24812 - Fosun Pharma

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Summary of Proposed Investment

Project Number

24812

Company Name

Shanghai Fosun Pharmaceutical (Group) Co., Ltd.

Date SPI Disclosed

Sep 22, 2006

Country

China

Industry

Health, Education and Life Sciences

Projected Board Date

Oct 23, 2006

Status

Completed

Sector

Pharmaceuticals and Medicine

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

B - Limited

Previous Events

Approved : Nov 8, 2006
Signed : Nov 8, 2006
Invested : Nov 16, 2006

Project Description

Shanghai Fosun Pharmaceuticals Company Limited (Fosun Pharma or the Company) is a leading Chinese pharmaceutical company focused on research, development, production and distribution of pharmaceutical products in China. The Company currently develops, manufactures and sells over 190 formulations and 20 different types of Active Pharmaceutical Ingredients. Its products have leading market positions in the treatment of gynecological and hepatic diseases, diabetes, and malaria. All of the Company’s production facilities are Chinese GMP (Good Manufacturing Practice) compliant. Fosun Pharma also possesses one of the largest wholesale and retail distribution networks for pharmaceutical products in China. The Company holds a 49% stake in Sinopharm Medicine Holding (Sinopharm), one of the largest distributors/retailers in China. China National Pharmaceutical Group (CNPG), a state owned enterprise, owns the remaining 51% in Sinopharm. Together Fosun Pharma and Sinopharm maintain a network of more than 1,500 pharmacies in major cities in China, including Beijing, Shanghai and Shenzhen, and rank as one of top three players in each city.

The purpose of the project is to support the operating activities of Fosun Pharma over the next 12-18 months. Fosun Pharma’s total financial requirements in this period are currently estimated at about $100 million.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

Development Impact

The project’s major development impacts are as follows:

- Support China’s medical sector reforms:

Though some privately owned, specialty drug stores have now emerged in several cities with the ability to sell medicines at a comparatively cheap price, they constitute a small portion of the overall market. Fosun Pharma’s expansion in pharmaceutical wholesale and retail business through the association with Sinopharm is likely to increase efficiency in the distribution of pharmaceutical products, help cut medical expenditures in China, and support the Chinese government’s decision to further reform the pharmaceutical industry.

- Support development of anti-malaria drugs:

In 2004, Guilin Pharma (a subsidiary of Fosun Pharma) was the first pharmaceutical company to introduce artesunate to treat malaria on a worldwide basis and owns a patent on its synthesis. Guilin Pharma has the exclusive right to manufacture artesunate in China and export artesunate-related products to 37 countries. The project will support the manufacturing on a larger scale of anti-malaria medicines.

- Support of Stock Reform Plan:

IFC’s support of the ongoing stock reform plan in the Company supports the overall Chinese stock market reform initiative intended to remove differences between traded and non-traded shares.

- Support improvement of Fosun Pharma’s environment and social systems:

IFC will provide assistance to Fosun Pharma for its ongoing initiatives to build capacity and standardize environmental, health and safety management systems throughout its group companies.

IFC is expected to play an important role in the project by supporting a company in pharmaceutical distribution, in which private sector participation in China to date has been small. On the pharmaceutical manufacturing side, though there are several players in China, only a small number of them comply with GMP guidelines. IFC’s support to Fosun Pharma would be a strong indicator of support to other companies about the need to follow stringent quality requirements. IFC’s financing will also help one of the largest private groups in China to access longer term financing.

This is a Category B project according to IFC’s Environmental and Social Review Procedure. Environmental, social, health and safety issues which may be associated with this type of project, and which were reviewed during appraisal, included:

- minimization of organic solvent usage;
- minimization of animal experiments;
- wastewater treatment and discharge;
- air emissions from processes and utilities;
- hazardous material management;
- solid/hazardous waste management;
- labor issues;
- occupational health and safety programs;
- sources of raw materials; and
- community safety/ relationship/ development.

The appraisal included meetings with senior managers at the Shanghai Fosun Pharmaceutical (Group) Co Ltd.’s, corporate headquarters, as well as meetings and site visits at the following Fosun Pharma subsidiaries:

- Chongqing YaoYou Pharmaceutical Co Ltd;
- Chongqing Carelife Pharmaceutical Co Ltd;
- Guilin Pharmaceutical Co Ltd; and
- Guangxi HuaHong Pharmaceutical Co Ltd.

Contacts

For Inquiries About the Project, Contact

Ye Wei Yong, Deputy Director, Finance Department
Shanghai Fosun Pharmaceutical (Group) Co. Ltd
No. 2 East Fuxing Road
Shanghai 200010
Telephone: +86-21-6332-3318
Fax: +86-21-6332-5032
E-mail: yewy@fosun.com.cn
Website: http://www.fosun.com.cn

Environmental Documents will be available at the Company’s headquarters in Shanghai and on the Company’s website (please see above for details).

For Inquiries and Comments About IFC, Contact

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IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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