Pharma giant AstraZeneca announced plans to acquire FibroGen, Inc.’s China subsidiary for approximately $160 million. Expected to close mid-2025, the deal provides that FibroGen will receive an enterprise value of $85 million plus FibroGen’s net cash held in China at closing, currently estimated to be approximately $75 million. Based in Hong Kong, FibroGen’s subsidiary is pursuing oncology pipeline of medications.
“Upon closing, AstraZeneca will obtain all rights to roxadustat in China,” according to the deal’s press release. “Roxadustat is the category leader in brand value share for the treatment of anemia in chronic kidney disease with a pending regulatory decision for chemotherapy-induced anemia. FibroGen maintains its rights to roxadustat in the U.S. . . .”
Source: Council on Foreign Relations
FibroGen International is based in Hong Kong, which had long served as the commercial hub of the region. China’s Qing Dynasty ceded the island to Britain following the British victory in the First Opium War. Under British colonial control, the island emerged as an international economic center that came to enjoy commercial prosperity alongside democratic government even as mainland China came under control of the Chinese Communist Party following the Chinese Civil War. While mainland China’s economy stagnated and faced mass starvation during the following decades, Hong Kong largely remained an island of prosperity.
Under the terms of an 1898 treaty, Britain was scheduled to return Hong Kong to Chinese control in 1997. As the handover approached, the British and Chinese governments negotiated a “one country, two systems” policy, whereby Hong Kong would receive a high degree of autonomy for the next five decades with its own laws, including freedom of speech and press.
Hong Kong’s Real GDP growth rate
Source: KPMG
However, little more than halfway through that 50-year period, the ruling Chinese Communist Party has taken steps to encroach upon Hong Kong’s independence. “In 2020, Beijing imposed a sweeping national security law on Hong Kong. Since then, authorities have arrested dozens of pro-democracy activists, lawmakers, and journalists; curbed voting rights; and limited freedoms of the press and speech,” according to the Council on Foreign Relations. “In March 2024, Hong Kong lawmakers passed Article 23, an additional security legislation that further cements China’s rule on the city’s rights and freedom. These moves have not only drawn international condemnation, but have also raised questions about Hong Kong’s status as a global financial hub and dimmed hopes that the city will ever become a full-fledged democracy.”
Hong Kong’s Hang Seng Index Performance
Source: Financial Times
During that time, Hong Kong’s economy has suffered as many multinational firms have left the city or diverted hiring to other regions. In 2021, the number of American companies with regional bases in Hong Kong also fell to an eighteen-year low. AstraZeneca has yet to announce its plan for the Hong Kong-based operations following this acquisition.
According to DealPulse’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly-announced transactions, FibroGen is advised by Ropes & Gray LLP and financial adviser BofA Securities, Inc.
