China's Leadman Biochemistry to Buy Controlling Stake in Simcere for USD239.5 Million; Shares Surge 16%

(Yicai) Nov. 14 -- Shares of Leadman Biochemistry jumped nearly 16 percent after the in vitro biochemical reagent maker announced plans to spend over CNY1.7 billion (USD239.5 million) to acquire a controlling stake in Simcere Sanroad Biological Products, a move that would give it rapid entry into the in vivo reagent market.After its initial surge this morning, Leadman’s share price [SHE: 300289] closed up only 1 percent at CNY9.09 (USD1.40), weighed down by a sharp decline in major market indexes as Shenzhen’s tech stock-heavy ChiNext Index fell 2.8 percent today.Leadman released a draft report yesterday outlining a major asset purchase involving the acquisition of a 70 percent stake in Beijing-based Simcere from Baijiahui Investment Management and its affiliates, to be paid in cash.Simcere mainly engages in the research, development, production, and sales of both in vitro (outside the human body) and in vivo diagnostic reagents and vaccines. Its core product, TB-PPD (tuberculin purified protein derivative), is one of the most widely used reagents to test for tuberculosis in China and is the exclusive product of its kind in the domestic market. The company is also one of the few enterprises in China holding a production license for human vaccines, according to the report.Leadman said acquiring a controlling stake will significantly shorten its research and development and market channel development cycle for the new business sectors it is set to enter, accelerate its business transformation, open new growth opportunities in innovative biological products such as vaccine development, and improve operating and financial performance.The sellers jointly pledged that the target company’s audited consolidated net profit -- excluding non-recurring gains and losses -- will be no less than CNY166 million (USD23.4 million) this year and no less than CNY560 million in total from 2025 to 2027.The outlook indicates that Leadman’s financial performance is likely to improve following a setback caused by falling product prices. From January to September, the company’s revenue dropped 10 percent year on year to CNY252 million, and it posted a net loss of over CNY6.3 million (USD885,730), compared with a profit of CNY1.1 million a year earlier. The decline was largely driven by the inclusion of in-vitro diagnostic reagents in the national centralized procurement program, which sharply cut prices in exchange for market share.Editor: Emmi Laine