M&A 1H17 Review China Pharmaceutical Sector

Transcription

1 M&A 1H17 Review China Pharmaceutical Sector

2 Agenda Foreword Overview Strategic Buyers Financial Buyers Mainland China Outbound Deals 2

3 Foreword Explanation of data presented in this report (1/2) The data and analysis here presented are for the China Pharmaceutical sector only The data source of this deck is consistent with that of M&A 1H17 Review and 2H17 Outlook, which is based on the information compiled by ThomsonReuters, ChinaVenture and analysis, unless stated otherwise Thomson Reuters and ChinaVenture record announced deals. Some announced deals will not go on to complete The deal volume figures presented in this report refer to the number of deals announced, regardless of whether or not a value is disclosed for the deal The deal value figures presented in this report refer only to the deals whereby a value has been disclosed (referred to in this presentation as disclosed value ) Domestic means China including Hong Kong and Macau Outbound relates to mainland China company acquisitions abroad Inbound relates to overseas company acquisitions of Domestic companies 3

4 Foreword Explanation of data presented in this report (2/2) Private Equity deals or PE deals refer to financial buyer deals with deal value of over US$1mn and/or with undisclosed deal value, invested mainly by private equity GPs, and also including direct investments by financial institutions and conglomerates which are of the nature of private equity type investing VC deals refer to financial buyer deals with deal value of less than US$1mn and/or with undisclosed deal, but invested by venture capital funds Strategic buyer refers to corporate buyers (as opposed to financial buyers) that acquire companies with the objective of integrating the acquisition in their existing business Financial buyer refers to investors that acquire companies with the objective of realising a return on their investment by selling the business at a profit at a future date and mainly, but not entirely, comprise PE and VC funds 4

5 Overview 5

6 China M&A fell by 14% in the first six months of 217 to US$1.87 billion, but China mainland outbound activity increased by 2% and 112% in number of deals and in deal value Total deal volume and value of China Pharmaceutical sector, 1H17 vs. 2H16 1H14 2H14 1H15 2H15 1H16 2H16 1H17 1H17 Vs Vs 2H16 % Differnce Vol Value Vol Value Vol Value Vol Value Vol Value Vol Value Vol Value Vol Value Strategic buyers (US$mil) (US$mil) (US$mil) (US$mil) (US$mil) (US$mil) (US$mil) Domestic 45 2, , , , , , ,844 (6%) (59%) Foreign % (72%) Total Strategic buyers 51 3, , , , , , ,871 (6%) (59%) Financial buyers Private Equity , , , , ,25 (32%) % VC (19%) (63%) Total Financial buyers , , , , ,36 (26%) (3%) China mainland Outbound SOE n.a n.a POE , , ,432 13% 76% Financial buyers ,655 5% 22% Total China mainland Out ,31 2 1, ,87 2% 112% HK Outbound % 173% Total 64 3, , , , , , ,874 (1%) (14%) Source: ThomsonReuters, ChinaVenture and analysis 6

7 Deal values fell significantly in domestic strategic buyer as a result of fewer mega-deals. However, outbound and financial buyer deal values have seen big increase in 1H17 Deal value by main category (1H14 1H17) US$mil 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 149 4, ,369 1, ,42 3, ,338 13, ,346 2,187 4, , , ,448 2,641 2,844 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound * US$1.65bn of private equity fund backed China mainland outbound deals are also recorded in financial buyer deals Source: ThomsonReuters, ChinaVenture and analysis 7

8 Deal volumes also fell in domestic strategic and financial sectors, but despite reported curbs outbound deal volumes increased by 16% to a new half-year record of 21 transactions Deal volume by main category(1h14 1H17) H14 2H14 1H15 2H15 1H16 2H16 1H17 Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound * 6 PE- led China mainland outbound deals are also recorded in financial buyer deals Source: ThomsonReuters, ChinaVenture and analysis 8

9 Strategic Buyers 9

10 Domestic strategic M&A declined by nearly 6% to touch three-year lows with only 5 mega-deals valued at more than $1 million (compared to 11 in the prior six months); On the other hand, foreign inbound strategic M&A remained inactive. Strategic buyer deals volume and value (1H14 1H17) Volume US$mil , , 1, 8, 6, 4, 2 2, 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Deal volume - Domestic Deal volume - Inbound Deal value - Domestic Deal value - Inbound Source: ThomsonReuters, ChinaVenture and analysis 1

11 Although overall deal volume and value decreased in 1H17, biotechnology showed growing trend in deal volume. Strategic buyer deal by subsector (1H14 1H17) Volume US$mil 12 12, , 8, 6, , , 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Deal volume - Pharmaceutical Deal volume - Biotechnology Deal value - Pharmaceutical Deal value - Biotechnology Source: ThomsonReuters, ChinaVenture and analysis 11

12 1H17 top deals of strategic buyers above US$1 million Date announced Deal val (US$ mil) 1 7/6/ Jiangsu Yuyue Tech Dvlp Co 2 19/6/ Grand Full Development Ltd 3 3/6/ Yantai Dongcheng Biochemicals 4 9/5/ Shanghai Runda Med Tech 5 5/1/ Guangzhou Baiyunshan Pharm Acquirer Target Target industry Brief introduction Yunnan Baiyao Holding Co Ltd Bloomage BioTechnology Corp JYAMS PET Research & Dvlp Ltd ReLIA Biological Engineering Yunnan Hongxiang Yixintang Source: ThomsonReuters, ChinaVenture and analysis Pharmaceuticals Healthcare Providers & Services (HMOs) Pharmaceuticals Other Financials China Hong Kong Pharmaceuticals PharmaceuticalsChina Pharmaceuticals Healthcare Equipment & Supplies China Jiangsu Yuyue Technology Development Co Ltd acquired a 1% stake in Yunnan Baiyao Holding Co Ltd, a Kunming-based manufacturer and wholesaler of pharmaceuticals, a 5:5 joint venture between New Huadu Industrial Group Co Ltd (New Huadu) and the People's Government Of Yunnan Province, from New Huadu (5%) and the People's Government Of Yunnan Province (5%), for CNY bil (USD mil), in a privately negotiated transaction. Grand Full Development Ltd of Hong Kong planned to acquire a 5.712% interest or mil ordinary shares in Bloomage BioTechnology Corp Ltd, a Beijing-based manufacturer and wholesaler of pharmaceutical preparation, for CNY (USD 2.9) in cash per share, or a total CNY 3.29 bil (USD mil), via scheme of arrangement. Upon completion, Bloomage BioTechnology Corp Ltd will be delisting from the stock exchange. Yantai Dongcheng biochemicals Co Ltd agreed to acquire the entire share capital of JYAMS PET Research & Development Ltd, a Nanjing-based manufacturer of medicinals and botanicals, for an estimated CNY bil (USD mil), in a stock swap transaction. The consideration was to consist of CNY mil (USD mil) in cash and the issuance of an estimated mil Dongcheng Biochemicals's new ordinary shares valued at CNY mil( USD mil). Shanghai Runda Medical Technology Co Ltd signed a Letter of Intent to acquire the entire share capital of ReLIA Biological Engineering (Shenzhen) Co Ltd, a Shenzhen-based manufacturer of pharmaceutical preparation, for an estimated CNY bil (USD mil), in a stock swap transaction. The consideration was to consist of CNY mil (USD mil) in cash and the issuance of an increased estimated mil Shanghai Runda Medical's new ordinary shares valued at CNY 1.2 bil (USD mil). Pharmaceuticals PharmaceuticalsChina Guangzhou Baiyunshan Pharmaceutical Co Ltd, a unit of the Chinese stateowned Guangzhou Pharmaceutical Holdings Ltd, agreed to acquire mil new ordinary shares, or 6.922% stake in Yunnan Hongxiang Yixintang Pharmaceutical Co. Ltd, a Kunming-based manufacturer of pharmaceutical preparation, for CNY19.28 (USD 2.781) per share in cash, in a privately negotiated transaction. 12

13 Financial Buyers 13

14 PE and VC activity declined by around a quarter compared to the significant peak seen in the last half of 216, but activity remained robust overall with almost the same deal value as prior 6 months Financial buyer deals (1H14 1H17) Volume US$mil H14 2H14 1H15 2H15 1H16 2H16 1H17 Deal volume - PE Deal volume - VC Deal value - PE Deal value - VC 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Source: ThomsonReuters, ChinaVenture and analysis 14

15 1H17 top deals of financial buyers above US$2 million Date announced Deal val (US$ mil) Acquirer Target Target industry Brief introduction 1 19/4/ Zhuhai Hengqin WeZhuhai Weixing Industrial Co 2 11/5/ Xizang Yuxi VentureGuizhou Xinbang Pharm Co Ltd 3 28/6/ Hangzhou ZhemintoZhenxing Biopharm & Chem Co Pharmaceuticals Pharmaceuticals Pharmaceuticals Zhuhai Hengqin Weifu acquired 1% stake of Wuhan Zhuhai Weixing Industrial Co for USD 662 mil. Guanfu Zhang,the actual owner of Guizhou Xinbang Pharm, transferred all his 21.4% stake to Xizang Yuxi VC for USD 396 million. Hangzhou Zhemintou Tianhong attempted to get control of Zhenxing Biopharm & Chem Co for USD 396 mil under a tender offer. 4 13/3/ Liu Xicheng Hainan Haiyao Co Ltd Pharmaceuticals Xicheng Liu, the actual owner of Hainan Haiyao, attemped to acquire 1% more stake of the company under a tender offer. Source: ThomsonReuters, ChinaVenture and analysis 15

16 Mainland China Outbound Deals 16

17 Pharmaceutical outbound deals, as deals with clear strategic rationale, continued to witness a plunge starting from 216 in terms of both volume and value. POE actively involved and contributed US$1bn deals. The involvement of PE and financial buyers in outbound M&A is now a well established sub-sector of the market While SOE remained inactive. Mainland China outbound deals by investor type Volume 3 US$mil 3, 2, , 1, H14 2H14 1H15 2H15 1H16 2H16 1H17 Deal volume - SOE Deal volume - POE Deal volume - Financial buyer Deal value - SOE Deal value - POE Deal value - Financial buyer 1, 5 Source: ThomsonReuters, ChinaVenture and analysis 17

18 1H17 top Mainland China outbound deals above US$2 million Date announced Deal val (US$ mil) 1 1/4/217 1,3 Creat Group Corp POE Biotest Medical research & development 2 1/3/217 9 Investor group Financial Buyer 3 9/1/ Sanpower Group Co Ltd POE 4 8/6/ Investor group Financial Buyer Acquirer Acquirer type Target Target industry Grail Dendreon Pharmaceuticals Inc SciClone Pharmaceuticals Medical research & development Biotechnology Brief introduction Creat Group Corporation, an investment firm, has agreed to acquire Biotest AG, a provider of plasma proteins and biological drugs, in a tender offer. The transaction is expected to be valued at approximately EUR1.2 billion (USD1.3 billion). Grail, Inc., a Menlo Park, CA-based life sciences company that promises to detect cancer early when it can be cured, raised over $9m through the first close of its Series B funding. The round was led by Arch Venture Partners with participation from Johnson & Johnson Innovation as well as Amazon, Bristol-Myers Squibb, Celgene, McKesson Ventures, Merck (known as MSD outside the United States and Canada), Tencent Holdings Limited and Varian Medical Systems, Inc. Valeant Pharmaceuticals International, Inc. announced that its affiliate has entered into a definitive agreement to sell all of the outstanding equity interests in Dendreon Pharmaceuticals, Inc. ("Dendreon") to the Sanpower Group Co., Ltd.,. Under the terms of the transaction, Valeant will receive cash consideration of $819.9 million at completion. Pharmaceuticals SciClone Pharmaceuticals, Inc. and a consortium consisting of entities affiliated with GL Capital Management GP Limited ("GL Capital"), Bank of China Group Investment Limited ("BOCGI"), CDH Investments, Ascendent Capital Partners and Boying announced that they have entered into a definitive merger agreement under which the Buyer Consortium will acquire all the outstanding shares of SciClone for $11.18 per share in cash, representing a valuation of approximately $65 million. Source: ThomsonReuters, ChinaVenture and analysis 18

19 Developed economies continue to be the favoured outbound destinations, among which, North America and Europe came in top two in terms of volume in 1H17. Outbound M&A deal volume by region of destination 1H17 vs. 2H16 North America Europe Asia Pacific South America Africa Oceanic Source: ThomsonReuters, ChinaVenture and analysis 1H17 2H16 19

20 Contacts Xun Tang China Pharmaceuticals & Life Sciences Industry, Transaction Services, Partner Shanghai Tel: +86 (21) Janelle Fei China Pharmaceuticals & Life Sciences Industry, Transaction Services, Associate Director Shanghai Tel: +86 (21) This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. 217 PricewaterhouseCoopers Management Consulting (Shanghai) Limited. All rights reserved. refers to the China member firm, and may sometimes refer to the network. Each member firm is a separate legal entity. Please see for further details. CN C1