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Shanghai Pharma Completes Acquisition of Cardinal Health’s China Business

February [2], 2018, Shanghai/Hong Kong – Shanghai Pharmaceuticals Holding Co., Ltd. ("Shanghai Pharma", SSE: 601607, HKEX: 2607), a leading pharmaceutical manufacturer and healthcare services provider in China, today announced that it has received anti-trust approval from the Ministry of Commerce of China for its all-cash offer to acquire Cardinal Health (L) Co., Ltd. ("Cardinal Malaysia") through its wholly-owned subsidiary Shanghai Pharma Century Global Ltd. (“Century Global”), and the completion of the transaction with Century Global owning 100% of Cardinal Health Malaysia, which controls Cardinal Health’s China business ("Cardinal Health China").

Mr. Zhou Jun, Chairman of Shanghai Pharma said, "We are pleased to announce that the deal has now closed, marking another milestone in Shanghai Pharma's continued development. As China’s healthcare reform continues to deepen and we see an increased demand for healthcare services, this acquisition will enable Shanghai Pharma to provide more efficient services and a greater diversity of drugs to hospitals and patients. We are committed to transforming Shanghai Pharma into a fully integrated pharmaceutical group that is globally competitive and provides the best in modern healthcare services."

Together, Shanghai Pharma and Cardinal Health will explore business opportunities in the global pharmaceutical and medical device industry, and leverage their respective strengths to develop innovative healthcare solutions for patients and healthcare professionals. 

Mr. Zhou Jun added, "After signing the Stock Purchase Agreement, Shanghai Pharma has been in discussions with Cardinal Health China on plans that include market positioning, development direction and business integration. These plans will take into consideration our group's growth strategy as well as the full interests of Cardinal Health China's existing suppliers and clients. We hope to build broad, sustainable, and mutually beneficial relationships with a greater number of business partners. "

Cardinal China’s core team – led by Ms. Elsie Lim – will be joining Shanghai Pharma, further enhancing the company’s ability to better serve clients and improve market share.

Post-deal synergies are expected to significantly improve Shanghai Pharma's strength and competitiveness in drug distribution, and further solidify its leading position in specialised business segments and innovation, helping the group to achieve its strategic goals faster. This acquisition will enable Shanghai Pharma to build a national distribution network covering 24 provinces and regions, increasing its hospital coverage and penetration in major cities. By broadening its range of drugs and cementing its competitiveness in East China, Shanghai Pharma

will establish a leading position as the distributor with the greatest range of imported drugs in the country. Technology driven solutions and development in end-to-end supply chain management will also help Shanghai Pharma to expand its scope and expertise in both medical device and specialty drug distribution. 

In response to the Chinese government's continued drive to separate pharmacies from hospitals, Shanghai Pharma’s drug retailing business will accelerate its efforts to build a leading national network for prescription drugs both online and offline. Furthermore, Shanghai Pharma will continue to strengthen its capabilities in data and logistics management to meet the growing demand for fast access to quality services.

Given that Shanghai Pharma and Cardinal Health China have established China’s No. 1 and No. 2 DTP networks respectively, the integration of the two companies will further expand Shanghai Pharma’s “Yiyao Pharmacy” branded servicing network for new drugs and specialty drugs. Shanghai Pharmaceutical Cloud Health, owner of the Yiyao Pharmacy DTP network, has been leading Shanghai Pharma’s efforts in building an e-commerce platform for prescription drugs. The platform is currently preparing for a new round of financing targeting strategic investors to help diversify its application. 

Shanghai Pharma signed a Stock Purchase Agreement with a wholly-owned subsidiary of Cardinal Health, Inc. (NYSE: CAH, "Cardinal Health") on November 15, 2017. The adjusted purchase price of the Transaction on the Closing Date is US$576 million.

 

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