M&A 2017 Review China Medical Device Sector

Transcription

1 M&A 217 Review China Medical Device Sector

2 Agenda Foreword Overview Strategic Buyer 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 Medical Device sector only The data source of this deck is consistent with that of M&A FY17 Review and FY18 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 medical device M&A fell by 36% in 217 to US$4.94 billion, the lowest amount in the past three years Total deal volume and value of China Medical Device sector Vs 16 % Differnce Volume Value Volume Value Volume Value Volume Value Vol Value Strategic buyers (US$m il) (US$m il) (US$m il) (US$m il) Dom estic 91 2, , , , % (59%) Foreign % n.a Total Strategic buyers 94 2, , , ,29 19% (58%) Financial buyers Priv ate Equity ,222 7% 3 5% VC % 423% Total Financial buyers ,496 26% 56% China mainland Outbound SOE n.a n.a POE ,1 (36%) 63% Financial buy ers , (1 4%) (7 3%) Total China mainland Outbound , ,324 (38%) (26%) HK Outbound (1 7 %) 27 % Total 125 2, , , ,94 9% (36%) Source:ThomsonReuters, ChinaVenture and analysis 6

7 Deal values fell across the two main sub sectors (strategic and financial) with fewer big deals, while China Mainland Outbound rose 59%, amounting to $ 1.1 billion, to a record high Deal value by main category(fy14-fy17) US$mil 9, 8, 7, 6, Up 12% ,3 2,132 Down 36% 5, 4, 327-1,11 3, 2, 1, ,494 4,838 4,855 1, ,997 FY14 FY15 FY16 FY17 Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound Source:ThomsonReuters, ChinaVenture and analysis 7

8 Although the deals value fell by 36%, the deal volumes increased by 9%. Deal in strategic and financial buyer remained active, but outbound declined Deal volume by main category(fy14-fy17) Up 9% 19 Up 4% FY14 FY15 FY16 FY17 Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound Source:ThomsonReuters, ChinaVenture and analysis 8

9 Strategic Buyers 9

10 Domestic strategic M&A volume increased by 19% but value decreased by 58% to touch three year lows; while foreign strategic M&A remained inactive Strategic buyer deals volume and value (FY14-FY17) Volume US$ mil , 8 2 5, 4, , , 1, FY14 FY15 FY16 FY17 Deal volume Domestic Deal volume Inbound Deal value Domestic Deal value Inbound Source:ThomsonReuters, ChinaVenture and analysis 1

11 Surgical, consumables and imaging equipment witnessed increase in FY17, while IVD (including reagent), the hottest sector in prior years, appeared to cool down in FY17 Strategic buyer deals by subsector volume (FY14-FY17) FY14 FY15 FY16 FY17 IVD Imaging Orthopedics Surgical Consumable Dental Others 1 Source:ThomsonReuters, ChinaVenture and analysis 11

12 Deal values fell across all the sub sectors except imaging Strategic buyer deals by subsector value (FY14-FY17) US$ mil 6, 5, 4, 3, 2, 1, , , , , , FY14 FY15 FY16 FY17 IVD Imaging Orthopedics Surgical Consumable Dental Others 55 Source:ThomsonReuters, ChinaVenture and analysis 12

13 FY17 top deals of strategic buyers above US$1 million Date announced Deal val (US$ mil) Acquirer Target Target industry Brief introduction /4/ Yu Rong China Resources Wandong 21/3/ Dongxu Optoelectronic Tech Co 24/1/ Tsinghua Tongfang Co Ltd 13/1/ Magnum Opus 3 Intl Hldg Ltd Sichuan Xuhong Guanglian Tech Nuctech Co Ltd Golden Meditech Holdings Ltd 21/9/ Investor Group Changsha Kaiyuan Instruments Imaging Imaging Healthcare Equipment & Supplies Healthcare Equipment & Supplies Healthcare Equipment & Supplies Yu Rong agreed to acquire 22% stake or mil ordinary shares in China Resources Wandong Medical Equipment Co Ltd, from Jiangsu Yuyue Technology Development Co Ltd, for CNY 19.5 (USD 2.827) in cash per share, or a total CNY bil (USD mil), in a privately negotiated transaction. Dongxu Optoelectronic Technology Co Ltd agreed to acquire the entire share capital of Sichuan Xuhong Guanglian Technology Co Ltd, from Tunghsu Group Co Ltd, the Chinese state-owned Mianyang Technology City Development Investment Group Co Ltd and Sichuan Changhong Electric Co Ltd, in exchange for the issuance of an increased estimated mil Dongxu Optoelectronic Technology Co Ltd's new ordinary shares valued at a total CNY bil (USD mil), in a stock swap transaction. Tsinghua Tongfang Co Ltd planned to raise its interest to %, from 69.9%, by acquiring a further 3.69% stake in Nuctech Co Ltd, a Beijing-based manufacturer of irradiation apparatuses, for a total CNY 1.22 bil (USD mil) in cash, in a privately negotiated transaction. Magnum Opus 3 International Holdings Ltd of China raised its interest to 7.36% from %, by acquiring further ordinary shares, in Golden Meditech Holdings Ltd, a Hong Kong- based manufacturer of medical instruments, for HKD 1.25 (USD.161) in cash per share, in a tender offer to acquire the remaining 64.9% interest of the company. The offer was conditioned upon at least 14.9% shares being tendered. An investor group, comprised of Changdu Gaoteng Business Management Co Ltd, a unit of Guangdong Private Investment Co Ltd and Gongqingcheng Heyuan Investment Management Partnership Enterprise LP, acquired 1.31% stake or mil ordinary shares in Changsha Kaiyuan Instruments Co Ltd, a Changsha-based manufacturer of analytical laboratory instruments, for CNY (USD 3.268) per share, or a total CNY mil (USD mil), in a privately negotiated transaction. Source:ThomsonReuters, ChinaVenture and analysis 13

14 Financial Buyers 14

15 VC investors were still active in FY17 in terms of deal volume, investing in medical diagnosis, consumables and imaging and surgical equipment etc., both the investment volume and value were on the rise Financial buyer deals (FY14-FY17) Volume FY14 FY15 FY16 FY17 US$mil 1,4 1,2 1, Deal volume PE Deal volume VC Deal value PE Deal value VC Source:ThomsonReuters, ChinaVenture and analysis 15

16 FY17 top PE/VC deals above US$1 million Date announced Deal val (US$ mil) Acquirer Target Target industry Investor Group Shanghai United Imaging Healthcare Medical diagnosis, care and treatment equipment According to Shanghai United Imaging Healthcare, the compan has completed a RMB 3.33 billion A round of financing, which was led by China Life Insurance Fund and SDIC Fund Management Company Ltd., and five other investors. 2 7/9/ Investor Group WuXi NextCODE Others According to WuXi NextCODE, the company has completed a RMB 24 million B round of financing, which was led by Sequoia China, with other investors including Temasek, Yunfeng Capital and 3W Partners. 3 27/5/ Investor Group Wuhan Jissbon Sanitary Prod Co Consumables Investor Group Relia Medical diagnosis, care and treatment equipment Investor Group Shanghai Ankon Medical Technologies Co., Ltd. Healthcare Equipment & Supplies Brief introduction Humanwell Healthcare Group Co. and CITIC Capital China Partners acquired 9% stake of Wuhan Jissbon Healthcare Equipment for USD 1.99 mil together. Shanghai Runda MedicalScience and Technology Co., Ltd and 3 other Investment Institutions acquired 1% stake of Relia for RMB 1.18 billion Shanghai Ankon Medical Technologies Co., Ltd. announced that it will receive RMB.1 billion investment from Da Zhong Group, Softbank China Capital, Preipo Capital, and 3 other investment institutions. Source:ThomsonReuters, ChinaVenture and analysis 16

17 Mainland China Outbound Deals 17

18 Both POE and SOE investors were less active in FY17, but POEs continue to be the driving force under the going out strategy. Financial investor participation in outbound activity kept stable in volume, while value dropped significantly Mainland in outbound deals by investor type(fy14-fy17) Volume US$mil 1,4 1,2 1, FY14 FY15 FY16 FY17 Volume SOE Volume POE Volume Financial buyer Value SOE Value POE Value - Financial buyer Source:ThomsonReuters, ChinaVenture and analysis 18

19 FY17 top Mainland China outbound deals above US$5 million Date announced Deal val (US$ mil) 1 24/9/ Shandong Weigao Argon Medical Group Medical Polymer Devices Inc Co Ltd Acquirer Target Target industry Brief introduction Healthcare Equipment & Supplies Investor Group Esaote Other Healthcare Equipment & Supplies Shandong Weigao Group Medical Polymer Co Ltd of China agreed to acquire the entire share capital of Argon Medical Devices Inc, a Plano-based manufacturer of surgical appliance and supplies, from Round Table Healthcare Partners LP, for USD 85 mil in cash. Yunfeng capital joints with Wandong, Tianyi Group, Yuwell-Jiangsu Yuyue medical equipment, Shanghai Free Trade Zone Fund, Kangda and other 5 medical companies and institutions plans to acquire the top Italian medical equipment manufacturer Esaote Group for 248 million euros (about billion yuan). The final purchase price will be adjusted according to the audited actual net debt and net working capital balance as of December 31, 217 in accordance with the principle of overpayment and less compensation. 3 25/1/217 8 Fosun Pharma Goldcup Consumerables Shanghai Fosun Pharmaceutical (2196) said the company and controlling shareholder Fosun International (656) agreed to set up a special purpose vehicle (SPV) and through which to contribute in an aggregate amount of up to US$8 million to purchase 44,645 shares in Goldcup (target company) held by PBM and subscribe for 35,355 shares to be issued by the target company. Source:ThomsonReuters, ChinaVenture and analysis 19

20 Developed economies continue to be the favoured outbound destinations, among which, Europe and North America came in top two in terms of volume in FY17. Outbound M&A deal volume by region of destination FY17 vs. FY16 FY17 FY16 North America Europe Asia Africa South America Oceanic Source:ThomsonReuters, ChinaVenture and analysis 2

21 Xun Tang China Deals Partner Pharmaceuticals and Life Sciences Industry Janelle Fei China Deals Associate Director Pharmaceuticals and Life Sciences Industry 21

22 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