Synmosa Acquires Over 90% Majority Stake in Seven Star Pharmaceutical

Date:2016.11.28

In the wake of a collaboration between Synmosa (TPEx:4114) and InnoPharmax Inc. (TPEx:4172) in March 2016 to execute a joint acquisition of a 70% stake in Seven Star Pharmaceutical Co., Ltd. which ushered in a new era for Synmosa's expansion into raw material production, Synmosa today announced that it had completed the second phase of the acquisition, resulting in the Group now holding over a 90% stake in Seven Star Pharma. The deal is expected to accelerate Synmosa's planned upgrades to its plant production specifications and ambitions to meet international regulatory requirements for pharmaceutical production, allowing Synmosa to further expand into global markets.

After being brought into the fold with the Synmosa Group, and to comply with the increasingly stringent international regulatory environment for the pharmaceutical industry, Seven Star Pharma is dedicating large amounts of resources to upgrading its equipment and facilities as well as making improvements to manufacturing processes in order to enhance the plant's production quality and specifications. After undergoing a spate of strategic restructuring lasting nearly six months, Seven Star Pharma was able to participate in this year's CPhI — one of the world's leading pharmaceutical ingredients shows — during which time the company attracted widespread interest and collaboration inquiries from customers on a range of new drugs currently in the R&D process. In 2016, owing to the massive demand in the international pharmaceutical market for raw materials, Synmosa's decision to move forward with its acquisition of Seven Star Pharma by acquiring a larger controlling interest in the company will increase the company's ability to exercise ownership over operational and strategic decision-making processes relating to the factory's production, thereby emboldening the Synmosa Group's efforts to make further inroads in the global market.

According to Synmosa, Seven Star Pharma is presently aiming to accomplish three major short-term, mid-term, and long-term developmental objectives. In the short-term, Seven Star will focus on improving production processes and upgrades to equipment and facilities for existing products so as to improve production efficiency and reduce operating costs, which will in turn also enable greater compliance with international regulatory requirements, allowing the company to continue providing products to markets in the US and Europe. In the mid-term, Seven Star will carry out R&D and production of raw pharmaceutical materials used in various specialty pharmaceuticals, such as radiocontrast agents developed by InnoPharmax Inc. and other leading product lines of the Synmosa Group. Finally, in terms of the company's long-term objectives, Seven Star will aim to continue developing products with marketable potential, including a diverse array of raw materials which also encompass traditional Chinese medicine products.

The latest joint acquisition by Synmosa and InnoPharmax consisted of a total investment of more than NT$114 million each (about US$3.75 million per company), resulting in additional acquisitions of 11.7% and 11.698% stakes in Seven Star Pharmaceutical Co., Ltd., respectively, at the original share price of NT$95. When accounting for the first phase of acquisition which amounted to a 70% stake, the present acquisition yields a total shareholder ratio of 65.43% for Synmosa and 27.96% for InnoPharmax, respectively. According to an official statement from the company, the planned acquisition of Seven Star Pharmaceutical not only provides vertical integration benefits, but also shores up access to raw materials for the Synmosa Group's major lines of pharmaceutical products. In addition, because the latest acquisition will be recognized as a bargain purchase gain for InnoPharmax and significantly increase its profitability for the current calendar year, it is anticipated that the Synmosa Group's overall profitability will in turn receive a substantial boost.