As geopolitical tensions rise in the region, AstraZeneca is looking at potentially spinning off its China unit into its own independent business.
Pictured: Chinese flags in a row/iStock
Amid growing geopolitical tensions, AstraZeneca reportedly plans to spin out its China business and have it separately listed in Hong Kong, the Financial Times revealed Sunday, citing three people familiar with the matter.
AstraZeneca has been discussing the spin-off for months, though the move might not ultimately happen, according to the unnamed sources. One source also noted that the British-based multinational is considering listing the new company in Shanghai.
The news comes a month after AstraZeneca’s China president Wang Lei announced during an event that the company would seek to be a company that “loves the Communist Party,” as reported by Reuters.
Having a local listing in Hong Kong or Shanghai could help AstraZeneca establish a separate capital source as well as avoid complications in case China clamps down on foreign companies, reassuring investors that they would be insulated from business risks that might come from operating in China, the Financial Times reported.
The move could also put AstraZeneca in China’s good graces and help the company win faster regulatory approvals.
Establishing and maintaining a solid presence in China is especially important for AstraZeneca, which in 2022 earned nearly $5.8 billion from the Chinese market, accounting for 13% of its total revenues that year.
In June, the pharma company announced it was pumping more investments into its China business and opening a production and supply facility focused on rare disease research and development. AstraZeneca is also expanding its Chinese operations by constructing a manufacturing facility for chronic obstructive pulmonary disease inhalers.
In 2023, AstraZeneca expects its total revenues from China to grow by a low single-digit percentage.
AstraZeneca isn’t the only biopharma player that has looked eastward to grow its business. In July 2022, Silicon Valley’s Sequoia Capital secured nearly $9 billion in investments for its Beijing-based unit Sequoia China. Earlier this month, the venture capital firm split off this China unit, now named HongShan, as an independent business.
Sanofi is also leaning into the Chinese market. In August 2022, the French drugmaker inked a strategic partnership with Innovent Biologics, seeking to develop and commercialize medicines for patients with hard-to-treat cancer in China.
Sanofi is offering two of its clinical-stage assets—the antibody-drug conjugate SAR408701 (tusamitamab ravtansine) and the engineered IL-2 SAR444245—which will be trialed in combination with Innovent’s checkpoint inhibitor Tyvyt (sintilimab), Sanofi pumped $300 million into Innovent’s share as part of the deal.
Tristan Manalac is an independent science writer based in metro Manila, Philippines. He can be reached at tristan@tristanmanalac.com or tristan.manalac@biospace.com.
