$5 Billion Giant UCB Faces Severe Setback Due to Drug Issues, Losing Over 75% of Market Share, May Accelerate Divestment from China!

On August 26, multinational pharmaceutical company UCB announced an asset divestiture, deciding to transfer its mature neurological products in mainland China (including Keppra, Vimpat, and Briviact) as well as allergy products (Zyrtec and UZED) to two investment firms: CBC Group and Abu Dhabi sovereign wealth fund Mubadala. The transaction amounts to $680 million (approximately 4.84 billion RMB).

In 2023, the total sales of the above five products in the Chinese market reached 131 million euros (about 1.04 billion yuan). In addition, the transaction also includes the company's production site in Zhuhai.

In 2023, the total sales of the above five products in the Chinese market reached 131 million euros (about 1.04 billion yuan). In addition, the transaction also includes the company's production site in Zhuhai.

After the divestment, there is only one major product remaining in the Chinese market, which is the treatment of rheumatoid arthritis, Pecellizumab injection (Ximenjia). Nevertheless, Yushbi's intention is to transform rather than withdraw from the market, and in its press release, the company made it clear that it will continue to deepen innovation and expand cooperation in China.

It is worth noting that this is the second time this month that multinational pharmaceutical companies have dealt with assets in China. At the end of last year, Sandoz also announced the sale of the entire stake in its China business to Aspen, a multinational pharmaceutical company based in South Africa.

The company was founded in 1928, headquartered in Brussels, Belgium, and entered the Chinese market in 1996. The company has made remarkable achievements in the field of anti-epileptic drugs. In 2020, its product levetiracetam concentrated solution for injection (Kapuran) was included in the third batch of collectible drug varieties. In the initial participation in the collection, Youshi showed the sincerity of price reduction, with a 75% reduction, the price of 85 yuan per bottle ranked third in the bid.

However, in August 2022, due to the discovery that some batches of the product's labeled expiration date was inconsistent with the registered approved expiration date, the National Medical Products Administration issued a notice to suspend the import, sale and use of the concentrated solution of Yushpivetiracetam for injection. Subsequently, the qualification of the winning bid of the product was cancelled, and other selected enterprises replaced the supply. It was not until August 19, 2023 that the State Medical Products Administration issued an announcement to resume the sale of the product in China. This series of events may have intensified the company's determination to spin off the deal.

In the asset divestiture action of multinational pharmaceutical companies, Mubadala company as one of the main buyers, known as "China's richest Middle East partner." In 2024, Mubadala's investment activities in China are extremely frequent. Its investment team has led investments of $600 million in high-profile companies such as JD Industrial and Hasten Biopharmaceutical in China. In addition, together with Sequoia Capital, CBC Group and Trans-Atlantic Investments, they jointly led the financing of cross-border e-commerce SHEIN, with a total of $2 billion. According to public data, Middle Eastern funds are particularly interested in cutting-edge technology, biomedicine and emerging consumer sectors. At present, the Middle East sovereign wealth funds are accelerating their direct investment in the Chinese market, effectively filling the gap in the domestic investment market's demand for long-term large funds.

The industry generally believes that CBC Group is the real driving force behind this. In July 2024, Fu Wei, founder and CEO of CBC Group, attracted wide attention when she took over as chairman of Nasdaq-listed Tianjing Biology. CBC Group's figure not only appeared in Tianjing Biological, but also appeared behind a number of well-known innovative pharmaceutical companies such as Xinda Biological, Genting Xinyao, Berry and Kang.

The transaction is subject to certain closing conditions, including necessary antitrust reviews and other customary conditions, and is expected to close in the fourth quarter of 2024. The transaction is not expected to have an impact on Usabi's global financial outlook for 2024.

In April 2022, Alexandre Moreau, a Frenchman of one-quarter Chinese descent, moved to China to assume the position of President of Youbyx China, marking the first time Youbyx has created this position in the Chinese market. In November 2022, Yushbi debuted at the China International Import Expo, showcasing a number of important drugs under development, a move that demonstrates the company's determination to increase its efforts in innovative drug research and development. In March 2023, UBI China adjusted its organizational structure: UBI China was integrated as a whole, and all business lines reported to Mr. Alexandre Moreau to strengthen direct communication with the top decision makers in China and the world, and no longer used the organizational structure divided by global business lines. At the end of October of the same year, the listing application of the new drug Rosellixizumab injection independently developed by Yushbi was accepted by the China Drug Evaluation Center (CDE) for the treatment of generalized myasthenia gravis (gMG). Previously, in June, the product was approved by the U.S. Food and Drug Administration (FDA) for the treatment of adult patients with acetylcholine receptor (AChR) or anti-muscular-specific tyrosine kinase (MuSK) antibody positive gMG. In July 2023, USbi's self-developed biologics, Bicizumab, was approved by China's National Medical Products Administration (NMPA) for the treatment of adult patients with active ankylosing spondylitis (AS, radio-positive axial spinal arthritis) who have not responded to conventional treatment or are not tolerated. This is the world's first and only approved two-target biologics for interleukin-17A /F (IL-17A/F).

Unlike the mature drug market, the innovative drug market competes for speed and concentration. As many pharmaceutical companies transform and increase their investment in innovative products, many innovation areas are rapidly becoming competitive, and it remains to be seen whether UBI can stand out in this competition.

In recent years, driven by policies, multinational pharmaceutical companies have bet on innovative products, and many companies have adopted various ways to deal with mature products. For example, Pfizer China granted its vaccine Pei 'er 13 to Shanghai Pharmaceutical Park; GSK licenses exclusive distribution of its herpes vaccine to ZIFo; Sanofi and Shangyao reach strategic cooperation... The corresponding product sales team also frequently reported layoffs.

The 2023 financial report shows that Gran, a drug used to treat neutropenia, has been affected by the volume purchase, and its revenue has declined.

Usabi Global is also under pressure to grow. In 2023, UStime's revenue was $5.182 billion, down 4.87% from the previous year. Net profit has declined for three consecutive years since 2021. According to the Top 50 list of global pharmaceutical companies in 2024 released by the US Pharmaceutical Manager magazine (PharmExec), in 2023, the ratio slipped to 34th place from 31st place in the previous year.

China is the second largest market in the world, choosing to exit or sell the business is inevitably a decision after weighing the advantages and disadvantages of many aspects. It's not about right or wrong. It's a business choice.