IPO Filing: Tongjitang Chinese Medicines Company

Tongjitang Chinese Medicines has filed to sell $192 million in securities for filing purposes, although those numbers are often arbitrary.  The company is selling 9.965 million ADR shares that represent more than 39 million ordinary shares.  The ADR price range is $15.00 to $17.00.  Its underwriting group is rather small with Merrill Lynch and UBS listed as lead managers and with CIBC also in the syndicate.

Based on the name, you probably already figured it was into drugs and medicines and based in China.  The company was founded in 1995 and operates as a profitable entity that sells traditional Chinese medicines both via porescription and OTC.  Revenues were $62.1 million in 2006 and it has over 370 salespeople.  Sales of Xianling Gubao for osteoporosis accounted for 68.7%, 66.6% and 77.2% of its revenues in 2004, 2005 and 2006, respectively; and it continues to expect that the sales of Xianling Gubao will continue to comprise a substantial majority of revenues. Its other medicines treat upper respiratory infection, gastritis and ulcers, general malaise and breathing, stroke and artery disease, joint pain, and mouth ailments.

8.35 million ADR’s will be sold by the company and 1.525 million ADR shares will be sold by holders.  Tongjitang will trade on NYSE under the ticker "TCM" upon the IPO.

Jon C. Ogg
February 27, 2007