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Pfizer-Hisun JV Launched

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Pfizer (PFE) and Chinese pharmaceutical company, Zhejiang Hisun Pharmaceuticals, recently announced the launch of their joint venture (:JV) - Hisun-Pfizer Pharmaceuticals Co., Ltd. The joint venture, Hisun-Pfizer, will focus on the development, manufacture and commercialization of off-patent products in China and across the world.

Pfizer and Hisun had signed a memorandum of understanding (MOU) in June 2011 for the establishment of the joint venture. Hisun-Pfizer, which has a registered capital of $250 million, has a total investment of $295 million. While Hisun has a 51% share in the joint venture, Pfizer holds the balance 49%.

The joint venture will focus on providing more patients with high-quality and low-cost medicines in the branded generics segment. Off-patent medicines, including branded generics, are one of the fastest growing segments in the global pharma market, especially emerging markets. China represents significant commercial potential with branded generics representing 70% of the domestic pharma market.

The joint venture will focus on cardiovascular disease, infectious disease, oncology, mental health, and other therapeutic areas. While Hisun will contribute a strong product portfolio, wide market reach and expertise in the production and commercialization of branded generics, Pfizer will provide the joint venture with its research and development, marketing and manufacturing capabilities.

We currently have a Neutral recommendation on Pfizer, which carries a Zacks #3 Rank (short-term ‘Hold’ rating). While the setting up of the joint venture will help transform Hisun into a branded generics company from an an active pharmaceutical ingredients manufacturer, Pfizer should be able to strengthen its presence in China.

We note that several pharma companies have been working on expanding their presence in emerging markets especially China. Some deals include AstraZeneca’s (AZN) joint venture with WuXi (WX) for the development and commercialization of MEDI5117 in China, Merck KGaA’s (MKGAY) acquisition of Beijing Skywing Technology Co., Ltd. and Novartis’ (NVS) acquisition of a majority stake in Chinese vaccines company Zhejiang Tianyuan Bio-Pharmaceutical Co., Ltd.

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