Foreign pharma companies are setting their sights on China
Pharmaceutical TechnologyDec 10, 2018
Anglo-Swedish pharmaceutical company AstraZeneca announced Tuesday it's buying Chinese cancer therapy company Gracell Biotechnologies for $2 per share, or $1.2B, in a cash deal that will give shareholders a non-tradable contingent value right of $0.30 per ordinary share if certain regulatory requirements are met.
The combined $1.2B deal includes $1B upfront as well as the cash, cash equivalents, and short-term investments on Gracell’s balance sheet, which amounted to $234.1M as of the end of the third quarter.
While the US will certainly remain the world's leading market for pharmaceutical investments in the short term, China has embraced exponential growth in foreign investment for years and is still growing. China, with its growing wealth and aging population, has seen an explosion of age-related illnesses as well as infectious diseases usually seen in poorer countries. Due to this, companies like AstraZeneca and Pfizer will surely look to tap into the government's ambitious healthcare industry expansion project.
Big Pharma companies, particularly those based in the US, are using loopholes to charge high prices to the people of their respective countries while also avoiding domestic taxes. This means that, as American taxpayers foot the bill for research and development, the company then manufactures its medicine abroad and claims its profits in other countries, thus leaving its home country without any of the tax revenue. These companies need to be heavily taxed if they want to offshore manufacturing while retaining high prices.