M&A 2016 Review China Pharmaceutical Sector
April 2017
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PwC
Agenda
2016 M&A Review — China Pharmaceutical Sector
2
April 2017
Foreword
Overview
Strategic Buyers
Financial Buyers
Mainland China Outbound Deals
PwC
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 PwC M&A 2016 Review and 2017 Outlook, which is based on the information compiled by ThomsonReuters, ChinaVenture and PwC 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
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PwC
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$10mn 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$10mn 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
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PwC
Overview
2016 M&A Review — China Pharmaceutical Sector
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April 2017
PwC
M&A in China’s Pharmaceutical sector increased slightly in 2016 in terms of deal volume, with deal value down by 34% at US$20.58 billion
2016 M&A Review — China Pharmaceutical Sector
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Source:ThomsonReuters, ChinaVenture and PwC analysis
Total deal volume and value of China Pharmaceutical sector, 2015 vs. 2014
Volume Value Volume Value Volume Value Volume Value Volume Value
Strategic buyers (US$mil) (US$mil) (US$mil)
Domestic 146 9,792 194 23,454 172 11,411 33% 140% (11%) (51%)
Foreign 9 612 4 19 8 97 (56%) (97%) 100% 418%
Total Strategic buyers 155 10,404 198 23,473 180 11,508 28% 126% (9%) (51%)
Financial buyers
Private Equity 15 979 37 7,431 53 5,373 147% 659% 43% (28%)
VC 10 31 47 85 38 194 370% 179% (19%) 127%
Total Financial buyers 25 1,009 84 7,516 91 5,567 236% 645% 8% (26%)
China mainland Outbound
SOE 2 305 - - - - (100%) (100%)
POE 5 73 7 117 25 2,668 40% 59% 257% 2185%
Financial buyers 1 6 1 - 5 564 0% (100%) 400% #DIV/0!
Total China mainland Outbound8 384 8 117 30 3,231 0% (70%) 275% 2667%
HK Outbound 3 758 1 53 3 276 (67%) (93%) 200% 420%
Total 191 12,555 291 31,159 304 20,582 52% 148% 4% (34%)
16 Vs 15 % Differnce2014 2015 15 Vs 14 % Differnce2016
PwC
146
194 172
9
4
8 26
85 96
10
8 28
0
50
100
150
200
250
300
350
2014 2015 2016
Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound
Except for domestic strategic investments, all the other types of M&A activities, in particular outbound deals, have increased in 2016 (1/2)
Deal volume by main category (2014 - 2016)
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Source:ThomsonReuters, ChinaVenture and PwC analysis
PwC
9,792
23,454
11,411
612
19
97 1,015
7,516
6,131 1,136
170
2,943
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2014 2015 2016
Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound
Except for domestic strategic investments, all the other types of M&A activities, in particular outbound deals, have increased in 2016; deal value decreased.
Deal value by main category (2014 - 2016)
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Source:ThomsonReuters, ChinaVenture and PwC analysis
US$mil
PwC
Strategic Buyers
2016 M&A Review — China Pharmaceutical Sector
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April 2017
PwC
146
194 172
9
4
8
0
5,000
10,000
15,000
20,000
25,000
0
50
100
150
200
250
2014 2015 2016
Deal volume - Domestic Deal volume - Inbound Deal value - Domestic Deal value - Inbound
Domestic strategic M&A witnessed strong growth in 2015 driven by economic transformation, this trend was slowing down in 2016 with volume and value decreased by 11% and 51% respectively. On the other hand, foreign inbound strategic M&A appear to be more active
Strategic buyer deals volume and value (2014 - 2016)
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April 2017
Source:ThomsonReuters, ChinaVenture and PwC analysis
Volume US$mil
PwC
114
133
138
41
65 42
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
0
50
100
150
200
250
2014 2015 2016
Deal volume - Pharmaceutical Deal volume - Biotechnology Deal value - Pharmaceutical Deal value - Biotechnology
Pharmaceuticals was the hottest subsector, which continued to grow in deal volume, but noticed decrease in deal value from 2015. Biotechnology was slowing down in both deal volume and value.
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Strategic buyer deal by subsector (2014 - 2016)
Source:ThomsonReuters, ChinaVenture and PwC analysis
Volume US$mil
PwC
2016 top deals of strategic buyers — above US$400 million
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Source:ThomsonReuters, ChinaVenture and PwC analysis
Date
announced
Deal val
(US$ mil)
Acquirer Target Target industry Brief introduction
1 30/12/2016 3,648 New Huadu Industrial
Group Co., Ltd.
Yunnan Baiyao
Holding Co., Ltd.
Pharmaceuticals New Huadu Industrial Group Co., Ltd paid
RMB 25.4 billion to acquire 50% shares of
Yunnan Baiyao.
2 05/12/2016 654 Chengdu Tianxing
Instrument Co., Ltd
Beijing Berry Genomics
Biotechnology Co., Ltd.
Biotechnology Chengdu Tianxing Instrument Co., Ltd
acquired the entire share capital of Beijing
Berry Genomics, a manufacturer and
wholesaler of biological products, in a
reverse takeover transaction.
3 01/01/2016 504 Shanghai Shyndec
Pharmaceutical
Co.,Ltd.
Sinopharm Weiqida
Pharm Co., Ltd.
Pharmaceuticals
4 01/01/2016 493 Shanghai Shyndec
Pharmaceutical
Co.,Ltd.
China National Accord
Medicines Corporation
Ltd.
Pharmaceuticals
5 31/05/2016 470 Shanxi CY Pharm
Group Co., Ltd.
Shanxi Powerdone
Pharmaceutics Co., Ltd.
Pharmaceuticals Shanxi CY Pharm Group agree to acquire
the entire share capital of Shanxi
Powerdone, a manufacturer and wholesaler
of pharmaceutical preparation, for RMB 3
billions.
6 01/09/2016 419 Wuhan Dangdai
Technology Ind Group
Co., Ltd.
Humanwell Healthcare
(Grp)
Biotechnology Humanwell Healthcare plan to issue no more
than 158 comone shares to at RMB 17.76
per share to the orginal shareholder, Wuhan
Dangdai. After the issuance, Wuhan Dangdai
raise its interest from 24.49% to 32.74%.
Shanghai Shyndec Pharmaceutical
purchased the shares of a number of
Sinopharm Group subsidiaries by issuing
shares and paying cash for the purchase of
assets.
PwC
Financial Buyers
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PwC
15
37
53
10
47
38
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
0
10
20
30
40
50
60
70
80
90
100
2014 2015 2016
Deal volume - PE Deal volume - VC Deal value - PE Deal value - VC
PE deal value hit a record high in 2015 and decreased in 2016, though deal volume kept stable and PE remained active. VC appeared to become inactive in 2016.
Financial buyer deals (2014 - 2016)
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Volume US$mil
Source:ThomsonReuters, ChinaVenture and PwC analysis
PwC
2016 top deals of financial buyers — above US$300 million
2016 M&A Review — China Pharmaceutical Sector
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April 2017
Source:ThomsonReuters, ChinaVenture and PwC analysis
Deal val
(US$ mil)
1 26/01/2016 590 Guangxi Invest Grp
Co Ltd
Guangxi Wuzhou
Zhongheng Grp
Pharmaceuticals The investor of Guangxi Wuzhong Zhongheng
agreed to transfer 20.52% interest, the total
deals value at RMB 3.9 million.
2 04/02/2016 401 Investor Group Sinovac Biotech Ltd Pharmaceuticals Privatization at USD 7 per share by investor
group.
3 02/09/2016 367 Investor Group Hainan Asia Pharm
Co Ltd
Pharmaceuticals Sichuan Goldstone Orient New Material
Equipment Co.,Ltd. and it's subsidiaries plan
to issue no more than 53 million shares at a
price of RMB 23.13 per share, and paid
RMB870 million in cash to acquire Hainan
Asia Pharm.
4 23/04/2016 308 Investor Group Nanjing
Pharmaceutical Co
Ltd
Pharmaceuticals Nanjing Pharma plan to issue no more
than 300 mil comone shares at RMB 6.57
per share to the investor group.
Date
announced Acquirer Target Target industry Brief introduction
PwC
Mainland China Outbound Deals
2016 M&A Review — China Pharmaceutical Sector
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PwC
POEs and financial buyers witnessed a plunge in 2016 in outbound deals in terms of both volume and value, with US$1 billion deals taking place. While SOE reported no participation in 2016.
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2 - -
5 7
25
1 1
5
0
500
1,000
1,500
2,000
2,500
3,000
0
10
20
30
40
2014 2015 2016
Deal volume - SOE Deal volume - POE Deal volume - Financial buyer
Deal value - SOE Deal value - POE Deal value - Financial buyer
Mainland China outbound deals by investor type
Volume US$mil
Source:ThomsonReuters, ChinaVenture and PwC analysis
PwC
2016 top Mainland China outbound deals — aboveUS$500 million
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Deal val
(US$ mil)
1 28/07/2016 1,260 Shanghai Fosun
Pharmaceutical
(Group) Co Ltd
Gland Pharma Ltd Pharmaceuticals Shanghai Fosun acquired 86.08% interest
of Gland Pharma Ltd, a manufacturer of
plasma products.
2 19/05/2016 1,197 Creat Group Corp Bio Products
Laboratory Ltd
Pharmaceuticals Creat Group of Chian agreed to acquired
Bio Products Laboratory for GBP 820
million.
3 14/11/2016 518 Investor group SciClone
Pharmaceuticals Inc
Pharmaceuticals SciClone Pharmaceuticals, Inc. (NASDAQ:
SCLN) ("SciClone") today confirmed that it
has received an unsolicited, nonbinding
proposal from a consortium led by GL
Capital Management GP Limited and ABG
Management Limited to acquire all of the
outstanding shares of SciClone not already
owned by the consortium for $11.18 per
share in cash.
Date
announced Acquirer Target Target industry Brief introduction
Source:ThomsonReuters, ChinaVenture and PwC analysis
PwC
Source:ThomsonReuters, ChinaVenture and PwC analysis
Developed economies continue to be the favoured outbound destinations, among which, North America and Europe came in top two in terms of volume in 2016.
0
North America
4
South America
0 0
0
6
0
813
03
2016 2015
Outbound M&A deal volume by region of destination 2016 vs. 2015
Europe Asia Pacific
Africa Oceanic
April 20172016 M&A Review — China Pharmaceutical Sector
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4
PwC
2016 M&A Review — China Pharmaceutical Sector
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April 2017
Xun Tang
PwC China Deals Partner
Pharmaceuticals and Life Sciences Industry
Janelle Fei
PwC China Deals Associate Director
Pharmaceuticals and Life Sciences Industry
Thank you
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