Shares of HUTCHMED (China) Limited (HK:0013), backed by Hong Kong billionaire Li Ka-Shing, gained nearly 4% today after it agreed to sell 45% of its stake in its joint venture, Shanghai Hutchison Pharmaceuticals Limited (SHPL). The company sold the stake to PE firm GP Health Service Capital Co. and its joint venture partner Shanghai Pharmaceuticals Holding Co. (HK:2607) for $608 million in cash.
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HUTCHMED is a biopharmaceutical company focused on creating and selling targeted treatments worldwide. The company is majorly owned by the Hong Kong-listed conglomerate CK Hutchison (0001.HK), in which Shing holds a 28.1% stake.
HUTCHMED Divests Non-Core Asset to Sharpen Cancer Focus
According to its statement, the divestment is a part of HUTCHMED’s strategic plan, unveiled in late 2022, which aims to navigate challenges in the global pharmaceutical landscape. Additionally, it will enable the company to focus on its core mission of developing innovative therapies for cancer and immunological diseases. As part of this plan, HUTCHMED is also cutting funding for certain international clinical programs and exploring partnerships to advance these assets.
The SHPL joint venture was formed in 2001 between HUTCHMED and Shanghai Pharmaceuticals, with the primary goal of manufacturing own-brand prescription medicines in China, targeting cardiovascular diseases. As part of this divestment, GP Health Capital will purchase a 35% stake in the joint venture from HUTCHMED for $473 million. Meanwhile, Shanghai Pharma will invest $135 million to boost its share by 10%, raising its total holding to 60%.
HUTCHMED expects a gain of $477 million from the deal, which will leave it with a 5% stake in the venture. The transactions are expected to be completed by March 2025, subject to regulatory and shareholder approvals.
HUTCHMED’s shares lost almost 17% in the last year.
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