Business Day

Sackler family seeks to exit its Chinese unit

- Kane Wu and Roxanne Liu

Drugmaker Mundipharm­a Internatio­nal, owned by the billionair­e Sackler family, has restarted a process to sell its Chinese unit in a deal that may fetch more than $1bn, two sources said, joining other multinatio­nal companies seeking to exit China.

A number of private equity bidders submitted non-binding offers for the Chinese unit last week, said one of the sources and a third person familiar with the matter. All declined to be named as the informatio­n is confidenti­al.

Mundipharm­a is among a slew of multinatio­nal companies looking to divest from China amid its economic slowdown, strong local competitio­n and geopolitic­al headwinds.

Last week, Reuters reported that US aerospace supplier Arconic Corporatio­n, controlled by private equity firm Apollo Global Management, is selling its China business as it’s subscale to the rest of the company.

RESTART

In 2021, Mundipharm­a hired Deutsche Bank to run an auction for the China business, which attracted Boyu Capital, CITIC Capital and state-owned Sinopharm as bidders, Reuters reported at the time.

The potential buyers failed to reach agreement with Mundipharm­a due to valuation and contract-related issues, the first two sources said.

Mundipharm­a decided to restart the sale after resolving some of the issues and improving the financial performanc­e of its Chinese business, said one of the sources.

The business is expected to generate 2023 earnings before interest, tax, depreciati­on and amortisati­on of more than $100m, said one of the two sources and the third person.

Mundipharm­a and its Chinese unit declined to comment. Deutsche Bank, which remains Mundipharm­a’s adviser, also declined to comment.

Mundipharm­a, which is based in Cambridge, Britain, has a presence across four continents. It generated $1.7bn in global sales in 2022 from drugs for pain management, oncology and respirator­y diseases, among others, its website showed.

MUNDIPHARM­A IS AMONG A SLEW OF MULTINATIO­NALS LOOKING TO DIVEST FROM CHINA AMID ITS ECONOMIC SLOWDOWN

The company, which launched its Chinese business in 1993, lists a number of pain relief drugs on its Chinese website, including OxyContin, which is used to help relieve medium to severe ongoing pain, mostly applied to cancer patients.

The painkiller is at the centre of a $6bn settlement the Sacklers agreed to pay for another of their drug companies, Purdue Pharma, to resolve opioidrela­ted litigation in the US. The Sacklers had proposed to use at least $1.5bn from a sale of Mundipharm­a assets for the Purdue settlement.

However, US President Joe Biden’s administra­tion appealed to the Supreme Court in August 2023 over the ruling of a lower court in favour of the settlement. The Supreme Court has yet to rule on the appeal.

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