SHANGHAI/HONG KONG: In a bid to enhance their drug pipelines and strengthen their presence in the world's second-largest pharmaceutical market, major Chinese and US pharmaceutical companies are actively seeking acquisitions in China, say industry insiders and investment experts citing significant transactions this year.
They say that AstraZeneca recently finalized a $1.2 billion acquisition of Gracell Biotechnologies, a China-based cell therapy developer, while Novartis acquired full ownership of SanReno Therapeutics, which specializes in kidney disease therapy.
Meanwhile, Bristol Myers Squibb and Sanofi are reportedly pursuing strategic acquisitions in China, reaffirming their commitment to the market despite challenges such as Covid-related disruptions and regulatory adjustments.
Interest from international pharmaceutical giants is seen as crucial support for local firms facing strict IPO regulations and economic pressures, providing potential exits for investors looking to capitalize on their investments.
CEO of London Politica, a global political risk advisory firm, Manas Chawla mentions the strategic benefits of these acquisitions. "Such deals enable companies to cut costs, access innovation, and tap into China’s vast consumer base," he says, also noting risks amidst bipartisan skepticism towards China in the US.
LSEG data shows that the announced acquisitions of Chinese healthcare companies totaled $6.8 billion as of July 16 this year, with foreign acquisitions amounting to $720 million, marking a 52pc decrease from the previous year.
Bristol Myers Squibb, facing patent challenges, is actively seeking "bolt-on opportunities," particularly in antibody-drug conjugates through collaborations with firms like Sichuan Biokin Pharmaceutical.
Sanofi has also expressed interest in acquiring biotech firms in China, although specific targets were not disclosed. A company spokesperson affirmed their strategic agility in pursuing opportunities worldwide.
BDA Partners Managing Director Sophia Wu lists promising growth areas such as women’s health, aesthetics, neurology, and auto-immunity, which could further attract investor interest in China’s healthcare sector.
Larry Merizalde, China CEO of South Africa's Aspen Pharmacare, acknowledges risks associated with the Chinese market, including geopolitical tensions and regulatory uncertainties. "We manage those risks as a company," he affirmed.
Jasmine Choi from Eurasia Group says regulatory scrutiny and concerns over data transfer restrictions between China and the US are increasingly critical factors for pharmaceutical investments in the region.
Despite geopolitical challenges and regulatory complexities, multinational pharmaceutical companies remain optimistic about opportunities in China’s thriving healthcare sector, while their sustained investments underscore China’s significance in their global strategies despite prevailing uncertainties.