Hutchmed to Divest Stake in Joint Venture for $608 Million
China’s Hutchmed has agreed to divest its 45% equity interest in Shanghai Hutchison Pharmaceuticals Ltd. (SHPL) for approximately $608 million (4,478 million renminbi) in cash, to China-based private equity firm GP Health Service Capital and Shanghai Pharmaceuticals.
SHPL, a 50:50 joint venture established between Hutchmed and Shanghai Pharmaceuticals in 2001, primarily manufactures its own-brand prescription medicines in China, predominantly for cardiovascular diseases. According to Hutchmed, its consolidated net income in 2023 from SHPL was $47.4 million.
Hutchmed said that these transactions would allow it to focus on its core business of discovering, developing and commercializing novel therapies for the treatment of cancers and immunological diseases, including advancing its next-generation antibody-drug conjugate (ADC) platform.
By combining antibodies with targeted therapeutics instead of cytotoxins, these antibody-targeted therapy conjugates (ATTCs) offer dual mechanisms for addressing a target. Hutchmed plans to move the first of these ATTCs into clinical trials in the second half of 2025.
“This transaction to divest most of our holding in SHPL is another example of Hutchmed delivering on the strategy outlined in 2022, accelerating our path to profitability and focusing on core operations. SHPL is a well-established business, having delivered over $370 million in dividends to Hutchmed throughout the years, and we are confident that it continues to have promising future growth prospects,” said Dan Eldar, chairman and non-executive director of Hutchmed.
Prior to the transactions, Hutchmed and Shanghai Pharmaceuticals each hold a 50% stake in SHPL.
Under the agreements, GP Health Service Capital has agreed to acquire a 35% stake in SHPL from Hutchmed for approximately $473 million and Shanghai Pharma has agreed to acquire a 10% stake for approximately $135 million and will hold a total 60% stake in SHPL following the transactions.
Out of its 35%, GP Health Service Capital retains the right to designate a third-party investment fund to acquire up to a 10% equity interest in SHPL. Hutchmed will retain a 5% equity interest in SHPL after the transactions.
