43968 - RSE COVID Jointown

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Summary of Investment Information

Project Number

43968

Company Name

JOINTOWN PHARMACEUTICAL GROUP CO., LTD.

Date SPI Disclosed

Jul 10, 2020

Country

China

Region

East Asia and the Pacific

Projected Board Date

May 29, 2020

Environmental Category

B - Limited

Status

Completed

Last Updated Date

Sep 7, 2023

Department

Regional Industry - MAS Asia & Pac

Industry

Health, Education and Life Sciences

Previous Events

Approved : May 29, 2020
Signed : May 29, 2020
Invested : Oct 30, 2020

Sector

other

Project Description

International Finance Corporation (“IFC”) is considering an investment in Jointown Pharmaceutical Group Co., Ltd. (the “Company”) to provide the Company with long-term funding to support the substantial increase in its working capital to procure pharmaceutical products and meet the surge in demand from health institutions for its distribution services. IFC’s proposed investment will be a senior straight loan of RMB350 million.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	49.66
Equity

Development Impact

Project Outcome Employees - Most of Jointown's warehouses and distribution centers are mainly located in frontier regions. While layoffs are being anticipated in a number of sectors in China in view of the worsening global economic conditions, Jointown will continue to hire more staff given the growing demand for health-related services, along with the coming on stream of its various new or upgraded facilities. Contribution to Market Creation Resilience - Health sector, specifically pharmaceutical distribution sub-sector, is the most needed sector during the COVID-19 pandemic. Jointown and peer companies play an important role in ensuring reliable and timely delivery services of essential supplies to hospitals and clinics, thereby supporting the healthcare system to be able to continue its operations.

On financial additionality, Jointown expressed the difficulty of obtaining loans with a tenor of more than three years from commercial banks. The proposed Second Loan from IFC can provide the much-needed liquidity to Jointown, supporting its working capital needs to procure products and meeting the surge in demand for its delivery services during the COVID-19 outbreak. On non-financial additionality, IFC is expected to share with Jointown (i) our successful experience of rapid crisis response efforts, (ii) the ability to support real sector clients on addressing liquidity constraints or working capital requirements, (iii) the ability to support real sector clients who provide critical goods, equipment and supplies, and (iv) the support to retain jobs and employment in countries of operation.

E&S Category Rationale / Risks and Mitigation

This project has been categorized as B according to IFC’s Policy on E&S Sustainability because a limited number of specific impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines. Key E&S risks and issues related to this investment include: the company’s capacity to assess and manage its social and EHS/OHS performance; assurance of reasonable and safe labor and working conditions for company employees including drivers; management of waste emissions and discharges at manufacturing facilities; measures taken to monitor and achieve potential efficiencies on energy consumption; emergency preparedness and response procedures; transportation safety and land acquisition for the new facilities to be developed under the project.

E&S Performance and COVID-19 related Impacts: This is a repeat investment, with IFC committing its first loan investment to the company in 2019 (IFC Project No. 41947. The E&S Review Summary of that project can be accessed at the following IFC web link: https://disclosures.ifc.org/#/projectDetail/ESRS/41947). The company’s business of pharmaceutical product distribution and warehousing in China represents moderate E&S risks and impacts and the E&S Action Plan of the existing investment (Project no. 41947) has been materially completed by the client. The new loan will not materially change the scope of the original investment nor introduce new material E&S risks and impacts.

Scope of IFC’s Appraisal: IFC’s E&S due diligence for this follow-on investment, comprised correspondences with company representatives to understand the potential impact of COVID-19 pandemic on the company’s operations and on its workforce. IFC also reviewed information and documents shared by the company including the annual monitoring report submitted by the company and related documents under IFC’s existing investment.

Response to COVID-19 Pandemic: The company has confirmed that no retrenchment of workers or no-payleave arrangements are expected due to COVID-19. As a distributor of pharmaceutical products, the company expects to potentially increase its workforce in order to meet increased demand for pharmaceutical products as a response to COVID-19.

Contacts

For Inquiries About the Project, Contact

Jointown Pharmaceutical Group Co., Ltd
Ms. Yanling Cai
Supervisor
+86 10 60210837
Cyl_2009@163.com
Development Zone, Beijing, China
www.jztey.com

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Local Access of Project Documentation

No. 9 Guangping Avenue, Daxing Economic Development Zone, Beijing, China

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. Its purpose is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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