How Valuable are Health Food Approvals?

Last week, Shandong Buchang Pharma announced that its controlling subsidiary intends to acquire 100% of Health-life Management Co. for RMB 48.88 million (USD $7.07 million). However, it’s known as a controversial acquisition since Health-life has negative net assets and no operating income. The most valuable part of the entire company seems to be its possession of health food approvals, each is around RMB 3 million yuan (USD $430k) on average, in terms of the acquisition price. Therefore, the purpose of Buchang Pharma obviously is to make up for the shortcomings of its product line. (Source: shuzheng consulting group)

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