Lilly Sells Antibiotics Brands and Manufacturing Facility in China for $375M

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Eli Lilly, a global pharmaceutical company, headquartered in Indiana is a pharmaceutical company that aims to improve people’s lives by providing high-quality medicines and drugs. Eli Lilly and Company often referred as Lilly, strives for excellence in its manufacturing processes, standards, procedures, and behaviors to develop medicines with safety and quality.

Recently, Lilly confirmed that it’s stepping out of its manufacturing business in China by signing a deal with China-based Eddingpharm. Eddingpharm purchased the rights to manufacture the Eli Lilly’s two legacy drugs Ceclor and Vancocin alongside their manufacturing plant in Suzhou, China for a total of $375 million deal. The deal described an initial deposit of $75 million to Lilly followed by a $300 million payment to complete the transaction. Sources report that the transaction will be completed by the end of 2019 or early 2020.

Selling manufacturing industry in China!

The sales from drug manufacturing assets in China have been an incredible source of revenue for the Lilly Company. China is renowned over the recent years, for drug overuse both in animals and humans alike. The Chinese government is aware of this problem has laid out strict surveillance on antibiotic use over the last few years.

The Eddingpharm Company, on the other hand, is set on focusing Lilly China’s resources on developing new medicines, therapies and methods to improve healthcare standards without promoting antibiotics use within the country. This will help China to control its antibiotics use while providing a better healthcare alternative to its citizens. Eddingpharm’s resource person said that Ceclor and Vancocin had earned the trust of both patients and physicians in China and Eddingpharm intends to carry on this legacy in the coming years by matching the standards set by Eli Lilly.

Eli Lilly has offered its existing staff in Suzhou to continue their work with the Eddingpharm and has agreed to provide services for a set period to ensure product quality, smooth operations and transfer of facility.

Does it benefit Eli Lilly?

The sales of Ceclor or Vancocin are not significant contributors to revenue for Eli Lilly globally. This could be a reason why Lilly is licensing Eddingpharm to manufacture and sell these old drugs consumed mainly in China. The transaction opens up more space for Eli Lilly to direct its resources towards research and development of new and more efficient drugs while maintaining the supply of its existing products through another reliable company named Eddingpharm in China.

Conclusion

With the discovery of new diseases and health problems on the rise, this striking $375 million deal shows the world that China is a nation of opportunity for pharmaceutical companies. Collaboration with China in terms of manufacturing medicines will result in exponential growth for pharmaceutical companies and drug-making industry.