AstraZeneca Wants To Shoot For China’s Stars

AstraZeneca Wants To Shoot For China’s Stars
Reda Farran, CFA

6 months ago2 mins

What’s going on here?

AstraZeneca, the UK’s pharmaceutical titan, is reportedly shooting for the stars with a new Chinese gambit.

What does this mean?

According to the Financial Times, AstraZeneca is drafting some big new plans: spinning off its Chinese business and listing it separately on the Hong Kong or Shanghai stock exchange. The game plan here is to keep control of the business – which brought in 13% of AstraZeneca’s total revenue last year – while making it a neat-and-tidy separate entity. And that could be a pretty wily move: first, it offers AstraZeneca a separate treasure chest of capital to fund growth in China – a populous, aging, and increasingly lucrative market for pharmaceutical companies. Second, a Chinese listing could help AstraZeneca win faster approvals for drugs developed in the country. And last but not least, it could provide AstraZeneca’s China business with a handy shield from the world’s increasingly messy geopolitical squalls too.

China pipeline

Why should I care?

The bigger picture: Pivots and politics.

That third reason is arguably the biggest one – and it hints at a possible sea change for multinationals, as friction between China and the West mounts. And word on the street is that every multinational with a footprint in China is contemplating a similar move. That’s not just boardroom gossip: venture capital powerhouse Sequoia Capital, for one, recently announced that it’s going to split in three, separating its Chinese and US operations as tensions grow between the world’s two biggest economies.

AstraZeneca stock
Source: Google Finance

For markets: Tokyo drift.

Japanese stocks might just find themselves in the spotlight as this drama unfolds. See, California-based wealth management firm Bailar thinks that the Land of the Rising Sun could bask in the glow of a trend they’ve dubbed “friend-shoring”. In other words, as tensions rise with China, European and US companies just might shift their trade reliance to Japan, turf that’s currently free of any nasty geopolitical storms.



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