Bristol Myers Squibb Divests Controlling Stake in Historic China Joint Venture

Bristol Myers Squibb (BMS) has announced the sale of its controlling stake in Sino-American Shanghai Squibb Pharmaceuticals (SASS), marking a significant shift in the company's long-standing presence in China. This move comes more than four decades after BMS established the first U.S. pharmaceutical joint venture in the country.

Deal Details and Strategic Implications

BMS has agreed to sell a 60% ownership stake in SASS, primarily affecting the manufacturing of older medicines and consumer products in China. The transaction, while substantial, does not impact BMS's core innovative drugs business in the country.

An internal email circulating online suggests that Hillhouse Capital, a major Asian investment firm with a track record in biopharma investments, may be the buyer. However, BMS has not officially confirmed the identity of the purchasing entity.

A BMS spokesperson stated, "As part of our long-term strategy, we continue to align our resources to support evolving business needs across our global network. The planned sale of our interest in the SASS joint venture reflects the continued implementation of our manufacturing strategy—one that balances internal capabilities with strong external partnerships to enhance regional focus and ensure long-term supply reliability for patients in China and around the world."

Historical Context and Joint Venture Operations

SASS was established in 1982 as a partnership between BMS and China's Sinopharm Foreign Trade, during a period when foreign corporations were required to enter the Chinese market through joint ventures with state-owned local companies.

The joint venture operates a 58,000-square-meter manufacturing facility in Shanghai, producing a range of pharmaceutical products including antibiotics, cardiovascular drugs, analgesics, and metabolic medicines. The sale includes both the joint venture itself and products exclusively manufactured for the mainland China market, such as:

• 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 Comparisons

BMS's divestment aligns with a broader industry trend of Western pharmaceutical companies restructuring their operations in China. In a similar move last year, Belgium's UCB sold its mature neurology and allergy business in mainland China to CBC Group and Mubadala for $680 million. This included the divestment of several established drugs and a manufacturing facility in Zhuhai.

These strategic shifts often aim to streamline operations and focus resources on innovative therapeutics, allowing companies to adapt to the evolving Chinese pharmaceutical market while maintaining their presence in key growth areas.