Baxter International Inc. and Guangzhou Baiyunshan Pharmaceutical Co. Ltd. announced plans to establish a joint venture to produce and sell parenteral nutrition products in China.
Under the terms of a framework agreement, subsidiaries of the two companies will form a 50/50 joint venture during the first half of 2007. The companies expect to invest between (US) $65 and $70 million over the life of the joint venture. The agreement is subject to government review and approval.
To establish the new business, Guangzhou Baiyunshan Pharmaceutical will contribute its existing parenteral nutrition business and assets located in Guangzhou, China, through one of its subsidiaries, Baiyunshan Qiaoguang Pharmaceutical Co., Ltd. Baxter will help fund the venture and strengthen its product line, and manufacturing, clinical, and marketing expertise.
The new business will manufacture and sell current Qiaoguang parenteral nutrition products and gradually expand its portfolio to include Baxter's products.
"By combining our expertise in the domestic parenteral nutrition market with Baxter's technology and product pipeline, customers will receive a wider selection of quality parenteral nutrition products and experience a higher level of customer support," said Xie Bin, chairman of Guangzhou Baiyunshan Pharmaceutical Co. Ltd.
"The joint venture will allow us to improve access to care by expanding the availability of Baxter's innovative parenteral nutritional products to patients, physicians and pharmacists in China," said John J. Greisch, Baxter's president of International Operations. "The agreement also reflects the importance of China to Baxter's continuing geographic expansion and growth."
The joint venture follows Baxter's previously announced (US)$60 million capacity expansion of its existing manufacturing facilities in China. In 2006, the company expects overall sales in China of approximately (US)$130 million. With the formation of the joint venture and its planned capacity expansion, Baxter expects sales in China to exceed (US)$300 million by 2010.
Parenteral nutrition products are delivered intravenously and provide essential dietary components that enable healing and normal body function. The products are used primarily by hospitals in clinical settings such as surgical, critical care, oncology and intensive care wards.
Established in 1992, Guangzhou Baiyunshan Pharmaceutical Co., Ltd. develops, manufactures and markets both Chinese and western pharmaceuticals through its affiliated companies and five facilities in China.