Santen Pharmaceutical said its Chongqing ophthalmic-drug joint venture, already in liquidation, resolved at a shareholders' meeting on 16 October (local time) to apply for bankruptcy under Chinese company and bankruptcy law. The company expects no new loss from it.
How it got here
Santen set up the venture in Chongqing in August 2016 with a local partner, aiming to supply more Chinese patients with prescription eye drugs at suitable prices. The company says changes in the business environment, including China's medical system reform, made the strategy hard to continue. Santen's board resolved to liquidate the venture in October 2024.
Liquidation was meant to repay all debts through asset sales. Santen says that outlook has gone, which is why the venture will now ask a local court to open bankruptcy proceedings.
The numbers
Liabilities total 143mn yuan (about ¥3.3bn at ¥23.40 per yuan, the end-September rate). Of that, 100mn yuan (about ¥2.3bn) is owed to Santen and its China subsidiary. The venture had net liabilities of 126mn yuan and total assets of 26mn yuan in the year to March 2026, with no sales.
The venture is a consolidated subsidiary. The China subsidiary holds 49% and the local partner 51%, and four of its seven directors are employees of Santen or that subsidiary.
Why no new loss
Santen holds a ¥2bn loan receivable from the venture and has provisioned all of it. The China subsidiary has written its stake down fully, so the shares are carried at zero. Santen expects the effect on this fiscal year's consolidated results to be minor.
What happens next
If the court accepts the application, bankruptcy proceedings follow. After a court declaration, Santen expects the venture's assets to be disposed of and the proceeds distributed to creditors. The notice gives no timetable, and a shareholder resolution to apply does not mean a court has opened proceedings.