According to statistics, this year, Chinese companies have announced more than $ 3.9 billion acquisition of overseas pharmaceutical, biotechnology and healthcare sectors, this rate is expected to exceed last year's record total amount, and is a total full-year 2012 acquisition of Chinese enterprises in the field 10 times.
This surge is mainly the result of Chinese companies seeking asset diversification in the context of slowing domestic economic growth and the government's promotion of “Made in China†upgrades. In the domestic market, many of these companies are struggling with the fragmented pharmaceutical industry, which has nearly 5,000 manufacturers and is highly competitive and is pushing down generic prices. Success overseas has allowed them to expand their product portfolio, find new growth areas, and provide an off-the-shelf entry point into developed markets with higher regulatory standards.
In a recent transaction, the Corey Group, founded by businessman Zheng Yuewen, agreed in May to acquire the UK's human blood plasma product manufacturer Bio Products Laboratory Ltd. for $1.2 billion. According to data compiled by Bloomberg, this is the largest international acquisition by Chinese companies in the pharmaceutical industry. Also in May, Fosun Pharma, which was backed by billionaire Guo Guangchang, proposed the acquisition of Gland Pharma Ltd. With a 96% interest in non-binding acquisitions, Gland is principally engaged in the manufacturing of injectable pharmaceuticals.
This industry in China may continue to advance overseas. “Some pharmaceutical products invested by Chinese companies are close to US and European approval,†said George Lin, head of Asian consumer, retail and healthcare investment banking at Bank of America (12.74, -0.36, -2.75%). “If these drugs are approved, Chinese companies may be more interested in seeking overseas acquisition targets in similar areas with strategic alignment.â€
Overseas acquisition frenzy
Chen Qiyu, chairman of Fosun Pharma, said in an interview last year that he hopes to increase the proportion of overseas income to total revenue by up to 40% in the next five years.
Last year, Fosun Pharma participated in the acquisition of Ambrx Inc. The consortium, the amount of the acquisition is unknown. Ambrx is a protein therapy development company in the United States. Fosun Pharma announced in May that its offer to Gland is still in a non-exclusive competitive bidding stage, and the transaction cannot be guaranteed. If the transaction is successful, it will increase the degree of internationalization of the company.
Franck Le Deu, a senior partner at McKinsey, said that Indian pharmaceutical companies with strong generics expertise and commercial presence in developed markets provide a good global platform for Chinese companies.
Although Chinese companies are appearing more frequently in the list of bidding for health care companies, they also face fierce competition for quality assets. Informed sources said in March that the Green Leaf Pharmaceutical Group, which controls a Chinese pharmaceutical company and healthcare provider, is one of the bidders of the French pharmaceutical company Ethypharm SA. Finally, another bidder, European private equity firm Partners, agreed to acquire the French drugmaker.
Liu Dianbo, chairman of the board of directors of Luye Pharmaceutical Group, said in an interview in March that the group also sought to find deals in overseas markets such as Australia, Singapore, Southeast Asia, the United States and Europe.
Informed people said in July last year that China Great Group, controlled by businessman Hu Kaijun, was one of the bidders for the US generic drug business of UCB SA in Belgium. UCB eventually sold the business to Lannett Co. of the United States. .
Bank of America's Lin said that if there is no reasonable large-scale strategic bidder, and the buyers only have private equity investment companies in the auction, Chinese companies are very suitable for intervention.
“Really attractive products, biotech products, these will be highly sought after by very large companies,†Lin said. “Therefore, Chinese companies will not be competitive.â€
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