Grape King Bio Ltd (葡萄王), a supplier of probiotics and mushroom mycelium health foods, yesterday inked a three-year cooperation pact with China-based traditional Chinese medicine maker Yunnan Baiyao Group Co (雲南白藥) to codevelop new products and sell products in the Chinese and Southeast Asian markets.
The two companies are currently codeveloping two healthy drink products, one ointment and one pill, Grape King Bio said.
The two companies will jointly launch a health drink in Taiwan at the end of September, ahead of future launches in China and SouthEast Asia next year, Grape King Bio executive vice president Andrew Tseng (曾盛麟) said yesterday.
The company has the rights to sell products codeveloped by both in Taiwan, he said.
Yesterday’s deal also allows Grape King Bio to manufacture products for Yunnan Baiyao Group on a contract basis, while using raw materials provided by the Chinese firm in the new products.
The company will use its factories in Taiwan and Shanghai to make products for Yunnan Baiyao Group, he said.
Meanwhile, Grape King Bio can rely on Yunnan Baiyao Group’s retail channels in China and other oversea markets, including Southeast Asia, to sell its health food products that use raw materials from Yunnan Baiyao Group, Tseng said.
“As most of our revenue currently comes from the domestic market, the deal marks the entrance for Grape King Bio into the international market,” Tseng said.
According to Tseng, Grape King Bio tried to sell its “Come Best” tonic drink, products for improving digestion and mushroom mycelium health foods in China in the past without much success because it lacked a retail network.
The cooperation with Yunnan Baiyao Group may enable the company to enter the market more easily, he said.
Yunnan Baiyao Group is a Shenzhen-listed company with revenue of 15.8 billion yuan (US$2.54 billion) last year, and its market value, which was 82.8 billion yuan in October last year, was the highest among all Chinese medicine makers.
“It is the first time for Yunnan Baiyao Group to sign such a comprehensive cooperation pact with another company,” Tseng said.
From January through May, Grape King Bio posted revenue of NT$2.47 billion (US$82.52 million), up 8.34 percent from NT$2.28 billion a year ago, according to the company’s filing to the Taiwan Stock Exchange.
About 90 percent of its revenue was from Pro-Partner Inc (葡眾), a multi-level marketing company which sells Grape King Bio’s products in Taiwan, Tseng said.
Grape King Bio owns 60 percent of shares of Pro-Partner.
“It is a little bit risky for us to rely on Pro-Partner entirely,” Tseng said. “The cooperation with Yunnan Baiyao Group can become the second pilar of Grape King Bio.”
Shares of Grape King Bio rose 4.93 percent to NT$149 yesterday, outperforming the TAIEX, which was up 0.44 percent.