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Layoffs, selling pipelines, selling factories, selling companies... 2022 Global Health Enterprise "Cash Stockpile Winter"

 Last Update: 2023-01-01
 Source: Internet
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As global uncertainty intensifies, the big health industry, which has been struggling to rise under the epidemic, has once again hit hard:

Of the more than 100 biotech companies listed in 2021, 80% of the shares of the US stock market have fallen by more than 50%, and a large part has even fallen by more than 90%.

In 2022, the number of IPOs of U.
S.
biotech companies fell by 80% year-on-year, and the share prices of these listed companies have fallen by more than half
so far.

In Hong Kong stocks and A-shares, IPOs of biotechnology companies have become the norm
.
Since the beginning of this year, the stock prices of Hong Kong stock big health companies have risen by only about 10, and the stock prices of A-share big health companies have risen by less than 30
.

In the big health industry, which can be said to be the "most burning money", enterprises are increasingly worried that the economic downturn will lead to the drying up
of "funds".
As a result, global health companies have "stockpiled cash for the winter"
.

After all, "staying alive" is more important
than anything else.

However, for some companies, having "money" does not necessarily mean peace of mind, because those large companies with large cash flows are also looking to grab more high-quality assets
during this period of price depression.

The world's big health giant

Hoard money, for the winter, but also for investment

Cash is king
.
Before discussing the recent "not doing well" big health companies, let's take a look at which big health companies have the most cash
.

Cash is king
.

According to the financial data released in the first three quarters of 2022, the companies with the highest cash and cash equivalents in the global health industry, BioNTech, the new crown vaccine upstart, the immunization giant AbbVie and Johnson & Johnson ranked in the top three
.

Covid vaccine upstart BioNTech, immunity giants AbbVie and Johnson & Johnson

As of 2022Q3; Medtronic's fiscal year 2022 is (May 2021 to April 2022); The fiscal year 2022 of BID Medical is (October 2021 - September 2022).

1 pound sterling = 1.
2127 USD; 1 DKK = USD 0.
1403
.

Global TOP20,

Group (pharmaceutical, medical devices) on the list of 2 companies: Johnson & Johnson, Abbott;

The group (pharmaceutical, medical device) listed 2 companies Johnson & Johnson and Abbott

15 pharmaceutical companies on the list: Novo Nordisk, BioNTech, AbbVie, Merck, Amgen, Fortech Pharmaceutical, Novartis, Bristol-Myers Squibb, Gilead, BeiGene, AstraZeneca, Biogen, Regeneron, GSK, Moderna;

The 15 companies on the list include Novo Nordisk, BioNTech, AbbVie, Merck, Amgen, Fortech Pharmaceutical, Novartis, Bristol-Myers Squibb, Gilead, BeiGene, AstraZeneca, Biogen, Regeneron, GSK, and Moderna;

There are 3 companies on the list: Medtronic, Thermo Fisher, and Bidi Medical
.

There are 3 medical device companies on the list: Medtronic, Thermo Fisher, and Bidi Medical

Among them: 14 American companies, 2 British companies, 1 Danish, German, Swiss and Chinese enterprises
.

"Fancy" cash stockpile: sell business, sell factory, reduce restructuring

Even if most large companies have a lot of cash, they may still feel that they are not enough in the face of great uncertainty and are still "fancy hoarding"
.
This is true
for pharmaceutical companies and medical device companies.

Novartis: Sold for a better investment

In early November, Novartis announced it was considering selling its ophthalmology and respiratory business to raise funds to invest in core medicines
.
According to people familiar with the matter, the larger ophthalmic business alone is expected to be valued at about $5 billion
.
This may be another major move
in Novartis' restructuring plan after restructuring, layoffs, and the spin-off of the generic drug division.

Early November, Novartis

Selling some of the cash from the business and investing it may be more profitable
.
For example, the latest news that Novartis is targeting GSK as a potential acquisition target, if successful, will allow Novartis to re-enter the field of vaccines and viruses, and get rid of the risks
faced in the highly competitive oncology field.
Analysts predict that if the deal goes through, Novartis will add more than 40% of its value
in three years.

AstraZeneca: New model, after the sale of the factory, the alliance is reached

AstraZeneca: New model, selling factories and reaching partners AstraZeneca selling factories to reach partners

On November 29, AstraZeneca decided to sell its West Chester, Ohio, plant to biotech manufacturer National Resilience
。 At the same time as the sale, the two drugmakers reached a deal A "long-term" biomanufacturing agreement under which Resilience will continue to produce its "selected drugs"
for AstraZeneca.
More than 500 employees currently working at the AZ plant will continue to work
after being integrated into Resilience.
The transaction did not disclose the exact amount and is expected to close in
early 2023.

November 29, AstraZeneca

Selling factories to reach partnerships without affecting production activities may become a trend
in the industry.

Medtronic: Spun to focus on high-growth businesses On October 24, Medtronic announced the spin-off of its patient monitoring PM business and respiratory intervention RI business from the group business to seek more efficient growth
in the company's core business.

Medtronic: Spun off to focus on high-growth businesses On October 24, Medtronic spun off its patient monitoring PM business and respiratory intervention RI business from the group business

The Patient Monitoring and Respiratory Intervention business is part of the Respiratory Gastrointestinal and Nephrology division of the Medtronic Medical-Surgical portfolio
.
These products were rapidly ramped up during the severe coronavirus pandemic, and now the coronavirus dividend has passed, and revenue has declined
under the negative impact of global supply chain shortages, geopolitical tensions, inflation and other negative effects.
In Q4 of fiscal 2022, its Respiratory, Gastroenterology and Nephrology segment revenue was approximately $740 million, or -7%.

The spin-off will help Medtronic focus on business priorities
.
In addition, Medtronic CEO Geoff Martha said Medtronic will continue to evaluate "potential additions and decreases"
to its portfolio in the medium to long term.

Siemens Healthineers: Downsizing and restructuring of the IVD business

On November 9, Siemens Healthineers said at its quarterly earnings conference that it plans to reduce and restructure its in vitro diagnostic business unit
.
The commitment to a "leaner organization and footprint" from 2025 will save around €300 million a year to cope with supply chain costs, equipment shortages and increased inflation, as well as lost revenue due to repeated coronavirus
pandemics.

On November 9, Siemens Healthineers downsized and reorganized its In Vitro Diagnostics business unit

This streamlining aims to bring some older systems out of the market sooner (or around 50 percent) than previously planned after the introduction of its Atellica lab system, in order to simplify the product portfolio and focus on the core pipeline
.

As of Q3 of fiscal 2022, Siemens Healthineers had cash and cash equivalents of EUR 1,436 million and net profit of EUR 630 million
in the first three quarters of fiscal 2022.

Teleflex: Layoffs, relocations, streamlining

On November 21, Teleflex announced plans for a new round of restructuring aimed at offsetting rising costs in the healthcare sector and countering inflationary pressures
.
It is said that the restructuring plan mainly involves offshore production and streamlining various business functions of the company
.

21 November, Teleflex

Specific or including:

The company plans to cut about
14,000 jobs.

Relocate part of your manufacturing operations to locations
with lower production costs.

Streamline various business functions
across the company.

Teleflex expects to save $21 million to $23 million annually in pre-tax costs
after full implementation of the restructuring plan.

As of Q3 2022, Teleflex had cash and cash equivalents of $397 million and net profit of $285 million
for the first three quarters of 2022.

Net profit is much greater than net cash flow, or there are "hidden concerns"

In addition to cash flow, net profit is also a very important consideration
for these large enterprises.

Net profit

Too low a net profit means that there is not enough sustainable development, and if the net profit is much greater than the net cash flow value, it also indicates a cash flow "crisis"
.

In the TOP20, cash flow "crises" include:

Novo Nordisk: net profit of DKK 41,933 million, cash and equivalents of GBP 27,914 million (net profit of over GBP 14 billion);

Novo Nordisk:

GSK: net profit of £13,495 million, cash and equivalents of £3,352 million (net profit of over £10.
1 billion).

GSK：

Judging from the cash flow "crisis" faced by GSK, it may be reasonable to be listed as a potential acquisition target
.

But this "crisis" also needs to consider specific factors
.
For example, Pfizer, which is the top 1 in the revenue of global pharmaceutical and device companies, is the company with the largest net profit exceeding net cash flow in the US stocks
.
In the first three quarters of 2022, Pfizer's net profit was US$26.
404 billion, and the balance of cash and cash equivalents as of Q3 2022 was US$1.
338 billion, with a net profit of more than US$25 billion
.

But Pfizer made a number of cash acquisitions in 2022, just investing its huge cash flow in places with a more "input-output ratio":

In April, it acquired ReViral
, an antiviral therapy company for respiratory syncytial virus (RSV), for $525 million in cash.

In May, it acquired most of Biohaven's business
for $11.
6 billion in cash.

In August, it acquired Global Blood Therapeutics (GBT)
for approximately $5.
4 billion in cash.

In October, it acquired an AI diagnostics company
for $116 million.

China A-share health

Plan ahead and try to save yourself

From the perspective of enterprises with the highest cash and cash equivalents in China's big health industry, in addition to BeiGene's "riding the dust", Baiyunshan Pharmaceutical and Hengrui Pharmaceutical ranked second and third
, respectively.

As of 2022Q3; 1 RMB = USD 0.
1544

China's TOP20,

1 enterprise on the list of the group (pharmaceutical, medical device): Fosun Pharma;

There are 7 pharmaceutical companies on the list: BeiGene, Baiyunshan, Hengrui Pharmaceutical, Health Yuan, Yunnan Baiyao, Tongrentang, Liaoning Chengda;

There are 8 medical device companies on the list: Mindray Medical, Jiuan Medical, Lizhu Group, Oriental Biotechnology, Xinhecheng, Yingke Medical, BGI, and Lepu Medical;

The 8 medical device companies on the list are Mindray Medical, Jiuan Medical, Lizhu Group, Oriental Biotechnology, Xinhecheng, Yingke Medical, BGI, and Lepu Medical;

CXO on the list of 3: WuXi AppTec, Tigermed Pharmaceutical, Kaileying;

CXO made the list of 3: WuXi AppTec, Tigermed and Kaileying

Chain clinic on the list: Aier Eye Department
.

The chain clinic is listed as 1 Aier Eye Department
.

BeiGene: A rare Biotech "cash" pioneer

In the global TOP20, 16 are large companies, and the other 4 include BeiGene
, the head of China's Biotech, in addition to the new crown vaccine giants BioNTech and Moderna.

As the only company in the TOP20 with a negative net profit, it can be seen that BeiGene's revenue cash is very small
.

BeiGene

In general, cash flow includes:

Revenue cash flow (product/service sales);

investment cash flow (invested in specific projects);

financing cash flow (financing activities);

Among them, revenue cash flow is the most necessary and very important part for the sustainable development of
enterprises.

BeiGene's strong financing is also an important advantage
for a BioPharma.
By the end of 2021, BeiGene had raised more than RMB70 billion (including primary and secondary markets).

Previous medical trends have analyzed it: Who can cross the cycle series? BeiGene's $70 billion financing vision

However, the long-term development in the future still depends on the growth
of its product revenue.
As of 2022Q3, BeiGene has launched 18 drugs (including 3 self-developed products: zebratinib, tirelizumab, and pamiparib).

Although its product revenue in the first three quarters of 2022 exceeded 6 billion yuan (+114.
6%), it was far from the speed of cost investment, and when profit is still its "sword of Damocles"
.

The famous Gartner curve divides "innovation" from embryonic germination to thriving in 5 stages
.
In the early stage, they will face risks similar to high cost or high failure rate; When the product technology enters the mature stage and is applied to the actual scenario, as the market continues to enjoy the technical dividend, it is ultimately a process
of cost reduction and efficiency increase.

Therefore, innovative technologies can better play their commercial value
by finding application scenarios with pain points and large-scale markets at suitable nodes.

On the other hand, the funding environment for start-ups is getting worse as capital is more cautious
about projects that "may have commercial future but have not yet been proven.
" Financing intensity like BeiGene's may not be common in the future
.

More Biotech is helping itself: focusing on core pipelines and "selling" factories

To maintain cash flow, these companies have had to take a series of open source throttling measures, including focusing on high-growth projects, selling factories, and even selling companies
.

Hutchison Pharmaceutical: R&D investment shifted to late-stage pipelines

As of Q2 2022, Hutchison had cash and cash equivalents of US$468 million, and net profit in Q2 2022 was -US$163 million
.

On November 15, Hutchison announced that it is actively making a strategic shift to focus on drugs that are at the forefront of its internal pipeline and most likely to drive near-term value
.
Include:

Priority is given to late-stage registration studies and regulatory approvals for the marketing of these drugs, in particular the global registration
of fruquintinib.

Some early-stage research is no longer prioritized for in-house development, while certain others consider external business opportunities
.

Seek potential partners to commercialize drugs outside of China to accelerate the delivery of innovative medicines
to patients worldwide.

At present, Hutchison Pharma has 3 self-developed innovative drugs on the market (2 of which have been included in medical insurance), in addition,

Clinical-stage drugs: 11 were conducted in China, 6 of which were in clinical trials in
the United States and Europe simultaneously.

Preclinical trial drugs: 7 models
.

From this point of view, there may be more than 5 Phase I clinical trials and 7 preclinical pipelines or will not be prioritized
.

Kewang Biotech: "sell" factory + cooperation

In September, WuXi Biologics and Kewang announced that they have entered into a number of strategic partnerships
.

Under the agreement, WuXi Biologics will acquire Kewang Pharma's Suzhou process development and pilot manufacturing facilities to further develop it into a macromolecule development and GMP manufacturing service base with industry-leading service standards (undisclosed amount).

The site will be WuXi Biologics' 22nd biomedical stock solution manufacturing facility, MFG22
, globally.

At the same time, the two parties signed a strategic partnership service agreement, under which WuXi Biologics will serve as the exclusive CDMO partner of Kewang to provide integrated R&D and manufacturing services to ensure the development and production needs
of Kewang's global innovative drug pipeline.

Kewang Biologics' move may not be about how much money it gets, but with the big tree of WuXi Biologics, its subsequent R&D and production are more secure
.

Harbour Pharmaceutical: Pipeline stopped and "sold", sold factories, funds for growth projects As of Q3 2022, Harbour Pharma has cash and cash equivalents of US$153 million, and net profit in the first three quarters of 2022 is -US$73 million
.

Harbour Pharmaceutical: Pipelines are stopped and "sold", factories are sold, and funds are used for growth projects

On October 10, Harbour Pharma issued two announcements announcing that its two core products in key clinical phase III will be suspended and "sold":

Because the efficacy did not meet expectations, it was decided to end the phase III trial of tenacercept (HBM9036) in China and no new subjects
were enrolled.

Licensed exclusive rights in the development, manufacture and commercialization of bartolimab (HBM9161) in Greater China to Enbipu Pharmaceutical, a wholly-owned subsidiary of CSPC Group, in a total transaction of approximately RMB1 billion
.

So far, in the R&D pipeline of Harbour Pharmaceutical, the most advanced fully human anti-CTLA-4 antibody HBM4003, single agent and combination therapy with PD-1 are in the I.
b/II.
trial stage
.
Other indications and products are in phase I or preclinical stage
.

On November 15, Harbour Biopharma announced that it would sell its biomolecule plant that was originally scheduled to be put into production before the end of 2022 to WuXi Hyde, a subsidiary of Biologics Biologics, for a transaction price of RMB 146 million
.
According to the announcement, the sale will cause a loss of about 61.
93 million yuan
for Harbour Pharmaceutical.

Thereafter, Harbour Biopharma said that the disposal will immediately generate cash to support the Group's operations and drug development, while improving the Company's financial structure, cash flow and liquidity
.
And these funds will be invested in projects
with more growth prospects.

On November 11, Harbour Biopharma announced that it has signed a cooperation agreement with Moderna, a leading mRNA company, to license the company's heavy-chain antibody HCAb technology platform
.
Harbour Biopharma will receive an upfront payment of $6 million, a milestone amount of $500 million, and a percentage of
sales.

In response to this big cycle, overseas biotech seems to be more "radical"
than Chinese biotech.

According to BIO, at least 110 large health companies worldwide (excluding China) will lay off jobs in 2022, of which more than 90% are start-ups
.

In addition to layoffs, many former star companies have recently begun to plan to "sell"
.
Include:

Mirati, an innovative drug company focused on cancer, valued at more than $12 billion;

Rubius, who proposed the concept of "red blood cell therapy", has a total market value of nearly $19 million;

Horizon, which focuses on rare diseases, autoimmune and severe inflammatory diseases, currently has a total market capitalization of approximately $17.
8 billion and may be purchased for more than $20 billion;

Single-port laparoscopic surgical robot company Titan Medical, with a total market value of $55.
85 million
.

The big difference between the current environment and the market recessions of 2000 and 2008 is that big drugmakers now have enough cash on hand to drive acquisitions
.

Many times, it's not a "bad thing" for Biotech/startups to sell assets or even be acquired, such as Genentech, which won from the first Biotech cycle, and is now a global brand
.

After all, a marathon lasts until the finish line to have a chance to be a
winner.

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