Bristol Myers Squibb Divests Controlling Stake in Historic US-China Joint Venture

Bristol Myers Squibb (BMS) has announced the sale of its controlling stake in Sino-American Shanghai Squibb Pharmaceuticals (SASS), marking the end of an era for the first U.S. pharmaceutical joint venture in China. The move, which involves the divestment of a 60% ownership stake, is part of BMS's strategic realignment of its global manufacturing network and resources.

Deal Details and Strategic Implications

The transaction, while primarily focused on older medicines and consumer products, does not affect BMS's core innovative drugs business in China. According to a BMS spokesperson, the sale reflects the company's evolving manufacturing strategy, which aims to balance internal capabilities with external partnerships to enhance regional focus and ensure long-term supply reliability for patients in China and globally.

While the financial terms of the agreement remain undisclosed, industry sources suggest that Hillhouse Capital, a prominent Asian investment firm with a track record of backing major biopharma companies, may be the buyer. Hillhouse's potential involvement underscores the continued interest of private equity in the pharmaceutical sector, particularly in the Asian market.

Historical Context and Future Operations

SASS was established in 1982 as a partnership between BMS and China's Sinopharm Foreign Trade, representing a pioneering move in U.S.-China pharmaceutical cooperation. The joint venture operates a substantial 58,000-square-meter manufacturing facility in Shanghai, producing a range of antibiotics, cardiovascular drugs, analgesics, and metabolic medicines.

Despite the ownership change, BMS has assured that the sale is not expected to disrupt facility operations or product supply in China. The transaction encompasses both the joint venture itself and products manufactured exclusively for the mainland China market, including:

• Baraclude (hepatitis antiviral)
• Bufferin (buffered aspirin)
• Theragran (vitamin deficiency supplement)
• Monopril (for high blood pressure and heart failure)
• Velosef (antibiotic for bacterial infections)

Industry Trends and Comparative Moves

BMS's divestment aligns with a broader trend among Western pharmaceutical companies reassessing their portfolios in China. As the Chinese market evolves and becomes more open to foreign entities, legacy joint ventures often find themselves managing a mix of older drug brands, off-patent medicines, and consumer products separate from innovative therapeutics businesses.

This move echoes similar actions by other international pharmaceutical firms. For instance, Belgium's UCB recently sold its mature neurology and allergy business in mainland China to CBC Group and Mubadala for $680 million. Such strategic divestitures allow companies to refocus their resources on potential innovative medicine launches and core therapeutic areas.

As the pharmaceutical landscape continues to shift, particularly in emerging markets like China, industry observers will be watching closely to see how other multinational corporations adapt their strategies to balance global manufacturing capabilities with local market dynamics.