2019 an active year in Chinese pharma M&A

Ding Yining
Investor confidence, private-equity mega deals and favorable policies bolstered mergers and acquisitions in China's pharmaceutical sector. Mixed results seen in related industries.
Ding Yining
2019 an active year in Chinese pharma M&A

The number of recorded mergers and acquisition deals in China's pharmaceutical sector remained high in 2019, with 437 cases and total deal value climbing 12 percent to US$22.1 billion, a 4-year high thanks to overseas investors' upbeat sentiment and mega deals in the private equity sector, according to a recent PwC report. 

These results also reflect favorable policies such as nationwide volume-based procurement, dynamic adjustment to the National Drug Reimbursement List, and encouragement of innovation, as well as the promotion of new capital market listing regulations.

Total M&A deals in the life science industry, including both pharma and device companies, lowered to 588 from 642 a year earlier, with total deal value down from US$27.6 billion to US$24.9 billion, making up 6 percent of the global transaction size, according to PwC's latest annual overview. 

In the medical device sector, transaction volumes plunged to the lowest level in six years at US$2.7 billion from US$7.8 billion a year ago amid overseas M&A stagnation. 

Both the value and number of outbound deals fell to the lowest level since 2016 as trade friction and other geopolitical factors curtailed large cross-border transactions.

Meanwhile, the value and number of IPO deals picked up, with total proceeds of listing, including those in overseas markets, reaching US$6.8 billion (US$4.5 billion for pharmaceuticals and US$2.3 billion for medical devices) in 2019. 

Medical device manufacturers have been active in the capital market, where 12 companies are successfully listed on the Shanghai Stock Exchange STAR Market.

In light of the coronavirus epidemic, the report predicts that vaccines, antiviral drugs, medical protection, in vitro diagnostic devices, infectious disease research and online medical diagnosis will attract growing investor attention in the short term.

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