BMS May Exit Shanghai Squibb JV: Closing Chapter for the First Sino–U.S. Pharma Partnership
Sino–American Shanghai Squibb, established in 1982, was China's first Sino–U.S. pharmaceutical joint venture. This report delves into its legacy, challenges faced, and the anticipated transition under Hillhouse Capital.
A market rumor has drawn wide attention this week: Bristol Myers Squibb (NYSE: BMY) may sell its 60% stake in Shanghai Squibb Pharmaceuticals Ltd. (中美上海施贵宝) along with several legacy brands in China. Hillhouse Capital is reportedly the potential buyer, with a deal possibly closing in early 2026. BMS has not confirmed the news.
The Starting Point of Sino–U.S. Pharmaceutical JVs in China
Sino–American Shanghai Squibb holds a unique place in China’s pharmaceutical history. In 1982, Squibb Corporation partnered with Shanghai Pharmaceutical Industrial Company (predecessor of Shanghai Pharma Group) to establish China’s first Sino–U.S. pharmaceutical joint venture—predating both Xi’an Janssen and Sino–American SK.
Following the 1989 global merger that created Bristol Myers Squibb, the JV continued as BMS’s flagship China presence. At its peak in 2016, Shanghai Squibb generated more than RMB 4.7 billion in annual revenue, driven by blockbuster drugs and strong sales teams.
Classic Products and Industry Firsts
The company brought multiple “firsts” to China:
- Captopril tablets – China’s first ACE inhibitor for hypertension
- Metformin hydrochloride tablets – classic anti-diabetic drug
- Entecavir tablets (Boluding) – third-generation antiviral for hepatitis B
- OTC products – including Shierkang vitamin tablets and Jiahe Baifuning cold medicine
In anti-infectives, products like “Xianfeng No.6” cefradine, cefprozil (Shifujie), and cefepime (Maspen) were long-standing mainstays in the domestic antibiotic market.
The company was also pioneering in marketing: it built China’s first professional prescription drug sales team, pioneered hospital academic promotion models, and was the first to actively promote OTC products. It was also the first Sino–U.S. JV approved by the FDA to export formulations to the United States.
Impact of Centralized Procurement and Voluntary Exit
A major turning point came with China’s centralized volume-based procurement (VBP) policy.
- 2020, third VBP round: Generic prices for captopril and metformin were reduced to RMB 0.01 per tablet, and BMS’s original drugs failed to win bids, significantly reducing market competitiveness.
- 2019, anti-infective segment: Due to raw material shortages, production of cefepime (Maspen) was voluntarily ceased, and the drug was removed from national procurement lists.
Although some legacy products remain on the market, they now lack price competitiveness and growth potential.
Hillhouse Capital’s Investment Logic
For Hillhouse Capital, these legacy brands retain value. Even after patent expiry, these original drugs still have strong recognition among doctors and patients. Through cost optimization and production and marketing efficiency, these products can continue to generate stable cash flow. A comparable example is Haisen Biotech, which was restructured by Kangqiao Capital.
The End of an Era
If the deal proceeds, it would mark the exit of China’s three early Sino–U.S. pharmaceutical joint ventures: Sino–American Shanghai Squibb, Xi’an Janssen, and Sino–American SK.
Joint ventures were once the primary entry model for foreign pharmaceutical companies. Today, multinational firms can wholly own factories in China, while local firms have rapidly enhanced R&D and commercialization capabilities. These early JVs have completed their “historical mission” and are now gradually leaving the stage.
Future Outlook
- Multinational companies may continue divesting mature products and manufacturing assets to focus resources on innovative drug development.
- Local pharmaceutical companies and investment firms may acquire these legacy assets and, through cost reduction and efficiency measures, sustain their commercial value.
Key Timeline
| Year | Event | Key Products / Notes |
|---|---|---|
| 1982 | Sino–American Shanghai Squibb founded | China’s first Sino–U.S. pharmaceutical JV |
| 1989 | BMS–Squibb global merger | JV renamed Sino–American Shanghai Squibb |
| 2016 | Revenue peak | ¥472 million RMB |
| 2019 | Maspen exit | Raw material shortage, withdrew from anti-infective market |
| 2020 | Third VBP round | Captopril and metformin original drugs failed bids |
| 2026? | Rumored transaction | Hillhouse Capital may acquire 60% stake & legacy drugs |
Sources
- Sina News
- DONGMAI
Disclaimer: This article is based on publicly available information and market rumors and does not constitute investment advice or a recommendation. BMS has not confirmed the related rumors. Readers should independently verify the accuracy of the information by consulting primary sources, such as official company announcements, regulatory filings, and scientific literature, and should carefully assess risks before making any decisions.