Hanghan**: Huge acquisitions in the medical industry are frequent, and industrial capital is in person.
After experiencing a decline in global financing enthusiasm and the industry entering a capital winter in 2023, the "main play" in 2024 has changed.
At the time of the alternation of the old and the new, large-scale acquisition transactions with giants in the medical industry segment as the "protagonists" are frequent, injecting new vitality and vitality into the entire industry, and also indicating the direction of accelerating the reshuffle of the industry in the coming year. Especially for domestic medical companies, the next year is bound to be a more colorful year.
While the industry is still amazed by AstraZeneca's $1.2 billion acquisition of Gracell Biologics, Haier Group's plan to take over the control of Shanghai RAAS, a domestic blood product leader, for 12.5 billion yuan has redefined the public's perception of industrial capital strength.
These two are not alone. At the beginning of the new year, there is good news from the medical industry, with veteran multinational pharmaceutical companies Johnson & Johnson, Novartis, GE, Boston Scientific, and global orthopedic giant Enovis Corporation successively announcing large-scale mergers and acquisitions, sweeping away the decline in the number and amount of social financing in 2023.
This is the new atmosphere and new rules of the medical industry in 2024. Industrial capital is not only betting on the "capital value" that was originally sought after by the industry, but also on more pragmatic business collaboration, real clinical needs and technological innovation, which is not only a turn on the investment side, but also represents the reintegration and reshaping of the new ecology of the industry in the future.
The different logics of industrial capital.
In the past five years, with the opening of the 18A gate of Hong Kong stocks and the establishment of the Science and Technology Innovation Board, and the sudden epidemic, the medical industry has been pushed into the spotlight
However, the rising *** soon took a sharp turn, and the capital winter kicked off with the stock prices of pharmaceutical star companies falling by more than 50% or even 70% in a very short period of time.
A pharmaceutical investor who did not want to be named once told the China Times that compared with China, the U.S. pharmaceutical market is obviously moving faster, and many times it is used as a mirror to see the way forward. The U.S. pharmaceutical industry has suffered a similar medical winter, and the essential reason for the crisis is that people have wrongly overestimated the speed of medical technology innovation and application, and at the same time underestimated the high risk and uncertainty of clinical trials.
If the logic of capital is to seek exit through rapid financing and listing, the logic of the industry is obviously much more pragmatic and complex.
Industrial investment in the medical industry has always been a case, as evidenced by the fact that industry leaders in the CXO track have invested in biotech to bind their future production "KPIs". Compared with financial capital, industrial capital is obviously more "knowledgeable", and its understanding of the industry and the judgment of projects are also more accurate. In addition to financial investment, industrial capital will also have more advantages in business synergy and resource matching.
Taking the transaction between Haier Group and Shanghai RAAS as an example, in recent years, Haier has focused on the layout of the big health industry track and created a big health ecological brand Yingkang Life. Yingkang Life has two listed companies, Haier Biotechnology and Yingkang Life. Haier Biotech has been in the field of blood for a long time, and its subsidiary, Haier Blood Technology, is also one of the earliest companies in China to produce and develop plasma separators.
As early as 2020, Haier Biotech used its own funds through Haier Blood Technology547.2 billion yuan acquired 90% of the equity of Chongqing Sanweiye, which is one of the few leading enterprises in China with a full range of products such as pulp mining equipment, pulp mining consumables and supporting drugs.
If the blood product industry chain is simply divided into three parts, namely, upstream plasma collection stations, midstream blood product enterprises, and downstream demand side. In this case, Shanghai RAAS is deployed in the upstream and midstream, Haier Blood Technology provides service guarantee for the upstream and midstream, and Haier Bio Blood Management, Yingkang Life Medical Service and other business scenarios are mostly concentrated on the downstream blood product demand side.
In the traditional emergency blood mode, it takes at least 30 minutes from the application for blood transfusion to the blood collection department and then to clinical transfusion, but in the innovative solution provided by Haier Biotech, relying on emerging technologies such as the Internet of Things, big data, and AI, as well as high-end equipment layouts such as blood refrigerators and unattended self-service blood refrigerators, this process can be shortened to only 1 minute.
In a broader range of application scenarios, Haier Biotech has realized the digital management of the whole process from blood collection, preparation, storage, blood distribution, distribution to clinical blood in many places, and gradually explored the construction and improvement of the "smart city blood network system".
Obviously, winning the control of Shanghai RAAS, the upstream of the domestic blood product industry chain, is self-evident for Yingkang's lifelong layout in the blood ecological industry chain.
In fact, the investment in the medical industry has extremely high requirements for professionalism, which is also the advantage of industrial investment in many cases, on the one hand, they understand the enterprise better, on the other hand, backed by the mature industrial ecology of listed companies, they can reach cooperation from the technology, product and commercialization levels.
A new cycle of heavy snow on long slopes.
Why are the frequent M&A transactions in the pharmaceutical market concentrated in the current time period?
A long-term responsible for the BD business of the pharmaceutical practitioner told the "China Times" reporter that the domestic traditional medicine market has rarely seen more than 1 billion yuan of transaction cases, the understanding of innovative business is on the one hand, on the other hand, the key is valuation, recently AstraZeneca, Haier as the representative of the industry leaders began to fall, but also from the side of the pharmaceutical valuation fell back to a reasonable range.
Compared with the exit of PE and VC, industrial capital is more patient and has a wider time limit for profitability.
Blood products are rigid demand drugs, and have an irreplaceable role in first aid, infection and disease**.
From the perspective of the current situation of competition in the blood product industry, in recent years, the wave of mergers and acquisitions of blood products in China has already been brewing, and there are less than 30 blood product enterprises in normal operation in China, and the only enterprises with a slurry production of more than 1,000 tons are Shanghai RAAS, Tiantan Biology and Hualan Biology.
According to the development process of the global blood products industry, it is also the general trend for enterprises to greatly increase the concentration of the industry through mergers and acquisitions. Taking advantage of the 14th Five-Year Plan and industry consolidation, the next round of growth of the blood products industry is imminent.
As early as March 2020, Shanghai RAAS purchased a 45% stake in GDS, a blood testing company under Grifols, a global blood product leader, through the issuance of shares, and through this transaction, Grifols obtained Shanghai RAAS 2620% of the shares. In June 2023, Grifols announced that it was planning a major event involving the change of Shanghai RAAS's shareholding, triggering a series of speculations in the industry about who would "take over" the leading blood product company.
Until Haier Group officially announced that it would acquire 20% of the shares of Shanghai RAAS held by Grifols for a total price of 12.5 billion yuan and obtain a total of 2658% of the voting rights. Upon completion of the transaction, Grifols will extend the term of the exclusive albumin** agreement with Shanghai RAAS for a period of 10 years, on which basis it will receive the right to renew for another 10 years.
The innovation and transformation of the blood management model is a long and complex process, whether it is the full-link industrial ecological empowerment or the construction of a win-win industrial ecosystem, it is not an easy task, but fluctuations and cycles cannot change the upward trend of the medical industry, and technological innovation and clinical needs are also the guarantee that needs to be realized.
How industrial capital can help industrial development and realize the prospect of 1+1 greater than 2 may be seen in the near future.
*: China Times.