The trend of M & A integration in the pharmaceutical industry

Source: Finance: since August 11, 2016, the investment and merger of pharmaceutical industry has become a hot field of capital pursuit On the evening of July 28, Fosun Pharmaceutical announced that the company plans to purchase India pharmaceutical company gland Pharma Limited (gland is the first injection drug manufacturer approved by FDA in India and GMP certification in major regulatory markets around the world, and its business income mainly comes from the United States and Europe) with a capital contribution of no more than US $1.26 billion through its holding subsidiary , including a contingent consideration of no more than $50 million to be paid by the acquirer based on the listing and sale of land's enoxaparin products in the United States This is by far the largest overseas merger and acquisition of Chinese pharmaceutical companies As mentioned in the recent review of China's equity investment market in the first half of 2016 released by Qingke Research Center, biotechnology / medical health ranked the third in the distribution of PE investment industry in the first half of 2016 with 122 cases, with an investment amount of RMB 17.178 billion Chinese pharmaceutical companies hope to speed up M & A to reduce disordered competition and repeated construction, improve competitiveness and get a share in the pharmaceutical field In the first half of 2016, the development of China's private equity market reviewed the general trend of M & A integration In addition to large pharmaceutical companies accelerating the pace of M & A in order to complete the layout of the industrial chain, at present, due to the impact of the industry economy and the intensive release of pharmaceutical policies, many small and medium-sized enterprises are difficult to sustain their development, and they have been acquired or "signed" by listed companies Through M & A, large pharmaceutical enterprises, especially some listed companies, can expand the market scale and complete the layout of the entire industrial chain Small enterprises can obtain advantageous resources and get the strong support of "relying on the mountain" with the help of a larger platform The benefits of M & A can optimize the corporate income, profit rate, earnings per share and other indicators through M & A, and further consolidate the "market position" According to wind information statistics, there were 279 M & A cases of listed pharmaceutical companies in 2015, including 197 cases of horizontal integration, 10 cases of vertical integration, 9 cases of financial investment and capital operation, and only 2 cases of business transformation; from 2016 to now, there are 70 cases of M & A of listed pharmaceutical companies, including 60 cases of horizontal integration, 2 cases of vertical integration, and only 1 case of business transformation Generally speaking, most of the M & A in the pharmaceutical industry is intra industry M & A, and there are few cross-border M & A cases The pharmaceutical industry includes a wide range of industries The pharmaceutical industry itself is a large industry, which can be subdivided into some small industries Its industry particularity makes it difficult for companies to do cross-border M & A from the perspective of enterprise development, the significance of cross-border M & A is not great The main businesses of Listed Companies in the pharmaceutical industry are also diverse, such as blood products, anti-cancer, preparations, biological vaccines, etc., so if it is a company merger, more or intra industry mergers and acquisitions, to achieve resource integration in the sub industry Up to now, there have been 20 overseas M & as of Chinese pharmaceutical companies with an amount of more than US $100 million Among them, Mindray Medical Co., Ltd and Fosun Medical Co., Ltd have launched two M & as respectively, and micro invasive medical science, Huada gene, China Resources Medical Co., Ltd., green leaf medical group and humanwell Medical Co., Ltd have also made outstanding achievements This surge is mainly the result of Chinese enterprises seeking asset diversification in the context of slowing domestic economic growth and the upgrading of "made in China" promoted by the government In the domestic market, many pharmaceutical companies are struggling with the fragmented pharmaceutical industry, which has nearly 5000 manufacturers The fierce competition is pushing down the price of generic drugs Their success overseas allows them to expand their product portfolio, find new areas of growth, and provide a ready entry point into developed markets with high regulatory standards At present, there are many shortcomings in the accumulation of Chinese pharmaceutical enterprises compared with those in the international decades There are obvious gaps in oral preparations, excipients, mechanical equipment and other fields The gap between home and abroad may make more enterprises "go global" and carry out cross-border M & A Now more and more pharmaceutical companies begin to focus on overseas markets As an emerging market, India has been favored by large pharmaceutical companies In November 2015, mylan completed the US $750 million acquisition of women's health care business from Mumbai's famycare Ltd Today, Fosun's acquisition of Indian pharmaceutical company gland creates the largest overseas acquisition of Chinese pharmaceutical companies Due to the low cost of operation in Southeast Asia, and the geographical location is not too far away, if domestic companies seek to expand overseas, Southeast Asia may be a key partner In fact, in recent years, the pace of M & A of global pharmaceutical companies is accelerating, and the target companies from emerging markets are more and more concerned by investment groups This change is mainly due to the fact that foreign quantitative easing and low-cost credit have pushed up the target price of mature markets in Europe and the United States, with fewer and fewer suitable investment opportunities However, due to the increase of interest rates in the United States dollar, the economic recovery in the United States, the decline of commodity prices and other reasons in emerging markets, asset prices have been underestimated and investment opportunities have increased As an important strategy of internationalization, overseas M & A is being valued by Chinese pharmaceutical enterprises Biomedicine has become one of the three most active industries for foreign investment and M & A in China, except for oil and gas and consumer goods retail industry In the future, we may see more pharmaceutical enterprises enter the overseas M & a layout with the help of PE / VC with strength to achieve international development