One of China’s top medical device and equipment distributors has landed in the $193 billion Australian healthcare sector, taking a $45.2 million stake in ASX-listed Paragon Care.
Hong Kong Stock Exchange-listed China Pioneer Pharma Holdings has subscribed to a share placement of 50.4 million shares in Paragon Care, priced at 91 per share.
The investment amounts to a 15 per cent stake in Paragon.
Pioneer Pharma said the investment would give the group a presence in the Australia and New Zealand healthcare sectors.
“In particular, the group intends to explore opportunities in the sales of certain of the group’s products in Australia and New Zealand and the distribution of the certain products of Paragon or other suppliers (through the business network of Paragon) in the People’s Republic of China,” the company said in a statement to the HKEX.
Founded in 1996, Pioneer Pharma is one of the country’s leading distributors of medical devices and equipment, as well as pharmaceutical products, with its products found in more than 30,000 hospitals and medical institutions as well as 108,000 pharmacies.
Pioneer Pharma has a portfolio of more than 30 pharmaceutical products and medical devices, while its sales network includes more than 260 in-house marketing and promotion employees and more than 1,000 third-party promotion partners.
Chairman Paul Li said it was a "great privilege" for Pioneer Pharma to take a significant stake in Paragon Care.
"We are impressed by what Paragon Care has achieved over the past nine years and look forward to being part of the company's ongoing success and growth in the future," Mr Li said.
"We are excited by the potential cross-selling benefits for both companies."
Paragon Care expects to use the proceeds from the placement to fund its next round of acquisitions in Australia and New Zealand.
The company is targeting a $9 billion slice of the total $193 billion spend on Australian and New Zealand healthcare, focusing on high-value opportunities in medical and surgical supplies.
Paragon Care said that segment of the market was growing at around 6 per cent per annum in its annual report, which was also lodged with the ASX today.
Last financial year, Paragon Care competed nine acquisitions which increased its footprint in Australia’s diagnostics and laboratory markets, including the acquisitions of distributors Anaequip Medical, Surgical Specialties, LabGear Australia and manufacturers MedTech Solutions, Ummulab and Immino.
Paragon Care’s revenue was up 7 per cent to $136.7 million, for a net profit lift of 7 per cent, to $10.9 million.
Chairman Shane Tanner said the presence of Pioneer Pharma on Paragon Care’s share register would provide further growth opportunities.
“This investment represents a pleasing validation of PGC’s strategy of building a sustainable growth platform to take advantage of the structural and demographic tailwinds underpinning the Australian and New Zealand health care sectors,” Mr Tanner said in a statement to the ASX.
“We look forward to exploring with China Pioneer the opportunities which may open up for both companies as a result of this investment.”
Bell Potter acted as Paragon Care’s corporate advisor, while Pioneer Pharma was advised by Perpetuity Capital.