German packaging firm Gerresheimer has ventured further into China, buying a majority interest in Chinese pharmaceutical packager Shuangfeng Group and gaining entry into the Chinese market for tubular glass packaging for the first time.
Shuangfeng employs 670 people in two locations and makes 800m pharma vials a year for the domestic Chinese market. Gerresheimer is now building an additional production plant in another location so that production can be ramped up even further.
Sales of around €10m are expected this year and the purchase gives Gerresheimer over 60 per cent of the shares in each location-related company, subject to approval by the Chinese authorities, which is expected in the next few weeks.
"The acquisition dovetails perfectly with our policy of targeted global purchases in the pharma sector," Dr Axel Herberg, Gerresheimer CEO said in a written statement.
Gerresheimer plans to use the purchase to gain a stronghold in the Chinese pharma packaging market, predicted to grow 12.5 per cent in the next three years, according to a new market research report by The Freedonia Group.
As China's economy begins to blossom, its drug manufacturing capabilities are rapidly expanding and this, coupled with an extensive government program designed to upgrade the quality and reputation of its medicines, is making China a hot spot for growth in the drug packaging market.
"We are rapidly expanding our pharma business in the high-growth Asian region and with the Shuangfeng Group we will quickly achieve a market-leadership position in China."
Gerresheimer said that having a presence in China will provide it with a good base for targeted transfers of products to the region and/or the ability to service new low-price market segments.
"This will result in a further substantial improvement in the group's world market position and cost situation," said Herberg.
The company made its first foray into China only six months ago with the purchase of a 45.7 per cent share in the Chinese specialist for moulded glass, Beijing Wheaton, now called Beijing Gerresheimer.