GSK to buy Chinese drug firm, reports say

GlaxoSmithKline is in talks to buy a Chinese drug company to expand its exposure in that fast-growing market, according to media reports.

The British company expects to announce a deal to acquire Nanjing MeiRui Pharma Co. as soon as this month, the Wall Street Journal reported, citing unnamed sources.

The price tag is likely to be modest, about $100 million, Reuters reported.

But the small deal highlights a large imperative for GSK and the other big, global pharmaceutical companies, the Wall Street Journal reported. Drug companies are facing flat to negative sales trends in the U.S. and Europe, forcing them to look to emerging markets for growth.

GSK, which has its North American headquarters in Research Triangle Park and about 5,000 local employees, is seeking other deals to boost its business in fast-growing emerging markets, including India.

Nanjing MeiRui's foothold in the urology business in China is a key attraction for GSK, which sells the urology drug Avodart, the Wall Street Journal reported. MeiRui's relations with Chinese urologists could help GSK build awareness for Avodart, which treats the ailment commonly known as an enlarged prostate.

The deal would also fit with GSK's stated goal of directing a portion of its prodigious cash generation toward acquisitions. The company has about $10 billion of cash on its balance sheet.

At an investment conference last month, GSK Chief Executive Andrew Witty said the company made 15 or 16 acquisitions in the last two years. He has made clear that the company isn't in the market for blockbuster deals and instead is focused on takeovers of between hundreds of millions and "upper single digits of billions of dollars." Typical deals for the company are in emerging markets, consumer products and vaccines, and help diversify GSK's risk portfolio, he has said.

Read the full Wall Street Journal story here.