Chinese pharmaceutical company Gan & Lee Pharmaceuticals exits Russian insulin producer

The Chinese insulin manufacturer Gan & Lee Pharmaceuticals has sold a 51% stake in Endogenix LLC to the co-owner of this company, Farmaktiv. The deal was closed on June 2, according to SPARK-Interfax. Gan & Lee Pharmaceuticals did not respond to Vedomosti’s request. It was not possible to contact Pharmaktiv.

Endogenix LLC was established in 2012 as a joint venture between Gan & Lee Pharmaceuticals and Pharmaktiv, which at that time was owned by the former CEO of Microgen Lev Grigoriev (51%) and a native of Pharmstandard Pavel Smachkov (49%) . In 2020, 100% of the shares of Pharmaktiv were received by Trio Pharm LLC, Grigoriev, Smachkov and Viktor Nazarov (each with 33.33%).

Endogenix produces insulin glargine (an analogue of Lantus from the French Sanofi). At the end of 2022, the revenue of Endogenix LLC amounted to 4.6 million rubles, profit – 24.89 million rubles.

Mikhail Burmistrov, CEO of Infoline-analytics, believes that the deal between the parties was cashless. Sergey Shulyak, CEO of DSM Group, and Nikolai Bespalov, RNC Pharma Development Director, agree with him. Endogenix produces insulin based on Chinese raw materials and, under the terms of the agreement, Farmaktiv could undertake to continue purchasing it from Gan & Lee Pharmaceuticals, Bespalov specified. He explains the decision of the Chinese company by the fact that it has become unprofitable for foreign manufacturers to develop the pharmaceutical business in Russia. First of all, due to problems with the logistics of pharmaceutical substances, and secondly, against the backdrop of an increase in the share of domestic pharmaceutical manufacturers in this market, which, subject to independent production of raw materials, began to receive more additional support measures in the public procurement system.

Experts are confident that Gan & Lee Pharmaceuticals will continue to cooperate with the Russian manufacturer. Despite the fact that the Chinese pharmaceutical company got rid of the asset, there is no talk of the manufacturer leaving the Russian market, Shulyak explained. With a high probability, Gan & Lee Pharmaceuticals will continue to supply its products to Russia, as evidenced by the method of getting rid of a stake in the company: if the Chinese side was going to completely stop cooperation, the asset would be sold to a third-party company at a market price, Shulyak explained. In addition, it is unprofitable to lose its share (albeit not so significant – about 5% in physical and monetary terms) of Gan & Lee Pharmaceuticals, since the market is multi-billion dollar, Bespalov added. Endogenix has prospects for further growth and increasing its share, for this the company needs to start actively participating in tenders and promoting its product among specialists and patients, summed up Shulyak.

Chinese Gan & Lee Pharma-ceuticals was founded in 1998. The pharmaceutical company specializes in the manufacture of drugs prescribed for diabetes, including Eli Lilly’s biosimilar insulin lispro. Medicines from a Chinese manufacturer are approved in a number of countries, in particular in Kazakhstan, Bolivia, India, Indonesia, Pakistan, and Thailand. Financial performance of Gan & Lee Pharmaceuticals was not disclosed.