Medical network - on March 9, in recent years, China's capital into the U.S. market, especially the things on both sides, for investment and mergers and acquisitions, and set up research and development, operation and business center in the United States, develop business and investment momentum is very fierce. In 2015, the Chinese acquisitions and business expansion in the United States at $15 billion, a record. Although the final statistics have not yet released in 2016, but investment intensity and frequency of the weak is no better than 2015.
According to the data analysis of reports has been publicly disclosed:
Involved in mergers and acquisitions in 2016 the most money, have good billions of dollars. To set up joint venture projects also many, the Chinese medicine of wuxi, fosun and joint venture with JUNO out pharmaceutical joint venture, all belong to big and leading innovative products cooperation development very much. Cross-border cooperation project is the largest number of type or products the sole agent in China and development, about 50%. In addition, there are dozens of cross-border equity investment commitments or for the project early invested several hundred million dollars.
Cross-border investment in the field is very wide, including new drug research and development, vaccines, diagnostic reagents, medical equipment, CRO services, gene sequencing, precision medical, mobile medical, big data, medical services. Most of new drug research and development cooperation, involving money too much. New drug license transfer and development projects, in order to "by" inside the outside is given priority to, and "by dantian" also picked up, transfer fee and deposit record highs.
This article will focus on around cross-border investment, cooperation and mergers and acquisitions of some hot spots, summarizes the trend, the opportunities and challenges.
Trend of seven potential
1 mergers and acquisitions are no longer banished
Chinese enterprise and financial group last year to do a series of mergers and acquisitions, a scale is very big, if not the Chinese chemical group's $45 billion takeover of first mega mergers and acquisitions, shengda light is buying companies in Europe and the United States and India capital contribution, there is hundreds of millions of dollars or even billions of dollars. This is very rare in the past.
Such as: the person f pharmaceutical paid $550 million acquisition of Phar - ma and its associated companies in the United States RE Holdco100 % equity. Fosun medicine purchase India Gland Pharma about 86.08% equity, at a cost of $1.26 billion. Green group 230 million euros for Europe's largest independent Swiss Acino company transdermal system manufacturers. In addition, a recent tricell group paid $820 million acquisition of Valeant Pharmaceuticals, Dendreon Pharmaceuticals (gain against prostate cancer immunotherapy Provenge control).
These cases are very distinctive, capital contribution, is a wholly-owned acquisitions. The purpose of the acquisition, as well as meet the huge domestic market demand, but also establish overseas bridgehead and channel, is fully staffed. Purchase price is generally on the high side, perhaps it is because of China's huge market space, capital market valuation and PE is higher, and financing is relatively easy.
2 cross-border investment become the norm
In fact, the biological technology of cross-border investment in began several years ago, but were only sporadic cases, is now the norm.
At least dozens of investment institutions are doing cross-border investment projects and cooperation, hundreds of pharmaceutical companies in overseas have different degree of attention and participation. Some buy drugs right China market, some involved in overseas equity investments, even holding and mergers. Part of the listed company has set up a research and development institutions in North America or in BD specialist, part of the investment institutions began to set up permanent workers in the United States, in order to seek the suitable technology, products and projects.
JPM this year during the meeting, I contact with many companies, both expressed very strong interest in cross-border investment and cooperation. And most is not only stays in the vision and planning phase, but has actually participated in the American company development project investment and cooperation, and achieved significant progress.
3 no longer conservative, in favor of early project
With previous Chinese pharmaceutical companies and investment institutions do cross-border investment project is different. Tend to focus on relatively mature project in the past, even have already listed or upcoming products, commercialization and local development.
Now investment and cooperation, for the most part has entered a more innovative and forward-looking project early, and even some listed companies and investment institutions have been set up good cooperation mechanisms, some virtual company involved in early project investment and cooperation, some to buy directly from the university of certain specific technology, IP license, and then to cast.
This investment strategy and the way of cross-border cooperation, may be short-term gains is not obvious, and even more risky, but if we can insist on down, and giving full play to the advantages of bilateral, earnings will not low, the effect will be even better. Because of the biotechnology industry growth momentum is innovation, the early projects, the risk is big, but valuations are relatively low and reasonable. Right project, select the right time and to form a batch and portfolio, instead more ideal odds and revenue. Partial late project can't say without risk, but generally the price on the high side, even far too high, not worth it flange spiderman.
4 to holding
Due to the limitation of time and space and human capital, and the difference of culture and business environment, cross-border investment often do not do large and controlling investment. But in recent years, China's capital and listed companies are no longer the old routine operation (only do equity are not involved in management, for example), but there's more money and manpower material resources, holding or acquisition.
The merger is not only need hundreds of millions or even billions of dollars of investment, and need after management experience and confidence. For such a big investment, if cast after integration does not reach the designated position, or the core staff turnover, maybe can not reach the expected effect and the investment profit, even has the potential of investment failure.
In recent years Chinese companies and Chinese capital acquisition holding enterprises, not only have gene sequencing, precision medical treatment, and new drug development, CRO services, platform technology and medical services. For some cutting-edge innovation, Chinese companies and investors increasingly good at move capital, even at the leverage to holding company merger and acquisition (m&a).
Although there is no special case of success, but several years later, you are likely to see the miracle of capital and revenue. Part of the enterprise successful IPO is likely. If the product and manufacturing shifted to China, also has strategic significance and value of industrial upgrade.
5 down payment is no longer at home
In the past, Chinese medicine enterprises with foreign enterprises to do product cooperative development is difficult to clinch a deal or rarely involved, the main reason is that technology authorization, and sale of products involved in the cost of risk. Abroad at hundreds of millions or even billions of dollars in trading cooperation, drug firms in China is essential. Previous cooperation projects are often channels in market access, involves the down payments not even "zero down payment", these projects the level and quality of natural is not high also.
Now, with exclusive marketing rights in China has been a rising tide lifts all boats, also can leave hundreds of millions of dollars prices, China's drug companies pay millions or even tens of millions of dollars of down payment.
For the same reason, research and development of China's innovation project transfer to foreign companies into the era of one hundred million yuan price. Only by hutchison whampoa, paekche before the transfer of the shenzhou project can obtain millions or tens of millions of dollars down payment, there are more and more such cases, hengrui, zhengda shine, Fang Kang biology also has hundreds of millions of dollars of transactions, all can get tens of millions of dollars down. Best is suzhou cinda and lilly cooperation development, to get the down payment of $60 million, milestone payments and sales commissions involved more than $1 billion. This is the real innovation research and development costs and due reward, and pride for congratulation!
6 'privatization more skilled
Cross-border biological medicine in recent years, the investment, the Chinese background of capital can reflect and play a more and more high level of specialization and internationalization. In many is the return of the biological pharmaceutical stocks, is basically dominated China's capital, and more and more skilled operation. From Asia pharmaceutical, sihuan pharmaceutical, shenyang be privatisation to be listed to refinance, there are the strong support of China's capital.
Wuxi $3.3 billion privatization, the main bridge is remit capital investment institutions the opportunity firmly, headed by four months of the beautifully completed the privatization. Even foreign mainstream investment institutions want to participate in late. No chance.
This involves big money and privatisation programme with great difficulty, completed by China's investment institutions' background, it is hard to imagine in the past. Now, everything is possible. Only familiar with domestic and international capital market and the laws and regulations of professional team to design and pointed out this kind of project.
There will be the year mindray only listed companies in the United States and several other minority will be privatised, also will be China fund sing leading role.
7 more diversified investment way
Recent research and contact investment institutions and senior executives of listed companies realize that China now more diverse cross-border investment biomedicine.
Already have a professional team of VC/PE began increasing in the overseas layout, such as the LAV, OrbMed, ViVO, IDG and enlightenment and other professional VC. Ignition key investment north American dollar fund, absorbing the experience of partner is responsible for the investment business in North America. Tong and capital recently also absorb new partner based in California, actively expand cross-border investment projects and investment management. IDG first leading investment overseas listed companies, develop anticancer drugs, also recently IDG business in the United States, United Nations consortium bid for investment in the United States will be bigger in the future.
Represented by wuxi business venture. Its yu bearing capital investment is very active in North America over the past few years, there are many outstanding projects participate in and out, and the mainstream American VC also has a lot of cooperation, has become a well-known American biotechnology VC investment institutions, also led to the CRO business expansion. Wuxi r&d outsourcing services have very strong and scale, VC supports many virtual research and development enterprise hospital and their cooperation.
Jean pharmaceutical group of corporate venture capital also quietly invested in more than a dozen companies in North America. Other CRO, such as bo medical, tiger medicine, also set up a fund respectively, to participate in overseas mergers and acquisitions and early project investment.
In addition, there are several pharmaceutical listed companies and investment funds to participate in overseas venture capital fund of LP capital injection and project investment, such as building capital letter, yasuhiro miyata pharmaceutical industry and Beijing new pharmaceutical industry, etc.
There are investment institutions in Beijing and shenzhen and other places set up offices in the United States, sent a partner resident and actively looking for project investment and do after service. Wide hair negotiable securities owned by direct investment department set up special and BayCity dollar fund Capital, cooperation, and joint office sent investment manager and investment management. Zhongke merchants investment Angelist $40 million investment in the United States, a deeper broader layout angel early and innovative start-ups.
Frequency and strength of reinforcement, this investment reflects China's cross-border investment interest rising, investment phase in advance, cooperation is more diversified. This is a very welcome phenomenon.
In depth, the future
If the pharmaceutical companies and investment institutions over the past few years China got off to a start cross-border investment, then in 2017 ~ 2020, this will be more active and frequent, investment opportunities are more and more.
In the past when dealing with foreign investment institutions and drug companies, capital and enterprises in China and the other in the eye. Now is not the same, there are four reasons why: one is the China market is big enough, the second is the Chinese CRO is very developed, three environment is one of China's new drug approval and the procedure in the improvement and acceleration, four is returning home services, and business more and more. Therefore, cross-border cooperation is more and more frequent, more smooth communication. If not the limit of capital across borders and the higher the threshold, the Chinese capital participation in investment overseas projects will be more active and frequent, investment will increase.
The author believes that in the next 5 ~ 10 years, China's indigenous innovation research and development projects will be more and more to show the value of the clinical study, up for sale abroad to seek cooperation. Not only China's capital advantage of month, will attract the interest of foreign mainstream investment institutions. And foreign venture capital firms or big pharma, also will actively looking for Chinese companies and investment institutions jointly develop early research and development project, from China's resources and capital, can more quickly into the Chinese market. Capital abroad in China today is scored the best good projects, leading investment opportunity is not much, but if the Chinese top investment institutions and overseas investment institutions hand in hand cooperation, are involved in the project of earlier, the future of this opportunity will be very big. In addition, because the IP + VC + CRO + Big Pharma (or more) of cooperation mode will be popular, Chinese investment institutions and drug companies are have a lot of opportunities to participate in Denver.
Risk four big difficult problem
In cross-border investment cooperation, enthusiasm, this is a good thing, and conducive to the sustainable growth of domestic biological medicine. But, the pharmaceutical enterprises in China is still relatively new in terms of the investment mechanism of business, pay some tuition and lighting) is a must. From the present can see roughly the following problems and potential risks.
1 the valuation on the high side
In the recent several reports in the merger, investment from China investors offered are not low, often hundreds of millions of dollars or even billions of dollars. These generally higher than the market price, nor drug companies or foreign investors are willing to pay a premium. Mainly because of Chinese elements, or capital market valuation system and the different financing concepts. This kind of circumstance may be temporary, future acquisitions can do much more in place, more rational.
Need special stress is that China's drug firms in overseas cooperation and merger and acquisition, is not never been cheated or seduced. Because some do not prepared, obviously bought is much bigger projects and companies; Some signed soon major clinical trials (failure) the bad news, etc.
After 2 shots management
In domestic companies and investment institutions signed a cooperation or investment projects, the common problem is that how much investment and cooperation management after some problems and bottlenecks. Cast after the success of cross-border investment and cooperation, the management of the communication with partners is also a necessary condition. Due to the limitation of space and time, combined with the concept of culture and differences, many companies and investment institutions on the cast after management is not smooth enough, mainly lack of experience and talent.
3 the human capital
Cross-border investment and cooperation, spell is not only a financial strength and vision, more important is the human capital, talent and resources of the industry. The drug companies and investment institutions is still relatively weak. For domestic companies and investment institutions, cross-border investment and cooperation requires familiarity with business and bilateral communication project management talents, when projects need to have more experience in the early stages of a business partner (VenturePartner) participation and management, this problem will take time, practice and gradually solve the talent introduction.
4 the sea current limiting
As the fed raising interest rates and the real economy and RMB gradually weakening, country issued a series of measures to limit capital outflows. These was not for cross-border investment and cooperation policy of biological medicine industry, but also to hope in overseas investment and cooperation of enterprises and investors bring inconvenience and obstacles. According to the personage inside course of study, new foreign exchange management policy to increase the threshold for examination and approval of overseas investment and the difficulty of m&a and. So, the future project investment and cross-border cooperation, need to have enough time and strong capital operation scheduling ability. , of course, has already set up abroad platform or through the examination and approval institutions and funds investment quota of overseas funds, will not be affected.
Doubt dispels doubts, Suggestions
Despite these problems and potential risks, the opening to the outside world and cooperation, cross-border mergers and acquisitions and investment trend will not change. For domestic companies and investment institutions, should according to the market demand and their own power and interests, and properly develop cross-border investment and cooperation strategy and emphasis in the future. Neither overly optimistic and aggressive, and don't miss this opportunity is too conservative and reserved.
Have to get access to
For cross-border investment has been actively seeking cooperation and merger of enterprises and investors, perhaps more attention should be paid to the real innovation of technology products and projects, especially on production-study-research cooperation and achievements and continue to look for investment and cooperation with small and medium-sized enterprises, as well as the cooperation with top investment institutions. Collect and compare more dynamic and information industry, ready to do due diligence, learn to be more effective communication and negotiation.
Make full use of the Chinese market, China's concept and resources characteristics and advantages, seeking more and better cross-border investment cooperation projects.
Due to innovation projects and many different stages of the assets, not blindly chase high, increase to avoid investment risks and costs. It is important to establish good investment and management team, reuse talent. In this way can make high quality investment and effective cross-border cooperation, ready to throw after management.
With good domestic policies, resources and funding, is likely to make investment cooperation to obtain the ideal returns, create a good value.
Of course, don't underestimate the risk of cross-border investment and cooperation. Don't rush, the opportunity is left to the prepared investors and partners. Be careful evaluation and disposal of all kinds of opportunities, in the case of the practice and others, to learn and improve the ability of investment and merger and acquisition and skill, proper risk control.
New entrants
For new entrants to the field of cross-border investment institutions and enterprises, there should be enough to prevent the risk of psychological preparation, don't fight the battle unprepared. To start from the cooperation or cast, step by step can exercise team, accumulate experience, and can make fewer mistakes.
In terms of cross-border investment and cooperation, have a lot of homework to fill, many policies and skills to learn. Investment into period, attaches great importance to establish and develop capable of cross-border investment team, choose a good partner and project, don't rush and don't spell price, depends on the sincerity, service, power and resources to win, such ability will get a partner recognition, also not easy to fool, the chances of success will be relatively higher.
Conclusion the < < <
As an investor, not a show and hype. We should not only see the future opportunities and potential, must see the risk of cross-border investment cooperation and implementation difficulty. Only be considerate in strategy and tactics, implementation to force, employing proper, capital of China biological medicine industry in the future will be promising investment and cooperation.
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