Sanofi-Aventis Continues Expansion of China Presence with Another JV

Sanofi-Aventis (NYSE: SNY) announced a new consumer healthcare joint venture with Minsheng Pharmaceutical that will produce vitamins and mineral supplements. Minsheng already manufactures China’s best selling product in the sector: 21-Super Vita multivitamin-multimineral tablets. Although financial details were not disclosed, Sanofi-Aventis did say it would own a majority stake in the JV.

The initiative gives continued evidence that multinational pharmas are turning away from the blockbuster patent-protected drugs on which they depended for the last 20 years. Instead, they are putting more emphasis on lower-technology products and emerging markets.

Recently, Sanofi-Aventis announced it would spend $1.9 billion to buy Chattem, a US company that makes consumer healthcare products, including toiletries and vitamin/mineral supplements. Sanofi-Aventis did not address the question of whether the new JV would supply products to its new Chattem subsidiary. Sanofi-Aventis originally discussed the JV as a means of entering into China’s OTC healthcare market.

Sanofi-Aventis and Minsheng have a long-standing relationship and announced another JV in May of 2009. Sanofi invested 270 million RMB ($40 million) in the JV, which is building a new pharmaceutical packaging plant in Hangzhou Binjiang Hi-Tech Industry Development Zone. The JV expects to complete the plant in 2012. It will have the capacity to produce 160 million packages.

Although Minsheng has a powerful position in OTC vitamin and mineral supplements, it is facing increasing competition from western competition. This includes Amway's Nutrilite, Pfizer's (NYSE: PFE) Centrum and Bristol-Myers Squibb's (NYSE: BMY) Theragran Gold. Amway is though to have spent $90 million in China to promote its Nutrilite product during 2008.

In recent years, Sanofi-Aventis has been building its presence in China, even though it did not follow many other big pharmas by setting up its own R&D center there. The company has expanded its Beijing diabetes drug manufacturing plant and built a flu vaccine facility in Shenzhen, in addition to the Hangzhou JV, which will house the previously announced packaging plant and now the vitamin/mineral supplement facility as well.

Disclosure: none.