The Ping An alliance, and letting an insurer become the largest shareholder (2017)

From the party you buy crude drugs from, to the party you sell them to

What moved in this alliance was the direction of trade, more than any shareholding ratio. Ever since the Shenzhen base of 1991, China had been for Tsumura a place to buy crude drugs and a quality problem to be managed. Even the system that has some 20,000 contract farms write down their cultivation records is an investment made to protect the quality of preparations sold in Japan. When the company carried that same control method across, bought local firms and moved to the selling side for local patients, the quality management it had accumulated in Japan became a product in itself. The $133.1M (¥19bn) of crude-drug sales that Ping An Tsumura Pharmaceutical booked in the year to March 2024 is the first number of that reversal.

That the partner is an insurer also defines the character of the decision. Where an alliance with a drug maker would have been an exchange of technology and products, Tsumura chose financial capital that owns customers and distribution, and handed over a tenth of its voting rights in return. Seen from the Chinese side, it is a transaction that brings 130 years of Japanese quality management into a traditional-medicine industry whose acknowledged weakness is the thinness of its scientific evidence. That some criticism appeared in China — that a venerable old maker had been bought cheaply, and traditional culture with it — shows this was not received as a simple capital transaction.