Heavy snow closed the mountains, and the "landlords" did not have much "surplus grain".
Financing and IPO are cold, and as a member of the troika, mergers and acquisitions have also performed poorly.
According to the statistics of E drug manager Rong**, in 2023 (2022.)10.1-2023.9.30), a total of 103 mergers and acquisitions occurred in China's biopharmaceutical industry, with a total merger and acquisition amount of 2254.9 billion yuan. Compared to last year's 121 cases, 2771.6 billion yuan, down 1488% and 1864%。
We may think that in the cold winter, Pharma still has "surplus food", and in the case that Biotech is desperate due to financial and other pressures, and the valuation of potential targets of domestic Biotech has fallen after the development of the first two years, a buying and selling market will be formed that is different from the "cold" situation of financing and IPO. But in fact, the "landlords" who covered the mountains with heavy snow did not have much "surplus grain".
The "national team" strikes
At the moment when the overall market was sluggish, state-owned assets took action. Taking China Resources Pharmaceutical as an example, from the beginning of the year to the present, the pace of "buying, buying, buying" has not stopped at all.
At the beginning of the year, China Resources Sanjiu issued the "Announcement on the Completion of the Restructuring of the 10th Board of Directors and the Board of Supervisors of KPC and the Acquisition of Control of KPC", in which CR Sanjiu purchased KPC 2 from Huali Pharmaceutical Group and Huali Group in the form of cash payment1.2 billion shares, representing 28% of KPC's issued shares. In this intensive acquisition, China Resources Pharmaceutical Group, as a circulation giant, vigorously deployed the pharmaceutical sector, further reflecting the determination of domestic pharmaceutical companies to "re-imitate and recreate".
This is directly reflected in the performance. After the integration of KPC, China Resources Sanjiu's revenue in the first half of 2023 will reach 10 billion yuan. Through successive acquisitions, CR Sanjiu's business segment has expanded while its asset scale has increased rapidly. In the past five years, its total assets have increased from 18 billion yuan to 388 at the end of June6.6 billion yuan, more than doubled.
And the same system of China Resources Shuanghe, in addition to September spent 2In addition to the acquisition of Guizhou Tianan Pharmaceutical Co., Ltd. for 600 million yuan to enhance its competitiveness in the field of diabetes, it also spent about 800 million yuan last year to complete the acquisition of two API companies, Tiandong Pharmaceutical and Shenzhou Biotechnology.
Throughout the acquisitions of China Resources Pharmaceutical Group, there are both horizontal acquisitions that pursue scale, and vertical acquisitions that integrate the first chain. In the past five years, CR Pharmaceutical Group has completed the acquisition of four listed companies, involving Jiangzhong Pharmaceutical, Boya Biotechnology, Dirui Medical and KPC, spending more than 13.6 billion yuan.
According to Tianyancha, at present, China Resources Pharmaceutical Group has more than 700 member companies, and it controls 8 listed companies within its system, with a total market value of more than 200 billion yuan. After the scale "soared", in the past two years, China Resources Pharmaceutical Group has also shown a tendency of "innovation and transformation". According to the financial report, in the first half of the year, the group's total R&D expenditure was 11HK$7.4 billion, an increase of about 26% in RMB terms. The company's senior management disclosed that it will continue to strengthen the research and development of biological innovative drugs and chemical innovative drugs.
This tendency to transform is also reflected in mergers and acquisitions. For example, in July last year, China Resources Pharmaceutical Group invested 800 million yuan in Yongtai Biotechnology, a leading cell company. On September 27, China Resources Pharmaceutical published an interim report that it will continue to integrate resources as its core strategy, saying that it will focus on "mergers and acquisitions and integration opportunities of leading enterprises and key product lines" in subdivided fields.
This also means that in the future, the mergers and acquisitions of China Resources Pharmaceutical Group will continue. The M&A strategy of CR Pharmaceutical Group is also a major feature of state-owned assets in the A-share M&A market this year.
In June 2023, the State-owned Assets Supervision and Administration Commission (SASAC) clarified the requirements that "** enterprises should use listed companies as a platform to carry out mergers and acquisitions and restructuring, so as to help improve their core competitiveness and enhance their core functions". Biomedicine, as a national strategic industry, has entered the country with state-owned mergers and acquisitions, expressing the vision of supporting the rapid growth of leading pharmaceutical enterprises from the national level. This year, all localities will include the development of the biomedical industry in their KPIs.
As of July, more than 20 policies and measures have been introduced in different regions of China to encourage the development of the biomedical industry, not only in the Yangtze River Delta, Beijing-Tianjin-Hebei and Pearl River Delta regions, but also in many second- and third-tier cities to support the development of the biomedical industry, involving industrial park planning, output value targets, special fund support, etc.
The development of the pharmaceutical industry, especially the promotion of pharmaceutical innovation, always requires the strong combination of "technology + capital". The mixed reform of state-owned assets is a major theme in the current capital market, and the integration of state-owned assets in the pharmaceutical industry will accelerate from 2020 onwards.
And this year it was even more prosperous. In September, Gansu SDIC planned to make a tender offer with a market value of 546.4 billion yuan of Foci Pharmaceutical; In July, the State-owned Assets Supervision and Administration Commission of Shanxi Province and the State-owned Assets Supervision and Administration Commission of Baoji City jointly "took back" Ziguang Chenji Pharmaceutical, a "century-old pharmaceutical company" previously acquired by Japanese capital.
In addition, under the promotion of Hefei Industrial Investment Group and Feidong County, Hefei City, Hasten Biotech has walked out of the "non-mainstream" development path. In the first half of this year, the company completed the acquisition of Rochefen in Chinese mainland and obtained exclusive licenses for the commercialization rights of Sitanin in Greater China and Switzerland.
This was followed by the introduction of libtherapeutics' third-generation long-acting PCSK9 inhibitor on September 12. So far, this pharmaceutical company, which has been established for less than 3 years, not only has 7 mature products in hand, but also entered the top 10 of global biomedical financing in the first half of the year. And the time is back in December 2020. At that time, Hasten Biotech was only established three months ago, and it dared to announce the acquisition of the divested assets of Takeda Pharmaceutical, the world's top 10 pharmaceutical company, and the confidence behind it was the "state-owned power".
After the state-owned assets platform enters the pharmaceutical field, the advantages are self-evident - the ability to obtain resources is strong, the cost is relatively cheap, the exit period is very long, there is no exit pressure, and it can be held and supported for a long time.
In the cycle of sluggish investment and financing, state-owned assets have become a "needle in the sea". However, more "state-owned novices" enter the pharmaceutical industry, and it will take time to know whether they are not adapted to the soil and what the results are.
The inflection point has arrived
Returning to the main business, laying out the market network, and focusing on the potential pipeline have become the main theme of pharmaceutical companies seeking change this year. From the perspective of field distribution, the largest number of mergers and acquisitions this year are still in the medical services, pharmaceutical distribution and life science support industries. M&A that truly belongs to drug R&D is still mediocre.
Judging from the data, it is clear that in the current downturn, the absolute size of the enterprise is more important than the relative size. Pharma is no longer keen on expansion, but more focused on commercializing products related to their core areas. They achieve sustainable growth through "internal mergers and acquisitions" and prudent "product introduction", while focusing more on product sales and commercialization.
In addition, pharmaceutical companies are paying more attention to marketing sales. For example, Haisco acquired Singapore Pharmaceutical and increased its efforts to go overseas, and Sunflower Pharmaceutical acquired "Huihai Pharmaceutical" to accelerate the layout of the circulation end.
For the dullness of mergers and acquisitions in the biomedical market, some investors believe that the pharmaceutical industry is one of the main industries in the mergers and acquisitions market, from the perspective of the development history of overseas biotech, many companies will eventually be merged, from the past 20 years of NASDAQ IPO listed biotech and biopharma companies, more than 1 3 companies were eventually acquired or merged.
At present, for the Chinese market, the exit path of investment is still very simple, still dominated by IPOs, while mergers and acquisitions in the domestic pharmaceutical field are still in their infancy. "This is also related to the development of the industry, especially in the past few years, when the valuation of biotech is high and direct mergers and acquisitions are not cost-effective, there is no need for big pharmaceutical companies to buy the remaining pipelines of the company, and they are more inclined to reach alliances or cooperation for a single product. Now that the situation has changed, the demands of the acquirer and the acquiree have gradually become prominent: traditional enterprises with revenue and profits are forced to transform and need technology, products and talents, they have a certain amount of capital, and they have the willingness and ability to acquire pipelines and technology platforms; At present, in order to supplement the demand for funds, innovative pharmaceutical companies are more willing to negotiate cooperation and mergers and acquisitions with large enterprises, and investors also have exit demands. An investor in the pharmaceutical industry said.
In order to be able to continue the game, biotech, which is short of "ammunition", is bound to be more difficult.
Poverty calms people down.
A CEO with a very "hard-core" founding team told the e-drug manager Renrong** that although the company's pipeline progress, authorization, and financing are relatively good, he does not rule out the possibility of "integration" into the Pharma system in the future. "Our strength is technology, not management, and our goal is to develop more innovation pipelines, and if there are companies that are good at commercialization, we are not excluded. ”
Some investors believe that there may be an inflection point in the wave of mergers and acquisitions in the short term. There are six main reasons: first, the valuation of biotechnology companies has been sharply lowered and approached a reasonable level; Second, many start-up companies have the need for assets, pipelines and even controlling interests due to lack of funds; Third, large pharmaceutical companies are facing the hidden concern of sluggish growth, and need to deploy more new products and technologies to enhance their competitiveness; Fourth, traditional generic drug companies need to complete resource integration and strategic transformation through mergers and acquisitions; Fifth, the tightening of IPO policies and new regulations have made it difficult for investment institutions to exit, and the transfer of old shares and mergers and acquisitions have become the mainstream exit methods; Sixth, the local government urgently needs to establish industrial clusters and leading cultivation, mergers and acquisitions is an effective means to optimize the allocation of resources and promote industrial integration, and the model of building regional leaders with strong alliances between enterprises is gradually emerging.
Despite this, there are still many factors that will affect the scale of domestic M&A, such as the relatively limited capital accumulation of domestic established pharmaceutical companies, the limitation of large-scale M&A by the scale of market sales, the small number of M&A due to the homogenization of pipelines, and the low proportion of internationalization leading to the low willingness of foreign companies to M&A. On the whole, the domestic M&A tide will definitely come, but the scale of M&A transactions may be much smaller than that of foreign countries.