Chinese herbal drug firm floats in London

A Chinese pharmaceutical company specialising in herbal medicines is to float on the London stock market with a valuation of about £140m.

Hutchison China Medi-Tech, part of the Hong Kong-based conglomerate Hutchison Whampoa, plans to raise about £40m through the listing on the Alternative Investment Market, mainly to fund drug development.

The company, formed six years ago and run by a former senior Procter & Gamble executive, has three main areas of operation - a research and development arm specialising in treatments for and cancer and auto-immune illnesses; a drug manufacturing division; and a chain of shops in London called Sen which sell traditional Chinese medicinal products such as health supplements, beverages and skin care products.

The Chinese pharmaceuticals market is worth $37bn (£21bn) a year and is growing at a compound rate of 20 per cent a year. China is predicted to overtake the UK and Italy to become the world's fifth-biggest drugs market by the end of the decade.

The World Health Organisation, meanwhile, calculates that the global market for herbal medicines could grow to as much as $5,000bn by 2050 from $60bn in 2002.

Chi-Med's research facilities are based at the Zhang Jiang high-technology park on the outskirts of China's biggest city, Shanghai. The company has a research team of 70 and has two potential drugs in clinical development in China and the United States. One is a treatment for head and neck cancers, the other is for the treatment of Crohn's disease.

Christian Hogg, the chief executive of Chi-Med, said: "In China, there is a wealth of knowledge and history of usage of traditional Chinese medicine, which we believe is a major, unexploited reservoir for identifying and developing novel pharmaceutical and consumer products for the global market."

Of the £40m in float proceeds, £30m will be used for drug R&D. Last year, the company had sales of $38m and it employs 1,900 staff.

The retail arm opened its first Sen shop in Mayfair in 2002 and has since opened a further three outlets around the capital. Sen is also planning to open stores in South Korea in a partnership with the household products and cosmetics group LGH&H.

Separately, the state-controlled Chinese oil giant Cnooc said it is to open a European headquarters in London. The company, which is listed in New York and Hong Kong, said it had selected the UK as the best location to help with its overseas expansion. A second Chinese company, the medical equipment supplier Mindray, is also opening a European head office in London.