Private-owned enterprises dominate overseas mergers and acquisitions | Traditional Chinese Medicine Leveraged along the way

In the past three years, the number of cross-border mergers and acquisitions of Chinese enterprises in the field of pharmaceuticals, including biopharmaceuticals and medical devices, has been on the rise with 133 transactions in the first half of 2014 up to 2016 Half a year, first half of 2017 is divided into 2904 and 4253 respectively.

While cross-border mergers and acquisitions continue to cool down, Chinese investors are continuously increasing their investment along the Belt and Road initiative, and the big health industry is an important part of the investment.

According to Mergermarket's report, since 2013, the scale of mergers and acquisitions along the One Belt and One Road has risen year by year. By the end of November 2017, it has reached 37.9 billion U.S. dollars, up from 25.7 billion U.S. dollars in 2016. The cross-border mergers and acquisitions investment service platform easy sector report shows that in the first three quarters of this year, cross-border mergers and acquisitions among Chinese enterprises, the health care industry accounted for 13%, is second only to the manufacturing industry's second-largest mergers and acquisitions hot spots.

Private-owned companies dominate the overseas pharmaceutical M & A market, with the total transaction volume reaching about 21 times that of state-owned enterprises in the past three years. "Huang Yaowei, managing partner of PricewaterhouseCoopers' Belt and Road Initiative, said.

Huang Yaosu told 21st Century Business Herald reporter Chinese enterprises invest in the field of large-scale foreign investment in two directions, one is the acquisition of sophisticated technology to promote China and the world; one is to use traditional Chinese medicine to enter the local market to the surrounding However, under the background of vigorously developing Chinese medicine tourism and allowing Chinese medicine to go global, the Chinese medicine industry is leveraging the initiative of 'One Belt and One Road' to go out.

According to data from Tom Reuters, in the past three years, the number of cross-border mergers and acquisitions by Chinese companies in the pharmaceutical field, including biopharmaceuticals and medical devices, has continued to increase. The number of transactions in the first half of 2014 was still 133, reaching the first half of 2016 In the first half of 2017 from 2904 and 4253 respectively.

"In these mergers and acquisitions, strategic business mergers and acquisitions as the main force." PricewaterhouseCoopers consulting services partner in China medical industry, said Liping Liping, especially since the second half of 2016 is a clear blowout.

Of the 2,167 transactions in the second half of 2016, 1,506 transactions were strategic business mergers and acquisitions, accounting for 71.14% of the total number of transactions, while 2577 of 4253 transactions in the first half of 2017 were strategic business acquisitions, with a sequential growth of 71.12 %. From the point of view of the amount, in the second half of 2015, the transaction volume involved in strategic business mergers and acquisitions involved in the field of medicine was only 333 million U.S. dollars, reaching 2.577 billion U.S. dollars in the first half of 2017.

These enterprises hope to introduce overseas high-quality medical resources and business models into China to speed up the strategic layout of their domestic medical and health businesses and take the acquisition of the target market as a platform for overseas market development. "Criminal Liping told reporters in the 21st Century Business Herald that this is also the case for many Chinese The reasons for choosing strategic business mergers and acquisitions in mergers and acquisitions will eventually include the merged company within its existing business scope.

In addition, according to data from the Tom Reuters, the transaction volume in the biopharmaceutical field in the second half of 2016 was 1.93 billion U.S. dollars, increasing to 4.087 billion U.S. dollars in the first half of 2017 while the transactions in the field of medical devices were 188 million U.S. dollars and 166 million U.S. dollars respectively .

Puning pointed out that many companies in the field of medical devices for start-ups, which makes such companies mergers and acquisitions prices will be relatively low.

The biopharmaceutical field of technology, products are relatively mature, the transaction amount will be higher than the field of medical equipment startups.Lian Lida law firm managing partner in China Fang Jian 21st Century Economic Reporter analysis, from the technology or product From the market point of view, this mature technology or product has been introduced in other markets for many years and has not been introduced into China with a lot of technical risks. The problem is that the amount of the transaction will be relatively large, Whether the enterprise has sufficient financial strength to support and promote the follow-up development, which is the risk of such mergers and acquisitions.

Since 2015, both the Chinese Drug Regulatory Commission and the regulatory authorities have accelerated the pace of reform, favorable policies coupled with capital-driven, enabling a large number of venture capital into the health industry. Yuan Ming Capital Founding Partner Tian Yuan at the 2017 Credit Suisse China Investment Forum Said that in the future this trend will continue to be maintained.

However, the fiery investment in the healthcare industry in China has also caused a substantial increase in the price of mergers and acquisitions for the Chinese health industry, with medical sector investors reporting to 21st Century Business Herald that "the valuations of many private companies have been speculatively exaggerated and premium foreign innovations The company's price is still not high ', the domestic standard of unreasonable let them speed up the pace of looking for a reasonable valuation of overseas acquisitions.

Just finished the acquisition of India's pharmaceutical company GlandPharma, Chen Qiyu, chairman of Fosun Pharma (600196), also said at an investment conference that when the acquisition of GlandPharma, the transaction was just announced, some analysts questioned why it was bought Expensive.

GlandPharma is mainly engaged in injection drug Of the manufacturing business, is the first in India received the FDA approval of the injection drug manufacturing enterprises, and get the GMP certification of the major regulatory markets around the world, the business income is mainly from the United States and Europe. In Chen Qi Yu view, 'this The company has good growth in the North American market, and can play a role as a bridge to help Fosun medicine Domestic pharmaceutical into foreign markets.

Chen Qiyu believes that when the subject of the bidding is on the subject of the value of the subject, the revival of the transaction on the surface is very frequent, has been acquired, in fact, each of the underlying acquisitions require a long-term strategy.

China's biopharmaceutical industry has a weak foundation and also allows Chinese companies to choose more in the biopharmaceutical industry than in medical instruments Industry for overseas investment transactions .Li Liping told 21st Century Business Herald reporter, 'At present, the field of pharmaceutical investment, more is the Chinese enterprise 'Going out' rather than 'bringing in overseas resources' mainly because there is still much room for improvement in the R & D capability of Chinese pharmaceutical companies.

In the view of Fang Jian, the acquisition of the pharmaceutical industry, especially in the high-end technology acquisition risk.

According to recent cases of the law firm, although the related technologies are still cutting-edge technologies in China, they are foreign but not the sunset, but also the 'afternoon sun' and may have been replaced without generating the expected economic benefits .

However, Li Liping told reporters in the 21st Century Business Herald that "we think the macro-health sector is still an emerging industry as compared with the retail and manufacturing industries," and that we have a good policy foundation for investment along the "Belt and Road" It is estimated that Chinese enterprises will continue to grow their investment deals in the pharmaceutical field after leaving the country.

At the same time, the tendency of the United States, the United States and the United States over the mergers and acquisitions by overseas investors in the high-tech industries has also given investors more emphasis on the Belt and Road initiative. Hope to become an emerging investment destination for Chinese investors.

In Huang Yaowei's opinion, Chinese enterprises have two types of investments in overseas large-scale healthcare: one is to invest in cutting-edge technologies in Israel and Singapore, with the aim of seeking to 'take over' the technology and even to China The whole world to promote; the other direction is to invest in such a country as Kazakhstan, and then through traditional Chinese medicine to enter the neighboring countries market.

Pun Liping pointed out that in countries like Kazakhstan, more than 70% of the drugs need to be imported. The shortage of drugs has become the most prominent issue in the health field. The local government therefore encourages the development of the pharmaceutical industry and, with sufficient scale (from 21.3 million U.S. dollars) Of the foreign pharmaceutical industry investment tax relief, prompting Chinese enterprises have begun to layout.

On the other hand, many countries along the Belt and Road have a history of using herbs. According to Xing Liping, Poland has a history of more than 100 years of growing herbs. As many as more than 3,000 varieties of herbs make Poland occupy the Central Eastern European herbal medicine market About 50% (about 400 million U.S. dollars), while Polish herbs are very similar to traditional Chinese medicine sources. In addition, the Polish government has included acupuncture in the medical system, so that there is a great market for Chinese medicine in the Polish market.

'Globally, people are getting more and more acceptance of natural medicines.' Li Chuyuan, General Manager of GPHL, told 21st Century Economic Reporter at the 21st Century Maritime Silk Road International Communication Forum that although traditional Chinese medicine and plants Medicine has some differences, but if in culture, as well as related Regulations , The standards and the "Belt and Road" countries and regions along the agreement, Chinese medicine will be able to successfully go out.

GPHL has set up research centers along the Belt and Road and has started to plant Chinese herbal medicines in countries and regions where climate is suitable. "In Cambodia and Laos, planting of Chinese medicines has started. 50% is planted in these countries. The 'One Belt and One Road Initiative' can also promote the development of Chinese medicine and promote the development of industries in the countries and regions along the line, "said Li Chuyuan.

The National Standards Commission also pointed out in the "Standard Unicom's Belt and Road Initiative (2018-2020)" recently released that "in the next three years, it will promote the revision and revision of international standards of Chinese medicine and speed up the development of medicinal products, medicinal products, and medical products Equipment and other aspects of international standards development, improve the international standard system of Chinese medicine.

At the same time, accelerating the promotion of Chinese medicine standards overseas, and promoting technologies such as TCM diagnosis, treatment and quality control as well as evaluation of new varieties of Chinese herbal medicine seeds (seeds and seedlings), authentic medicinal materials and Chinese herbal medicines (herbal medicines) Standard into the countries and regions along the line.