Haleon increases stake in Chinese JV Tianjin TSKF Pharmaceutical to 88%

Haleon plc, a leading name in consumer healthcare, has successfully completed the acquisition of an additional 33% equity interest in its joint venture, Tianjin TSKF Pharmaceutical Co. Ltd (TSKF), from its partners Tianjin Pharmaceutical Group (TPG) and Tianjin Pharmaceutical Da Ren Tang Group Corporation Limited (DRTG). With this strategic move, Haleon increases its stake in the Chinese venture to 88%, consolidating its position in one of the world’s most dynamic healthcare markets.

A Strategic Investment in China’s Growing Healthcare Market

Announced initially on 27 September 2024, the transaction is valued at RMB 4.465 billion (approximately £0.5 billion) and represents a pivotal moment in Haleon’s growth strategy. By expanding its stake in Tianjin TSKF Pharmaceutical, which accounted for 40% of Haleon’s China revenues in 2023, the company secures greater strategic and operational control.

China has consistently been identified as a critical growth market for Haleon. With a rapidly expanding middle class and increasing demand for over-the-counter healthcare products, Haleon’s strengthened presence in this market positions it to capitalise on long-term opportunities. TSKF’s portfolio includes popular brands such as Fenbid, Voltaren, and Bactroban, which enjoy strong consumer recognition across the region.

Brian McNamara, Chief Executive Officer of Haleon, has highlighted China’s significance to the company’s global strategy, describing the acquisition as a “milestone that is both strategically and commercially compelling.” He emphasised that this investment reflects Haleon’s commitment to leveraging growth opportunities in emerging markets while maintaining its focus on delivering shareholder returns.

Regulatory Approvals and Funding Structure

The transaction received shareholder approval from DRTG on 22 November 2024 during its extraordinary general meeting, fulfilling one of the key conditions for closure. Additionally, all necessary regulatory clearances were secured, enabling the deal to move forward as planned.

Haleon funded the acquisition through a combination of internal cash resources and third-party Renminbi-denominated debt, reflecting a prudent approach to capital allocation. The company has reiterated that the transaction is expected to be accretive to earnings per share (EPS) and aligns with its financial priorities of maintaining a strong investment-grade balance sheet.

Option for Full Ownership

As part of the agreement, Haleon and DRTG have established reciprocal options concerning the remaining 12% stake in Tianjin TSKF Pharmaceutical. This gives Haleon the right to acquire, and DRTG the right to sell, their remaining equity in the joint venture. While no immediate plans for full ownership have been disclosed, this agreement ensures flexibility for future consolidation.

What This Means for Haleon’s Growth Strategy

The acquisition of the additional stake in Tianjin TSKF Pharmaceutical offers Haleon enhanced operational and strategic flexibility. This greater control will enable the company to streamline its decision-making processes and drive efficiency across its supply chain in China. It also reinforces Haleon’s commitment to strengthening its presence in key markets and supporting long-term growth in the global healthcare sector.

China’s consumer health market remains one of the fastest-growing globally, fuelled by urbanisation, rising disposable incomes, and increasing health awareness. By deepening its investment in Tianjin TSKF Pharmaceutical, Haleon positions itself to tap into these growth drivers, building on its portfolio of trusted brands and leveraging local market expertise.

Looking Ahead

The completion of this transaction not only reflects Haleon’s confidence in the Chinese market but also aligns with its broader strategy to enhance operational efficiency, deliver shareholder value, and drive innovation in consumer health. As competition intensifies in the global healthcare sector, Haleon’s focus on strategic investments and market expansion ensures it remains at the forefront of industry growth.