(Adds detail, background)
* Novartis has consulted Chinese government on IPO-sources
* China one of six priority emerging markets for Novartis
* International board may host only 10 companies
By Samuel Shen and Soo Ai Peng
SHANGHAI, July 12 Swiss drugmaker Novartis AG
is considering a possible initial public
offering in China, joining a growing list of multinationals
eyeing a listing on Shanghai's planned international board, two
people with knowledge of the situation said.
Novartis is studying the feasibility of a China IPO and has
been consulting relevant government agencies, said the sources,
who declined to be identified because the information is not
public. Novartis spokesman Eric Althoff declined to comment.
Selling shares in China would enable Novartis to raise money
to fund rapid expansion in China and for potential acquisitions,
as it competes fiercely with rivals such as Roche Holding AG
and Eli Lilly in the country.
Having its shares traded on the Shanghai Stock Exchange
could also help Novartis promote its brand in a country where
concerns over food and drug safety constantly haunt consumers.
China is among the six countries identified by Novartis as
priority emerging markets for the company, where combined net
sales grew 12 percent in 2010 to $4.6 billion, accounting for 10
percent of the firm's global sales, its annual report said.
Novartis expects that proportion to double in five years.
China may launch the international board as soon as this
year or next year as the country wants to boost the global
profile of the yuan currency and further liberalise its capital
Shang Fulin, Chairman of the China Securities Regulatory
Commission, said recently the international board was "coming
closer and closer" to the market.
Global firms, including HSBC , Standard
Chartered , Unilever and Coca-Cola Co
have already expressed interest for a listing on the
China may allow about 10 foreign companies to list on the
board initially, local media reported earlier this year, citing
draft rules on the board.
Foreign companies might be allowed to use proceeds from an
international board listing for their offshore operations
subject to approval from the forex regulator, the 21st Century
Business Herald reported in April, citing the draft rules.
Basel, Switzerland-based Novartis employs more than 5,000
people in China and has invested more than $700 million in the
country, betting that rising income among its 1.3 billion people
will boost health awareness and drug consumption.
In March, Novartis paid $125 million in cash for a majority
stake in Chinese vaccines company Zhejiang Tianyuan
Bio-Pharmaceutical Co, establishing a foothold in China's $1
billion-a-year vaccines market, the world's third largest.
(Additional reporting by David Lin; Editing by Jacqueline Wong)