Trump new regulations! Chinese pharmaceutical companies will be strictly examined

Medical Network October 22nd The Sino-US trade war has finally burned into the medical field.

Recently, according to the New York Times, Trump said that the federal government will begin to actively regulate foreign investment in the United States on November 10, and prevent China from acquiring sensitive US technology through a stricter censorship system.

According to reports, the US Treasury aims to implement a temporary new regulation to strengthen foreign investment audits starting from November 10, which covers 27 industries, except for traditional sensitive industries such as telecommunications, semiconductors, computers and defense. medicine The industry also appears in the column.

The war between China and the United States has finally spread to the biomedical industry.

This means that with the increasingly close exchange of funds between China and the United States, Chinese pharmaceutical companies will face more severe censorship of investment in the US pharmaceutical industry, acquisitions and other capital actions.

At the same time, in the report of the Overseas Chinese News Network, the new rules stated that foreign investors must report to the Foreign Investment Committee (CFIUS) if CFIUS believes that foreign investors investing in sensitive US areas have access to non-public technology. Information, or participation in company decision-making, can veto the investment or acquisition plan.

It should be noted that before the entry into force of the Foreign Investment Risk Assessment Modernization Act, minority equity investments are outside the scope of CFIUS's review. Today, as long as key facilities, key technologies and sensitive data are involved, regardless of the investment in any level or percentage of equity, Will belong to the CFIUS review scope.

However, Chinese capital has always maintained a great interest in the US biomedical industry.

According to data provider PitchBook, in the first three months of this year, China-based venture capital funds injected US$1.4 billion into US private biotech companies, accounting for about 40% of the company's $3.7 billion raised during this period. Compared with the same period, China Fund invested US$125 million, accounting for only 7% of the total.

A number of foreign media are also concerned about this phenomenon.

In the report of Bloomberg, China launched the 'Made in China 2025' in 2015, which will bring biomedicine and high performance. medical instruments As one of the ten key areas, biotechnology and other innovative companies are eligible for greater government support. This has stimulated Chinese pharmaceutical companies and investors' interest in the biomedical industry, and on the other hand, China has become more Easy access to new medical technology, resulting in high returns.

In addition, Reuters revealed that in the United States, cash inflows from China have expanded the scale of biomedical financing and accelerated its role in raising funds. Companies that rely on licensing agreements to get new drugs to sell and develop in China - such as Shanghai Ding Pharmaceutical pays premiums more often - China's interest has increased the advance payment of US pharmaceutical companies' license agreements from $1 million, $5 million three years ago to more than $30 million.

Cross-border M&A behavior is also under review.

On September 14, Harbin Pharmaceutical Group received a notice from the US Foreign Investment Committee (hereinafter referred to as 'CFIUS'). The notice stated that CFIUS has reviewed and completed the company's securities purchase agreement signed by GNC and the company to purchase 299,950 shares from GNC. Convertible preferred stock, totaling approximately $300 million (approximately RMB 2 billion) in transactions.

The transaction was evaluated by the industry as a rare transaction reviewed by CFIUS after many Chinese M&A cases were blocked this year.

This also confirms from the side that the pharmaceutical industry is inevitably involved in the growing trade friction between China and the United States.

For a long time, the pharmaceutical industry has been a hot industry for international cross-border mergers and acquisitions. Trump's new regulations have cooled the enthusiasm for cross-border mergers and acquisitions between China and the United States.

According to Chinese medicine Health care products Import and Export Chamber of Commerce data shows that China only in the first three quarters of 2017 enterprise Cross-border M&A case, medical health The industry accounted for 13%, which is the second largest M&A hotspot industry after manufacturing. A total of 32 cross-border M&A cases were completed, surpassing 21 in the same period of 2016, involving an amount of US$47, exceeding the 3.78 billion in the same period of 2016. Dollar.

In 2017, Sanpower Group announced that it will acquire US biopharmaceutical company Dendreon for US$819 million. After Fosun Pharma, Renfu Medicine, Xianyi Pharmaceutical, Sansheng Pharmaceutical, and Weigao Group, all of them entered the merger, and Sanpower Group set up. Acquisition of the record of the first biological original drug in overseas.

The research report of going out to think tanks suggests that Chinese companies encounter foreign security review when they encounter overseas mergers and acquisitions, which will increase the risk and uncertainty of mergers and acquisitions.

The new Trump regulations are tantamount to making it easier for Chinese pharmaceutical companies to make overseas acquisitions.

Previously, even though the friction between China and the United States has intensified, medicine is still a 'pure land' that has not spread.

On June 15, the United States announced that it would impose tariffs on Chinese goods of US$50 billion and taxed 1,102 products in two batches.

Among them, the United States on the 6th local time on July 6th 00: 01 (Beijing time on the 6th at 12: 01) on the first batch of 818 categories, the value of 34 billion US dollars of Chinese goods plus 25% import tariffs, need to pay attention The first batch of this trade war has no medicine, only some medical equipment.

However, Trump said on July 5 that if China takes revenge, the United States will start the current tax levy on 200 billion U.S. dollars of imported Chinese goods, and then start the current suspended investment of 300 billion U.S. dollars in Chinese goods as needed. Tax, which means that the United States may increase tariffs on all imported goods from China.

From the above veins, we can find that medicine has not been affected by the Sino-US trade war, and the pharmaceutical industry has also become a pure land under the war.

However, the release of the US policy tells us that: Under the nest, there will be an intact egg, and this piece of pure land will cease to exist.