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* Declines to give financial terms
* Part of Bayer's goal to become No. 1 OTC company
* Dihon has 123 mln euros in annual sales
FRANKFURT, Feb 27 Bayer said it would
buy privately held Dihon Pharmaceutical Group Co, a maker of
traditional herbal Chinese medicines (TCM), as the German
drugmaker pushes to become the world's largest non-prescription
With China's healthcare spending forecast to nearly triple
to $1 trillion by 2020 from $357 billion in 2011, according to
consulting firm McKinsey, the country is a magnet for makers of
medicines and medical equipment.
Dihon has about 2,400 employees and generated sales of 123
million euros ($168 million) in 2013, Bayer said on Thursday,
declining to provide the financial terms of the deal.
Dihon's products include dandruff treatments, antifungal
creams and medicine against gynaecological conditions such as
endometriosis. A spokeswoman said it was too early to say
whether they would be exported to Germany or Europe.
The deal, which could help Bayer challenge Johnson & Johnson
to the number-one spot in the over-the-counter
(OTC)market, underscores its push into herbal medicine after it
bought smaller German supplier Steigerwald last year.
A number of international healthcare firms have been making
inroads in China. Alliance Boots, the owner of Europe's largest
pharmacy chain, plans to take a 12 percent stake in Chinese
distributor Nanjing Pharmaceutical Co Ltd, while
Medtronic Inc purchased China Kanghui Holdings in 2012.
But doing business in the world's most populous country is
not without risk. China's regulators have been investigating
several foreign and domestic drug companies on suspicion of
bribery, with the most high-profile investigation involving
China's consumer health and wellness market is expect to hit
almost $70 billion by 2020 as increasing numbers of consumers
turn to health supplements and OTC health treatments, according
to a recent report from Boston Consulting Group.
The OTC market alone was worth $18 billion and is estimated
to grow at a rate of around 8 percent per year, the report said.
The Dihon deal is to close in the second half of 2014, Bayer
($1 = 0.7317 euros)
(Reporting by Maria Sheahan and Ludwig Burger; additional
reporting by Adam Jourdan in Shanghai; editing by Victoria Bryan
and Tom Pfeiffer)