Case | HBS Case Collection | September 2012 (Revised August 2014)

Shanghai Pharmaceuticals

by Regina E. Herzlinger and Natalie Kindred

Abstract

Shanghai Pharmaceuticals (SPH), a vertically integrated Chinese pharmaceutical conglomerate, was considering its strategic options in the context of a rapidly evolving industry, policy, and economic environment. The company—essentially a collection of subsidiaries operating under a unified management structure—was formed through the 2009 merger of several state-owned enterprises, part of a broad policy effort in China to streamline state assets, consolidate the fragmented pharmaceutical sector, and enhance the global competitiveness of domestic firms. As it competed with other large domestic firms to become one of the few national champions that the government hoped to create, SPH was also considering an acquisition in the U.S. or Europe. This case allows students to consider the broad trends sweeping China's pharmaceutical industry and health care sector and assess future opportunities there for domestic and foreign businesses.

Keywords: Business Subsidiaries; Business Conglomerates; Vertical Integration; Decision Choices and Conditions; Mergers and Acquisitions; Consolidation; Health Care and Treatment; Global Strategy; State Ownership; Pharmaceutical Industry; Health Industry; Shanghai; United States; Europe;

Citation:

Herzlinger, Regina E., and Natalie Kindred. "Shanghai Pharmaceuticals." Harvard Business School Case 313-016, September 2012. (Revised August 2014.)