Glaxo close to buying Chinese drug firm: report

Drug maker GlaxoSmithKline PLC is close to signing a deal to acquire Nanjing MeiRui Pharma Co, a Chinese drug company that would boost its exposure to the fast-growing market, says a media report.

Attributing to people familiar with the matter, The Wall Street Journal reported that GlaxoSmithKline, which has a significant presence in India, is nearing a deal to buy Nanjing MeiRui Pharma Co.

The report said that the deal size couldn't be learnt. An agreement could be announced this month.

Although small, the deal highlights a large imperative for Glaxo and the other big, global pharmaceutical companies. Drug companies are facing flat to negative sales trends in the US and Europe, forcing them to look to emerging markets for growth.

Glaxo has either acquired or struck marketing partnerships in recent years with a string of companies in countries from South Africa to India to China. In the last two-year the company made 15 or 16 acquisitions.

According to the publication, MeiRui's relations with Chinese urologists could help Glaxo build awareness for Avodart, which treats benign prostatic hyperplasia, the ailment commonly known as an enlarged prostate.

Besides, the deal would also fit with Glaxo's stated goal of directing a portion of its prodigious cash generation toward acquisitions. The company has about $10 billion of cash on its balance sheet, the report added.

MeiRui is owned by Pagoda Pharma Group, a British Virgin Islands-based holding company that established the Chinese health-care company in 1996. On its website, MeiRui describes itself as "one of the leading companies in the Chinese urology market and the market for allergy diagnostics."