Chinese Healthcare Companies Planning to Purchase a Way into International Markets
China’s healthcare companies are on a buying spree as they attempt to purchase their way into international markets like they never did before. Chinese firms announced that around US$ 3.9 billion in overseas acquisitions were made this year in the pharmaceutical, healthcare ad biotechnology sectors, in a pace that might exceed last year’s record total of acquisitions and a tenfold increase in the amount spent in 2012.
The surge is driven by Chinese tycoons and those businesses that are looking into diversifying amid the slow growth at home plus a government that is planning to upgrade the Made in China brand in the domestic market since a lot of these companies are struggling with a fragmented drug industry with 5,000 manufacturers and strong competition that pushes down the generic drug prices. Overseas success will allow them to expand their portfolios and find new areas for growth and provide a ready made entry in the developed market with high regulatory standards. Recent deals include China Creat Group founded by Zheng Yuewen who agreed to acquire Bio Products Laboratory an manufacturer of human blood plasma products in the United Kingdom. Shanghai Fosun Pharmaceutical Group backed by Guo Guangchang, created a non binding offer to purchases 96 percent of India’s Gland Pharma Ltd. which produces injectable drugs.
The Chinese industry likely to continue to push overseas since there are only a few Chinese companies that are investing in pharmaceutical products that are getting close to being improved in Europe and United States. Once approved, then China will likely to more interested in looking at overseas targets in similar areas that have strategic alignment. Fosun Pharma, one of the active buyers in the health care sector said that overseas revenue might increase as much as 40 percent of the total in the next five years through acquisitions.
Although the pharma industry in China is still lagging behind other sector and its multinational peers in terms of size of international acquisitions, ChemChina agreed to purchase Swiss pesticide and seeds makers Syngenta AG for US$43 billion. The global healthcare industry saw a huge deal such as Allergan Plc’s US$40 billion agreement in selling their generic drug business to Teva Pharmaceutical Industries. China companies tend to target companies with US$100 to $300 million in the healthcare sales and has a value of US$ 300 million or more.