Merger And Acquisition Of Medical Industry In 2020 Under The Epidemic Situation: The First Half Of The Year Is Flat And The Second Half Is Expected To Recover

Plain as water. Under the impact of the epidemic, the global medical M & a industry has no surprise in the first half of 2020.

Although biopharmaceuticals, medical devices and related big health industries are paid more attention to under the epidemic situation, investors also support medical stocks to create new "giants" with real gold and silver. New incidents have repeatedly occurred in high epidemic related industries such as detection, equipment and antiviral drugs, but M & A has not been boosted by this sentiment.

Due to travel restrictions, the global medical M & A transactions in the first half of 2020 once pressed the pause button. According to evaluate vantage, the average size of acquisitions completed in the first half of 2020 is lower than at any time in the past 10 years. In the first six months of 2020, the average acquisition size was only US $108 million, the first overall decline since 2015. The number of transactions was only 57, with 251 in 2015 and 263 in 2016 at its peak in the past decade.

In the first half of the year, Ridgeway spent $4.9 billion on the acquisition of Fort seven, a cancer immune company, in early March because of its global reputation. This is the largest amount of M & A in the first half of this year.

However, there are multiple signs that mergers and acquisitions in the healthcare industry are picking up. In its latest report, PwC said that in the short term, vaccines, antiviral drugs, medical protection, in vitro diagnosis, Internet hospitals and medical informatization have become hot spots in the market, which will affect the medium and long-term industry merger and integration.

"When the epidemic affects mobility and travel, there may not be too many temporary decision-making mergers and acquisitions in the short term." Zhang Peng, executive partner of gaotejia investment group, said in an interview with 21st century economic report that "more mergers and acquisitions in the second half of the year are more likely to be based on the long-term, and enterprises will still do business splitting and integration according to their needs." From the domestic situation, some IVD enterprises performed well in the secondary market during the epidemic period, with abundant spare funds. Those enterprises with the idea of expanding abroad will also have M & A activities. In addition, the market segments of high-value consumables and imaging will continue to lead the M & A.

Merger suspension

Mergers and acquisitions are often a big driver of big pharmaceutical companies' financial results. After the completion of the acquisition of new base, the revenue of Bristol Myers Squibb (BMS) rose 61% in the second quarter of 2020, and increased 71% in the first half of 2020 to 20.91 billion US dollars. Among them, Revlimid (lenalidomide) sales of US $5.799 billion (+ 10%), eliquis (apixaban) sales of $4.804 billion (+ 21%).

Evaluate Pharma predicts that by 2026, BMS will become the seventh largest prescription drug company in the world in terms of revenue due to the acquisition of Xinji; the same will be true of Aberdeen, which will rise to the fifth place after the acquisition of aierjian; Takeda will also become the first echelon of global pharmaceutical enterprises after the acquisition of shire, a rare disease company.

All of these acquisitions are representative of the huge transactions of pharmaceutical enterprises in recent years: the transaction volume of US $74 billion, US $63 billion and US $62.4 billion has excited the market.

In the first few months of 2020, global pharmaceutical M & A volumes have fallen to at least a four-year low compared with the year of 10 large-scale transactions of more than $1 billion at the end of 2019. The largest acquisition of $4.9 billion in the first half of the year has failed to make it to the top deals list in recent years. The rest, such as Biogen's $560 million purchase of Parkinson's rights from Denali therapeutics and Novo Nordisk's $725 million acquisition of corvidia therapeutics are not even worth seeing. The biggest deal in the second quarter was alexion's $1.4 billion acquisition of Portola.

According to the data of evaluate vantage, in the second quarter of 2020, pharmaceutical continued the pattern of the first quarter, with a slight decrease in the number of acquisitions. However, due to the absence of large-scale transactions, the value of mergers and acquisitions after the merger has shrunk significantly.

On August 13, a deal worth looking forward to in the first half of the year, Thermo Fisher's acquisition of Qiagen also failed. In the first half of 2020, the total value of medical device transactions completed is less than $2 billion. The epidemic has made it more difficult to finalize the legal or financial difficulties of completing a deal.

Until Siemens' acquisition of Varian appeared. In addition to business and financial driving, the epidemic may accelerate the occurrence of this merger to some extent. Compared with Siemens, as its business is highly related to cancer, the impact during the epidemic period is more direct, which greatly improves the bargaining power of Siemens.

Companies related to internet medical services that performed well during the outbreak were also favored. In early August, teladoc announced its $18.5 billion acquisition of livongo, a provider of care management services for chronic diseases, in response to this trend.

At home, PwC reported that in the first half of 2020, the negotiation and due diligence of investment and merger in the medical and health service industry were limited to varying degrees. Compared with last year, the transaction dynamics declined. In the short term, the market rhythm was affected, but in the long run, the industry was better.

Restart

With the change of epidemic situation, capital activities in the second half of the year are also active.

On July 13, Baiji Shenzhou announced the completion of the largest equity financing of US $2.08 billion in the global biopharmaceutical field, accelerating the research and development of tumor pipelines. On November 1, 2019, Amgen announced that it would purchase 20.5% shares of Baiji Shenzhou with $2.7 billion in cash, setting the largest transaction amount between Chinese and foreign Biopharmaceutical Enterprises at that time.

With the promotion of policies such as nationwide expansion of procurement with volume, dynamic adjustment of medical insurance catalogue, encouragement of innovation, and the promotion of new listing rules in capital market, the number of M & A transactions remained at a high level of more than 400, with the transaction amount reaching 22.1 billion US dollars, the highest in recent four years. In 2020, with the further deepening of reform, the activity of M & A is expected to further increase.

The lowest value of M & A in 2019 is US $2.7 billion, which is greatly affected by overseas medical devices. However, it is worth noting that 2019 is a big year for the medical device sector to rush into the capital market, and 12 companies have successfully listed on the science and technology innovation board. Whether the new listed companies will lead the rebound of industry M & A in the future is worth looking forward to.

Tang Xun, managing partner of acquisition and merger services of Chinese pharmaceutical and life sciences enterprises of PWC, believes that in the long run, the epidemic will help human beings attach importance to virus cognition and disease prevention and control, and will promote the development of new drug research and development, infrastructure construction and high-end medical device field in the future. In the long run, the epidemic has revealed that there is still a huge gap in human cognition of virus and disease prevention and control, and the R & D response capacity and primary medical reception capacity are insufficient. In the future, new drug research and development, infrastructure construction and high-end medical devices will be the areas of continuous investment.

In terms of medicine, domestic transactions will remain active in the second half of the year, listed companies will further integrate resources, state-owned enterprises will explore mixed reform, and more large-scale transactions are expected to appear; however, inbound transactions and overseas mergers and acquisitions will remain depressed. Import substitution and self-control in medical device industry have become a trend. Due to the short-term economic and political influence, mergers and acquisitions are cold. A large number of mergers and acquisitions in the industry in the past few years need time to digest and integrate, but long-term mergers and acquisitions will still pick up.

It is worth noting that health services transactions. From 2013 to 2019, China's medical and health service market has completed 924 mergers and acquisitions at home and abroad, and the disclosed transaction amount has exceeded 190 billion yuan, including 160 cases in 2019, about 60.4 billion yuan. After experiencing the overall explosive growth in 2016 and the trough in 2017 and 2018, the total transaction scale in 2019 reaches the highest in the calendar year. The merger and acquisition of non hospital health service institutions such as physical examination, maintenance and internet medical treatment is becoming more and more active, and the transaction volume has realized reverse overrun on hospitals.

"From 2013 to 2019, the cumulative amount of M & A transactions in ophthalmic hospitals was the highest among all specialties," said Qian Liqiang, managing partner of M & A services for domestic market and medical industry of PWC in mainland China and Hong Kong. The trend of investment in gynecology, stomatology and other markets continues to cool down, and specialties with high technical barriers such as ophthalmology, oncology and brain science are favored. " Hong Kong has been the preferred listing location for medical institutions in recent years. From 2013 to 2019, a total of 20 enterprises were listed in Hong Kong.

Qian Liqiang said that during the epidemic period, new technologies such as online diagnosis and treatment, information transmission and supply guarantee, represented by Internet medicine, played a positive role. "In the long run, the epidemic may speed up the improvement of the mode system and hierarchical diagnosis and treatment system of infectious diseases, put forward higher requirements for primary medical capacity and medical informatization, and breed more investment opportunities."