M&A 2017 Review China Pharmaceutical Sector

Transcription

1 M&A 217 Review China Pharmaceutical Sector April 218

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 217 Review and 218 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 pharmaceutical sector M&A fell by 17% in 217 to US$17.12 billion, but China mainland outbound activity increased by 1% and 97% in number of deals and in deal value Total deal volume and value of China Pharmaceutical sector, 217 vs Vs 1 6 % Differnce Volume Value Volume Value Volume Value Volume Value Volume Value Strategic buyers (US$m il) (US$m il) (US$m il) (US$m il) Domestic , , , ,481 (8%) (43%) Foreign % 83% Total Strategic buyers 155 1, , , ,659 (6%) (42%) Financial buyers Priv ate Equity , , ,1 (26%) (26%) VC % (55%) Total Financial buyers 25 1,9 84 7, , ,88 (14%) (27%) China mainland Outbound SOE n/a n/a POE , ,87 7 (4%) 45% Financial buy ers ,99 4% 239% Total China mainland Out , ,362 1% 97% HK Outbound % (98%) Total , , , ,115 (7%) (17%) Source: ThomsonReuters, ChinaVenture and analysis 6

7 Deal values fell continuously in domestic strategic buyer as a result of fewer mega-deals. However, outbound deal values have seen big increase in 217 Deal value by main category (2o14-217) 35, 3, 25, 2, 17 7, ,943 Down 17% 15, 1, 5, 1,136 6,131 4,459 1,15 23, ,997 11, ,792 6, Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound * US$1.3bn 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 continued to increase to a new record of 29 transactions Deal volume by main category ( ) Down 7% Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound * 7 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 43% to touch four-year lows with only 12 mega-deals valued at more than $1 million (compared to 23 in 216); On the other hand, foreign inbound strategic M&A remained inactive. Strategic buyer deals volume and value ( ) Volume 25 百万美元 US$mil 25, , 15, , 5, 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 217, biotechnology showed growing trend in deal volume. Strategic buyer deal by subsector ( ) Volume 25 US$mil 2, 18, 2 16, , 12, 1, , 6, 4, 2, Deal volume Pharmaceutical Deal volume Biotechnology Deal value Pharmaceutical Deal value Biotechnology Source: ThomsonReuters, ChinaVenture and analysis 11

12 217 top deals of strategic buyers above US$2 million Date announced Deal val (US$ mil) 1 7/6/ Jiangsu Yuyue Tech Dvlp Co Acquirer Target Target industry Brief introduction Yunnan Baiyao Holding Co Ltd 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. 2 12/1/ China Biologic Prod Hldg Inc 3 11/12/ China Regenerative Medicine 4 19/6/ Grand Full Development Ltd 5 12/9/ Shenzhen Hepalink Pharm Grp 6 11/12/ Boai NKY Ltd 7 3/6/ Yantai Dongcheng Biochemicals Health Forward Holdings Ltd Lung Hang Investments Ltd Bloomage BioTechnology Corp Shenzhen Duopule Ind Dvlp Co Boai Nky Biotech Co Ltd JYAMS PET Research & Dvlp Ltd Biotechnology Biotechnology China Biologic Products Holdings Inc (China Biologic) agreed to acquire the entire share capital of Health Forward Holdings Ltd, manufacturer of biological products, from PW Medtech Group Ltd, in exchange for mil China Biologic's new ordinary shares valued at a total CNY bil (USD mil), in a stock swap transaction. The shares were based on China Biologic's closing stock price of CNY (USD 97.15) on 11 Oct 217, the last full trading day prior to announcement. China Regenerative Medicine International Ltd of Hong Kong signed a Letter of Intent to acquire the entire share capital of Lung Hang Investments Ltd, manufacturer of pharmaceutical preparation, from Sacred Heart Healthcare LP, for an estimated CNY bil (USD mil). 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. Shenzhen Hepalink Pharmaceutical Group Co Ltd agreed to acquire the entire share capital of Shenzhen Duopule Industry Development Co Ltd, a Shenzhen-based manufacturer and wholesaler of pharmaceutical preparation, in exchange for an estimated mil Shenzhen Hepalink Pharmaceutical Group Co Ltd's new ordinary shares valued at CNY bil (USD mil), in a stock swap transaction. The shares were valued based on Shenzhen Hepalink Pharmaceutical Group Co Ltd's closing stock price of CNY 2.48 (USD 3.138) on 27 Apr 217, the last full trading day prior to the suspension. Boai NKY Ltd agreed to acquire the remaining 83.74% interest, which it did not already own, in Boai NKY Biotechnology Co Ltd, a Jiaozuo-based manufacturer and wholesaler of biological products, in exchange for an estimated mil Boai NKY Ltd's new ordinary shares valued at CNY bil (USD mil), in a stock swap transaction. The shares were valued based on Boai NKY Ltd's closing stock price of CNY (USD 7.33) on 24 Mar 217, the last full trading day prior to the suspension. 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). Source: ThomsonReuters, ChinaVenture and analysis 12

13 Financial Buyers 13

14 PE and VC activity declined by 14% and 26% in number of deals and deal value compared to the significant peak seen in 216 Financial buyer deals ( ) Volume US$mil 8, 7, 38 6, , 4, 3, 53 2, , Deal volume PE Deal volume VC Deal value PE Deal value VC Source: ThomsonReuters, ChinaVenture and analysis 14

15 217 top deals of financial buyers above US$2 million Date announced Deal val (US$ mil) 1 19/4/ Zhuhai Hengqin Weichuang 2 11/5/ Xizang Yuxi Venture Capital 3 28/6/ Hangzhou Zhemintou Tianhong Zhuhai Weixing Industrial Co Guizhou Xinbang Pharm Co Ltd Zhenxing Biopharm & Chem Co 4 13/3/ Liu Xicheng Hainan Haiyao Co Ltd 5 24/8/ Essence Fund/TFTC/Haier Capital/One-beltone-road etc Acquirer Target Target industry Yifan Pharmaceutical Co., Ltd Brief introduction 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. Xicheng Liu, the actual owner of Hainan Haiyao, attemped to acquire 1% more stake of the company under a tender offer. Yifan Pharma issued 16.2 million new shares via private placement and raised Rmb 1.8 billion in total. 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$1bn deals. The involvement of PE and financial buyers in outbound M&A is now a well established sub-sector of the market. SOE also contributed 2 deals in 217. Mainland China outbound deals by investor type Volume Deal volume SOE Deal volume POE Deal volume Financial buyer Deal value SOE Deal value POE Deal value Financial buyer Source: ThomsonReuters, ChinaVenture and analysis US$mil 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5

18 2o17 top Mainland China outbound deals above US$5 million Date Deal val announced (US$ mil) Acquirer Acquirer type Target Target industry Brief introduction 1 1/4/217 1,3 Creat POE Biotest Medical research Creat Group Corporation, an investment firm, has agreed to acquire Biotest AG, a Group Corp & development 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). 2 3/11/217 1,51 Nanjing Xinjiekou Dept Store 3 1/3/217 9 Investor group 4 9/1/ Sanpower Group Co Ltd 5 8/6/ Investor group 6 15/11/ Shanghai Pharma Century POE Shiding Shengwu Biotechnology (Hong Kong) Trading Ltd / Dendreon Inc Biotechnology Financial Buyer Grail Medical research & development POE Financial Buyer SOE Dendreon Inc SciClone Cardinal Health (L) Co Ltd Biotechnology Nanjing Xinjiekou Department Store Co Ltd (Nanjing Xinjiekou) of China agreed to acquire the entire share capital of Shiding Shengwu Biotechnology (Hong Kong) Trading Ltd, provider of biotechnology research and development services, from Sanpower Group Co Ltd, in exchange for an estimated mil Nanjing Xinjiekou's new ordinary shares valued at HKD 8.21 bil (USD 1.51 bil), in a stock swap transaction. The shares were valued based on Nanjing Xinjiekou's closing stock price of HKD (USD 5.833) on 14 Sep 217, the last full trading day prior to the suspension. 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 International, Inc. announced that its affiliate has entered into a definitive agreement to sell all of the outstanding equity interests in Dendreon, 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. SciClone, 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. Shanghai Pharma Century Global, wholly-owned subsidiary of Shanghai Pharma acquired a 1% stake in Cardinal Health (L) Co., Ltd. in an all-cash offer and therefore owned Cardinal Health s business entities in the PRC upon the completion of this transaction. 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 217 Outbound M&A deal volume by region of destination 217 vs. 216 North America Europe Asia Pacific South America Africa Oceanic Source: ThomsonReuters, ChinaVenture and analysis 19

20 Xun Tang China Deals Partner and Life Sciences Industry Janelle Fei China Deals Associate Director and Life Sciences Industry 217 M&A Review China Pharmaceutical Sector April 218 2

21 Thank you! This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. 218 PWC. 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