with 3SBio Inc. (SSRX), a China-based biotechnology company. The companies will jointly invest about $20 million in China, in the ratio of 7:3 (DaVita:3SBio). Additionally, the two companies have also inked a supply deal for anemia management drugs in China.
3SBio is a leading developer of biopharmaceutical products in China. The company also manufactures and markets biopharmaceuticals and conducts research in various medical fields such as nephrology, oncology, supportive cancer care and infectious diseases.
The agreement is a significant step in DaVita’s international expansion strategy as the Chinese market provides ample scope for growth. Moreover, the company will gain from 3SBio’s widespread marketing network in China.
DaVita regularly acquires companies both domestically as well as internationally in order to expand its business. However, recently the company has been more inclined toward international expansion.
In January 2012, DaVita announced the purchase of a majority stake in NephroLife, an India-based kidney care company. Previously, in November 2011, the company announced the acquisition of ExtraCorp AG by its wholly-owned subsidiary DV Care GmbH. Alongside, DaVita operates a dialysis center in Singapore and has also signed an agreement to develop and operate various clinics in Malaysia.
DaVita is mainly focusing its international expansion strategy on Europe and Asia and has been looking for suitable acquisition and partnership opportunities. We expect more meaningful mergers and acquisitions, given the company’s strong international reputation, which provides competitive advantage in terms of global acquisitions.
The Zacks Consensus Estimate for DaVita’s first-quarter earnings is currently pegged at $1.45 per share, up about 51% year over year. Five of the 13 analysts covering the stock revised their estimates upward in the last 30 days, while five downward revisions were witnessed. For 2012, earnings are expected to be about $6.24 per share, climbing nearly 21% over 2011.
DaVita currently caries a Zacks #3 Rank, implying a short-term Hold rating.
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