china m&a 2019 review & 2020 outlook: medical device sector€¦ · china m&a 2019...

China M&A 2019 review & 2020 outlook: Medical device sectorApril 2020

PwC

1. Foreword 03

2. Overview 06

3. Strategic Buyers 10

4. Financial Buyers 14

5. Mainland China Outbound Deals 16

Content

2

Foreword

PwC

• The data and analysis here presented are for the China Pharmaceutical sector only

• The data source of this deck is consistent with that of PwC 2019 China’s Corporate M&A Review and 2020 Outlook, which is based on the information compiled by ThomsonReuters, ChinaVenture, AVCJ, Public news and PwC analysis, unless stated otherwise

• Thomson Reuters and ChinaVenture record announced deals. Some announced deals will not go on to complete

• The deal volume figures presented in this report refer to the number of deals announced, regardless of whether or not a value is disclosedfor the deal

• The deal value figures presented in this report refer only to the deals whereby a value has been disclosed (referred to in this presentation as“disclosed value”)

• “Domestic” means China including Hong Kong, Macau and Taiwan

• “Outbound” relates to mainland China company acquisitions abroad

• “Inbound” relates to overseas company acquisitions of Domestic companies

• “Private Equity deals” or “PE deals” refer to financial buyers deals with deal value over US$10mn and/or with undisclosed deal value, invested mainly by private equity GPs but also including direct investments by financial institutions and conglomerates which are of the nature of private equity type investment

Foreword – Explanation of data presented in this report (1/2)

4

PwC

Foreword – Explanation of data presented in this report (2/2)

• “VC deals” refer to financial buyer deals with deal value of less than US$10mn and/or with undisclosed deal, but invested by venture capital funds

• “Strategic buyer” refers to corporate buyers (as opposed to financial buyers) that acquire companies with the objective of integrating the acquisition in their existing business

• “Financial buyer” refers to investors that acquire companies with the objective of realizing a return on their investment by selling the business at a profit at a future date and mainly, but not entirely, comprise PE and VC funds

5

Market overview

PwC

Market overview

2019 M&A decreased by 65% to

US$2.7bn, the lowest level since

2014. Both domestic and outbound

deals fell significantly.

7

Source: ThomsonReuters, ChinaVenture and PwC analysis

65%Total deal volume and value of China Medical Device sector

Volume Value Volume Value Volume Value Volume Value Vol Value

Strategic buyers (US$mil) (US$mil) (US$mil) (US$mil)

Domestic 7 5 4,855 89 1 ,997 7 1 2 ,547 50 869 (30%) (66%)

Foreign 2 - 3 32 2 - 2 1 1 0% n.a

Total Strategic buyers 77 4,855 92 2,029 73 2,547 52 880 (29%) (65%)

Financial buyers

Priv ate Equity 1 5 908 1 6 1 ,222 20 7 05 1 9 1 ,297 (5%) 84%

VC 39 53 52 27 5 81 1 64 67 58 (1 7 %) (64%)

Total Financial buyers 54 961 68 1,496 101 869 86 1,356 (15%) 56%

China mainland Outbound

SOE 3 - - - - - - - n.a n.a

POE 22 61 9 1 4 1 ,01 0 1 4 2 ,47 2 6 27 4 (57 %) (89%)

Financial buy ers 7 1 ,1 7 2 6 31 4 1 3 1 ,920 5 1 1 0 (62%) (94%)

Total China mainland Outbound 32 1,791 20 1,324 27 4,392 11 384 (59%) (91%)

HK Outbound 6 7 1 5 91 4 1 1 2 97 (50%) 7 88%

Total 169 7 ,678 185 4,940 205 7 ,819 151 2,717 (26%) (65%)

20192016 2017 2018

19 Vs 18

% Differnce

* Shanghai Raasannounced in 2018 to acquire 100% of GrifolsDiagnostic Solutions Inc (“GDS”) for US$5 bn, while the plan was

changed/announced in 2019 to acquire 45% of the shares for US$1.9bn and thus we adjusted the deal value in FY18 accordingly.

PwC

Market overview

Deal value dropped in all categories.

There were no large-sized outbound

deals in 2019 since Raas’s

US$1.9bn investment in GDS and

CDH’s US$1.4bn acquisition of

Sirtex announced in 2018.

Meanwhile, domestic deals fell in

terms of both volume and size,

leading to a 66% drop of deal value.

8Source: ThomsonReuters, ChinaVenture and PwC analysis

66%4,855

1,9972,547

869

0

32

0

11

2,132

1,810

2,789

1,466

691

1,101

2,483

371

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

FY16 FY17 FY18 FY19

Va

lue

(U

S$

mil

)

Deal value by main category (FY16 - FY19)

Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound

Up 58% Down 65%

*The deal values in the financial buyer sub-sector in 2019 include outbound deals led by financial buyer, amounting to US$0.11 bn (US$1.9 bn in 2018).

PwC

Market overview

Deal volume decreased in all

categories to a total of 151 in 2019,

26% down from 205 in 2018.

9

26%


7589

7150

2

3

2

2

61

74 114

91

31

19

18

8

0

50

100

150

200

250

FY16 FY17 FY18 FY19

Vo

lum

e

Deal volume by main category (FY16 - FY19)

Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound

Up 11%

Down 26%

Strategic Buyers

PwC

Strategic buyers

Due to economic uncertainty and

deleveraging process, domestic

strategic deal fell to a record low of

US$0.87bn in 2019, indicating fewer

transactions and smaller deal size

which was US$17m in 2019 versus

US$36m in 2018. Foreign strategic

investors were still not active.

11


75

89

71

50

2

3

2

2

0

1,000

2,000

3,000

4,000

5,000

6,000

0

10

20

30

40

50

60

70

80

90

100

FY16 FY17 FY18 FY19

Va

lue

(U

S$ m

il)

Vo

lum

e

Strategic buyer deals volume and value (FY16 – FY19)

Deal volume - Domestic Deal volume - Inbound Deal value - Domestic Deal value - Inbound

$17m

PwC

Strategic buyers

Led by cardiovascular interventional

treatment, consumables especially

HVC were heavily traded in 2019.

Meanwhile, IVD and imaging

remained active; distribution/supply

chain and innovative medical

equipment gained reasonable

attention from strategic buyers.

12


13 11 149

10 15 10

7

6 1 2

0

55

0

0

14 19

16

16

11

0

1

28

40

31

19

0

10

20

30

40

50

60

70

80

90

100

FY16 FY17 FY18 FY19

Vo

lum

e

Strategic buyer deals by subsector volume (FY16 - FY19)

IVD Imaging Orthopedics Surgical Consumable Dental Others

PwC

Strategic buyers

Lack of mega deals and shrink of

deal size has led to decrease in

deal value within all subsectors.

13Source: ThomsonReuters, ChinaVenture and PwC analysis

391113

384 184

741870 377

267

1,274

131

0

176

550

0

610

307300

75

0

20

0

1,663

6821,455

354

0

1,000

2,000

3,000

4,000

5,000

6,000

FY16 FY17 FY18 FY19

Va

lue

(U

S$ m

il)

Strategic buyer deals by subsector value (FY16 - FY19)

IVD Imaging Orthopedics Surgical Consumable Dental Others

Financial Buyers

PwC

Financial buyers

PE funds backed medical device

companies’ IPOs in HK as

cornerstone investors while state-

owned bail-out funds strategically

invested in private companies, both

led to a highest PE deal value in the

past 4 years of US$1.3bn in 2019,

albeit slightly declined deal volume.

VC remained in-active.

15


15 16 20 19

39

52

81

67

0

200

400

600

800

1,000

1,200

1,400

0

20

40

60

80

100

120

FY16 FY17 FY18 FY19

Va

lue

(U

S$ m

il)

Vo

lum

e

Financial buyer deals volume and value (FY16 – FY19)

Deal volume - PE Deal volume - VC Deal value - PE Deal value - VC

Mainland China outbound deals

PwC

Mainland China outbound deals

Ongoing trade war and increasing

censorship has damaged the

enthusiasm for outbound deals of

both domestic strategic and

financial buyers, and therefore

outbound fell to its lowest in the

past 4 years in both value and

volume teams.

17


3

22

14 14

6

7

6

13

5

0

500

1000

1500

2000

2500

3000

0

5

10

15

20

25

30

35

FY16 FY17 FY18 FY19

Va

lue

(U

S$ m

il)

Vo

lum

e

Mainland China in outbound deals by investor type (FY16 - FY19)

Volume - SOE Volume - POE Volume - Financial buyer

Value - SOE Value - POE Value - Financial buyer

PwC

Developed economies continue to be the favored outbound destinations. Europe and North America were in the forefront of deal volume in 2019

18

Outbound M&A deal volume by region of destination FY19 vs. FY18

South America

00

North America

127

Africa

00

9

Europe

3

3

Asia

1

Oceanic

30

20192018


PwC 19

Top 10 deals in 2019

Top 10 deals of 2019 valued at US$1.6bn and accounted for 60% of total value (US$5.3bn and 68% for 2018)

Date Acquirer Acquirer category Target Target industry Deal typeDeal value

(US$ mil)

10/12/2019Investor group (China Alpha, GIC, CDH Singapore, Hillhouse capital, Aspex Management (Cayman) and etc.)

Financial buyerVenus Medtech(Hangzhou) Inc.

ConsumablesDomestic (cornerstone investor)

333

05/08/2019 SDIC Group of Hangzhou Xiacheng District Financial buyerShanghai Runda Medical Technology Co., Ltd

IVD Domestic 217

10/01/2019 IVD Medical Holding Ltd Listing company Vastec Medical Ltd Trading Domestic 181

24/09/2019 Blue Sail Medical Listing company NVT AG Consumables Outbound 159

08/09/2019Investor Group (Taikang Life Insurance, 6 Dimensions Capital, China Merchants Capital, Flow of capital, Legend Capital and etc.)

Financial buyerGKHT Medical Technology Co Ltd

Trading Domestic 155

14/03/2019 Pingxiang Huifeng Invest Co Financial buyerJiangxi Star Technology Co Ltd

Imaging Domestic 149

27/02/2019 Edan Instruments Inc Listing companyShenzhen Edan Messer Diagnostics Co Ltd

IVD Domestic 125

08/11/2019 OrbiMed Financial buyerShanghai Kindly Medical Instruments Co., Ltd

ConsumablesDomestic (cornerstone investor)

107

06/11/2019Investor Group (Grand Flight Investment，SDIC fund, Chengtong Fund, Matrix Partners China, Lily Asia Ventures and etc.)

Financial buyer Peijia Medical Co., Ltd Consumables Domestic 100

27/09/2019 China Lucky Group Coporation Listing company Lucky Healthcare Co., Ltd Imaging Domestic 93


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china m&a 2019 review & 2020 outlook: medical device sector€¦ · china m&a 2019...

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