Grifols, a Spanish multinational pharmaceutical and chemical manufacturer which specializes in producing blood plasma-related products, is in talks with Shanghai RAAS in establishing a partnership with Grifols' U.S.-based subsidiary.
The discussion may involve exchanging the subsidiary, Grifols Diagnostic Solutions Inc., for fresh rounds of Shanghai RAAS shares, Reuters reported. Grifols Diagnostic Solutions Inc. is valued at about $5 billion. If the partnership goes according to plan, Grifols would oversee the business that would come out of the collaboration.
There is currently a booming demand for blood products in China which the local industry could not meet. The country is in need of 420 tons of blood products yearly, Bloomberg reported citing data from the Xinhua News Agency. Sixty-percent of these blood requirements were already supplied by international pharmaceutical companies but the country needs more due to its growing population.
Of particularly in high demand is the human serum albumin, a blood plasma that could treat liver diseases. Supplies are limited locally as Chinese regulators are particularly strict about the industry even through blood donation, Bloomberg noted.
With this, China has been regarded as a strategic market for international foreign blood products, according to Yang Song, a pharmaceutical industry analyst at Guotai Junan Securities Co. in Beijing. The Asian superpower would also rise in segments such as blood products resource input and business footprint, the analyst added.
Under the deal with Shanghai RAAS, Grifols would integrate its unit from the United States which is currently the largest exporter of blood products. In 2017 alone, the US had 627 collection centers, a 23 percent increase from what the country had in 2016. Altogether, blood centers in the United States collected nearly 42 million liters of plasma in 2017, a 44 percent growth from 2013.
The proposed arrangement would serve as a win-win situation for the two companies involved. Shanghai RAAS said the partnership would give it access to Grifols testing technology. It would also promote the company across the international market, thereby increasing its market share on a worldwide level.
Shanghai RAAS had previously eyed Tiancheng Germany for $627 million, Caixin Global reported. The acquisition would have given Shanghai RAAS access to the blood products company, the Biotest AG. The supposed acquisition was abandoned, however, as it faced complicated U.S. regulations.
Grifols, meanwhile, announced a similar deal in May with Chinese blood products manufacturer Boya Bio-Pharmaceutical Group Corporation. The deal involved an investment of about $57 million and opening plasma collection centers in the country.
