(Yicai) Nov. 14 -- Leadman Biochemistry, a Chinese maker of in vitro biochemical reagents, said it plans to spend over CNY1.7 billion (USD239.5 million) for a controlling stake in Simcere Sanroad Biological Products, giving it a fast track into China’s in vivo diagnostic reagents market.

Leadman will acquire 70 percent of Simcere from Shanghai Baijiahui Investment Management and its affiliates in a cash deal, the Beijing-based firm said in a report released late yesterday.

Simcere develops, makes, and sells in vivo diagnostic reagents, vaccines, and in vitro diagnostic reagents, according to the report. Its main product, TB-PPD, is widely used for tuberculosis screening in China and is the exclusive product in the domestic market. The Nanjing-based firm also has one of China’s few human vaccine production licenses.

The acquisition will enable Leadman to speed up research and development along with its entry into a new market, hasten its business transformation, tap new growth in innovative biologics including vaccines, and boost operating and financial performance, it said.

After surging by as much as 16 percent in Shenzhen this morning, Leadman’s shares [SHE: 300289] closed up 1 percent at CNY9.09 (USD1.40) each. The benchmark ChiNext Index fell 2.8 percent.

The sellers pledged that the target company’s audited consolidated net profit, excluding non-recurring gains and losses, will be at least CNY166 million (USD23.4 million) this year and CNY560 million in total from 2025 to 2027. The deal is expected to substantially boost Leadman’s earnings. 

Due to China’s bulk-buying policy for in vitro diagnostic reagents, Leadman’s product prices have dropped sharply. From January to September, revenue fell 10 percent year on year to CNY252 million, and the company posted a net loss of more than CNY6.3 million, compared with a net profit of CNY1.1 million a year earlier.

Editor: Emmi Laine