April 8, 2024

ROHTO Pharmaceutical Co., Ltd. and MITSUI & CO., LTD. have Strategically Joined Forces to Acquire Singapore's Leading Chinese Pharmaceutical Company, You Yang Sun International Ltd.

The total acquisition price is approximately 88 billion yen. You Yang Sun International, the largest manufacturer of Chinese herbal medicines in Southeast Asia, operates over 170 sales outlets, mainly in Singapore, Hong Kong, and Malaysia. This acquisition aims to tap into the significant growth potential of the Southeast Asian market.

You Yang Sun International was founded in 1879. It involves Chinese herbal medicines and other products expected to improve asthma. Sales were approximately 33.5 billion yen for the fiscal year ending June 2023. Rohto Pharmaceutical and Mitsui will acquire You Yang Sun through a jointly established special purpose company (SPC). After the acquisition, Rohto Pharmaceutical and Mitsui will have a 60% and 30% stake, respectively. The remaining 10% is held by the founding family of You Yang Sun. It aims to complete the acquisition during the fiscal year 2024.

After the COVID-19 pandemic, health consciousness is on the rise worldwide. In particular, Chinese herbal medicines are attracting attention from the disease prevention perspective, and the market is expanding.

Rohto Pharmaceutical entered the Chinese herbal medicine business in 2006. Rohto is developing products in Japan under the "Wakansen" brand, including products that effectively reduce subcutaneous fat. Rohto positions Chinese herbal medicines as the next pillar of growth after over-the-counter medication such as eye drops and skin care products.

Overseas sales account for about 40% of the company's total sales. The company primarily focuses on skincare products but intends to expand its business further by using Chinese herbal medicine.

Meanwhile, Mitsui aims to strengthen its healthcare business in Asia. Mitsui is involved in hospital management and other businesses, and with the acquisition of You Yang Sun International, it will expand its business domain. Rohto Pharmaceutical and Mitsui also want to collaborate with You Yang Sun on product development.

According to US market research firm Report Ocean, the global market for herbal medicines is expected to grow 1.5 times from 2020 to $121.9 billion (about 18.3 trillion yen) in 2027. Especially in Southeast Asia, where there are many "overseas Chinese" residents, demand for Chinese herbal medicines is expected to grow along with economic growth.