Beijing Tongrentang (Group) Co Ltd and Hong Kong business giant Hutchison Whampoa Ltd signed a deal on Friday to form a US$239 million investment venture in Beijing.

The new venture, Beijing Tongrentang Hutchison Pharmaceutical Investment Co Ltd, will engage in investment in traditional Chinese medicines (TCM) and health-related projects and enterprises, said a press release on Tongrentang's official website.

The Beijing-based TCM maker and Hutchison Chinese Medicine Investment Ltd, a wholly owned subsidiary of Hutchison Whampoa (China) Ltd, each are to hold 49 per cent of the new venture.

The remaining 2 per cent will be taken up by a third-party enterprise to be picked by Tongrentang Group, according to the press release.

Tongrentang's spokesman Jin Yongnian declined to give further details about the two firms' co-operation.

Previous media reports had said that Beijing Tongrentang Group would either invest in the venture the 69.98 per cent stake, or 232 million shares, it holds in its domestically-listed company, Beijing Tongrentang Co Ltd, or part of its non-listed assets such as factories or drugstores.

"We hope that China's pharmaceutical business will expand further, with the expertise and experience of Tongrentang on the one hand and Hutchison Whampoa's global network on the other," the press release quoted Simon To, managing director of Hutchison Whampoa (China) Ltd, as saying.

"To Hutchison Whampoa (China), this joint venture will serve as a good opportunity for the company to further diversify its pharmaceutical and health-related business," To said.

Hutchison currently is the second largest shareholder of Tong Ren Tang Technologies Co Ltd, a Hong Kong-listed branch of Tongrentang Group.

Chairman of Tongrentang, Yin Shunhai, said, "Tongrentang's business development is expected to move forward quickly, with the help of Hutchison's experience in global business development."

The drug maker announced last month that it aims to increase the total number of its domestic chain drug stores to 900 in six years and have 100 overseas pharmacies in five years.

Hou Dakun, president of Beijing KevinKing Management Consulting Co Ltd, a consultant in the drugmaking industry, said the big deal will not only benefit the two firms, but also have positive influences on China's entire TCM industry.

"The deal shows overseas investors' growing interest in the commercial potential of millennia-old traditional Chinese medicines," Hou said.

From ChinaDaily.com.cn