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Shares of Leadman Biochemistry surged nearly 16% following an announcement that the biochemical reagent manufacturer plans to invest over 1.7 billion Chinese yuan (approximately $239.5 million) to acquire a controlling stake in Simcere Sanroad Biological Products. This strategic move is aimed at granting quick access to the in vivo reagent market.
After an initial jump in early trading, Leadman’s stock closed up just 1% at 9.09 CNY (about $1.40), pressured by a significant decline in major market indices, with Shenzhen’s tech-heavy ChiNext Index falling 2.8% for the day.
The company released a draft plan yesterday detailing a substantial asset purchase, involving the acquisition of a 70% interest in Beijing-based Simcere from Baijiahui Investment Management and its affiliates, with payment to be made in cash.
Simcere specializes in the research, development, production, and marketing of both in vitro (outside the human body) and in vivo diagnostic reagents and vaccines. Its flagship product, TB-PPD (tuberculin purified protein derivative), is among the most widely used reagents for tuberculosis testing in China and holds a monopoly in the domestic market. Additionally, Simcere is one of the few Chinese companies authorized to produce human vaccines, according to reports.
Leadman emphasized that obtaining a controlling interest would significantly speed up its research and development efforts, streamline market channel expansion, and facilitate its transformation into new business areas. This move is also expected to unlock growth in innovative biological products such as vaccines and enhance the company’s operational and financial performance.
The sellers have jointly guaranteed that the target company’s audited consolidated net profit—excluding non-recurring gains and losses—will be no less than 166 million CNY (around $23.4 million) this year, and will reach at least 560 million CNY (about $79 million) from 2025 through 2027.
Looking ahead, it is expected that Leadman’s financial results will improve as it recovers from previous setbacks caused by declining product prices. Between January and September, the company’s revenue fell 10% year-over-year to 252 million CNY (roughly $35 million), with a net loss exceeding 6.3 million CNY (approximately $885,730), compared to a profit of 1.1 million CNY (about $155,200) during the same period last year. The decline was mainly due to the inclusion of in-vitro diagnostic reagents in the national centralized procurement program, which led to significant price reductions in exchange for increased market share.
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