(Yicai) Dec. 16 -- Shares of Fosun Pharmaceutical Group fell after the Chinese drugmaker unveiled a CNY1.4 billion (USD198.8 million) plan to gain control of Green Valley Shanghai Pharmaceuticals, known for its sodium oligomannate capsules used to treat Alzheimer's disease.

Fosun Pharma [SHA: 600196] closed 4.2 percent lower at CNY26.75 (USD3.80) a share in Shanghai today. Its Hong Kong-listed stock [HKG: 2196] fell 5.8 percent to end at HKD21.06 (USD2.71).

To acquire a 51 percent stake in Green Valley, Fosun Pharma unit Fosun Pharmaceutical Industrial Development will acquire existing equity and inject new capital into the target company, its Shanghai-based parent firm announced late yesterday.

Green Valley's flagship sodium oligomannate capsules, marketed as GV-971, are mainly used to treat mild to moderate Alzheimer's disease, improving the cognitive function of patients. The drug was approved by China’s National Medical Products Administration in November 2019 and was included in the National Reimbursement Drug List in 2021.

However, due to Green Valley not completing the mandatory confirmatory clinical trials for GV-971 after it hit the market, Chinese regulators denied the firm's application for the extension of the registration validity period last year, so it had to stop producing the drug in November that year.

The investment represents a strategic push into central nervous system therapeutics, said Fosun Pharma Chief Executive and President Liu Yi, adding that the company will back Green Valley’s efforts to complete the required post-marketing confirmatory trials for the sodium oligomannate capsules after the deal is closed.

The deal will help enrich Fosun Pharma's innovative product pipeline for CNS illnesses, improve its market footprint, and enable integrated diagnosis-and-treatment solutions that combine multiple technological pathways across the company’s portfolio, it said.

The GV-971 production suspension has hit Green Valley’s earnings. It had a net loss of CNY67.6 million (USD9.6 million) in the first nine months of this year on operating revenue of CNY102 million (USD14.5 million), Fosun Pharma said. Assets topped CNY805.8 million and liabilities reached CNY795.5 million as of Sept. 30.

Editor: Martin Kadiev