CVC buys into Chinese pharmacy chain
CVC Capital Partners has made an investment of undisclosed size in Xi’an Yikang Pharmacy, China’s eighth-largest pharmacy chain.
Established in 2001, the company has more than 1,600 outlets nationwide, with a high concentration in northwest China. It has also built up a 10 million-strong online member base through a proprietary mobile app and WeChat mini-programs. The app provides health information and can be used to order prescription medicines and over-the-counter health and personal care products.
Yikang will use the new capital to ramp up investment in digitalization and build a smart retail pharmacy brand. In addition, CVC will provide assistance in diversifying medicines offered, improving the efficiency of distribution and sales, and scaling the business.
The private equity firm noted in a statement that China’s retail pharmacy industry is seeing both consolidation and business model innovation. The structure of the industry will be shaped by professional competence, diversified services, online channels, and digitalization.
Yikang is expected to benefit from government efforts to broaden prescription drug services and ease the burden on public hospitals.
“With the deepening of China’s healthcare reforms, rapidly ageing population and the increasing importance people attach to health and quality of life, CVC is optimistic about the prospects of China’s retail pharmacy market. Especially the boost in business efficiency brought about by digitalization and economies of scale arising from sector consolidation,” said Kevin Xu, a senior managing director at CVC.
The private equity firm is currently deploying its fifth pan-Asian fund, which closed last year at $4.5 billion. It typically invests in companies with enterprise values of $250 million to $1.5 billion.
Other notable pharmacy deals include FountainVest Partners and Primavera Capital Group paying $557 million for a significant minority stake in Laobaixing in 2019, facilitating an exit for EQT. For the most part, though, investors have gravitated towards online-first business models, exemplified by Miaoshou Doctor, MediTrust Health, Dingdang Health, and JD Health.
All four either operate their own offline pharmacies or have partnerships with local operators. These coexist with telemedicine services.
More on Greater China
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.