m&a 2016 review china medical …...destinations, among which, europe and north america came in...

M&A 2016 Review China Medical Device Sector

April 2017

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PwC

Agenda

2016 M&A Review — China Medical Device Sector

2

Foreword

Overview

Strategic Buyers

Financial Buyers

Mainland China Outbound Deals

April 2017

PwC

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

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

• The data source of this deck is consistent with that of PwC M&A 2016 Review and 2017 Outlook, which is based on the information compiled by ThomsonReuters, ChinaVenture 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 disclosed for 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 and Macau

• “Outbound” relates to mainland China company acquisitions abroad

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


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April 2017

PwC

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

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

• “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 realising 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


4

April 2017

PwC

Overview


5

April 2017

PwC

M&A in China’s medical device sector hit record high in 2016, with deal volumes up by 40% and values up by 12% at US$7.68 billion

Source:ThomsonReuters, ChinaVenture and PwC analysis


6

Total deal volume and value of China Medical Device sector

Volume Value Volume Value Volume Value Volume Value Volume Value

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

Domestic 91 2,494 76 4,838 75 4,855 (16%) 94% (1%) 0%

Foreign 3 0 8 327 2 - 167% 99643% (75%) (100%)

Total Strategic buyers 94 2,494 84 5,165 77 4,855 (11%) 107% (8%) (6%)

Financial buyers

Private Equity 8 191 10 958 15 908 25% 50% (5%)

VC 15 32 13 19 39 53 (13%) (41%) 200% 174%

Total Financial buyers 23 223 23 977 54 961 0% 338% 135% (2%)

China mainland Outbound

SOE - - - - 3 -

POE 2 63 7 384 22 619 250% 511% 214% 61%

Financial buyers 4 33 5 322 7 1,172 25% 889% 40% 263%

Total China mainland Outbound 6 96 12 707 32 1,791 100% 640% 167% 153%

HK Outbound 2 7 2 24 6 71 0% 240% 200% 196%

Total 125 2,820 121 6,873 169 7,678 (3%) 144% 40% 12%

2014 2015 15 Vs 14 % Differnce2016 16 Vs 15 % Differnce

Total deal volume and value of china Medical Device secter

April 2017

PwC

91 76 75

3

8 2

27

28

61

4

9

31

0

20

40

60

80

100

120

140

160

180

2014 2015 2016

Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound

Domestic strategic deals remained fairly stable in terms of deal volume and deal value, PE/VC deals and outbound deal increased notably, and foreign strategic deals have decreased slightly in 2016 (1/2)

Deal volume by main category (2014 - 2016)



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April 2017

PwC

Deal value by main category (2014 - 2016)

2,494

4,838 4,855 -

327 -

256

1,300 2,132

70

408

691

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2014 2015 2016

Domestic Strategic Buyer Foreign Strategic Buyer Financial Buyer Outbound

US$mil

Domestic strategic deals remained fairly stable in terms of deal volume and deal value, PE/VC deals and outbound deal increased notably, and foreign strategic deals have decreased slightly in 2016 (2/2)



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April 2017

PwC

Strategic Buyers


9

April 2017

PwC

91

76 75

3

8

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

2014 2015 2016

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

Volume US$mil

Domestic strategic M&As remained fairly stable in terms of both deal volume and deal value; on the other hand, foreign inbound M&A appears to remain inactive

Strategic buyer deals volume and value (2014 - 2016)



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April 2017

PwC

IVD (including reagent), the hottest sector in 2014 and 2015, slowed down in 2016; while orthopedics, imaging and other devices witnessed increase.

Strategic buyer deal by subsector (2014 - 2016)

23 26

15

12

19

10

1

3

6

4

2

5

11

15

14

5

-

1

38 19

26

-

10

20

30

40

50

60

70

80

90

100

2014年 2015年 2016年

体外诊断影像骨科手术

耗材牙科其他

336

2,184

407

1,062

210

741

-

224

1,274 256

279 176

351

1,472

610

18

-

-

470

795

1,647

-

1,000

2,000

3,000

4,000

5,000

6,000

2014年 2015年 2016年

体外诊断影像骨科手术

耗材牙科其他

Deal volume Deal value（US$ mil）

IVD Imaging Orthopedics Surgical

Consum

erable Dental Other



11

IVD

Consum

erable

Imaging

Dental

Orthopedics

Other

Surgical

April 2017

PwC

2016 top deals of strategic buyers — above US$200 million



12

Date

announced

Deal val

(US$ mil)

Acquirer Target Target industry Brief introduction

1 06/01/2016 1,151 Nanjing Xinjiekou

Department Store

Co., Ltd.

China Cord Blood

Corporation

Other Nanjing Xinjiekou agreed to acquire 65.4% equity

interest of China Cord Blood, for a total consideration of

approximately USD884 million. Concurrently,Nanjing

Xinjiekou agreed to acquire the

remaining 34.6% stake or 41.728 mil ordianry shares,

which it did not already own, in China Cord Blood Corp

(CCBS), for an estimated USD 267 mil in cash.

2 15/06/2016 1,109 Zhuhai Winbase

International

Chemical Tank

Terminal Co., Ltd.

Shandong Weigao

Orthopedic Device

Company

Orthopedics Zhuhai Winbase International Chemical Tank Terminal

Co., Ltd. acquired the entire share capital of Shandong

Weigao Orthopedic Device Company, a manufacturer

and wholesaler of orthopaedic medical device products,

in a reverse takeover transaction.

3 07/12/2016 362 Zhuhai Hokai

Medical Technology

Co., Ltd.

Shanghai Zhixin

Medical Supply

Consumerables Zhuhai Hokai acquired the entired share capital of

Shanghai Zhixin Medical Supply, a medical equipment

and supplies wholesaler.

4 16/12/2016 288 Guangdong Yuejian

Zhujiang

Zhongshan Hokai

Med Tech Co

Imaging Guangdong Yuejian Zhujiang Xian Advanced Equipment

Manufacturing Industry Development Fund Partnership

(LP) planned to acquire a 57.77% interest in Zhongshan

Hokai Medical Technology Co Ltd for CNY 2 bil (USD

288.142 mil).

5 09/07/2016 215 Zhejiang Jindun Fan

Co., Ltd.

Zhejiang

ULIRVISION

Technology Co.,

Ltd

Imaging Zhejiang Jindun acquired the entired share capital of

Zhejiang ULIRVISION, a company dedicated to

researching, designing, manufacturing, integrating the IR

and UV systems, for RMB 116million.

April 2017

PwC

Financial Buyers


13

April 2017

PwC

8 10 15

15 13

39

0

200

400

600

800

1,000

1,200

0

10

20

30

40

50

60

2014 2015 2016

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

Volume

PE andVC investors were still more active in 2016, investing in orthopedics, IVD and consumable as well as chasing opportunities in m-health, wearable medical device, smart/small diagnostic device and IT solutions etc.

US$mil

Financial buyer deals (2014 - 2016)



14

April 2017

PwC

2016 top PE/VC deals — above US$100 million



15

April 2017

Deal val

(US$ mil)

1 16/08/2016 137 Investor Group Yitian Bio Others An investor group agreed toacquire

the entire share capital of

Hangzhou Yitian Biotechnology Co 2 11/01/2016 100 Chongqing Xinsanwei

Invest

NanHua Bio-

medicine Co Ltd

IVD Chongqing Xinsanwei

Investment Consulting Center

LP acquired an 11.596% stake,

or 36.13 mil ordinary shares,

in NanHua Bio-medicine Co Ltd

(NanHua),

Brief introductionDate

announced Acquirer Target Target industry

PwC

Mainland China Outbound Deals


16

April 2017

PwC

- -3 2

7

22

4

5

7

0

200

400

600

800

1,000

1,200

1,400

0

10

20

30

40

2014 2015 2016

Volume - SOE Volume - POE Volume - Financial buyer

Value - SOE Value - POE Volume - Financial buyer2

Volume

POEs and financial investors witnessed a plunge in 2016 in outbound deals in terms of deal volume and value with US$1 billion deal taking place; while SOE reported one participation in 2016.

Mainland China outbound deals by investor type (2014 - 2016)

US$mil



17

April 2017

PwC

2016 top Mainland China outbound deals — above US$100 million



18

April 2017

Deal val

(US$ mil)

1 01/04/2016 1,050 CITIC Biosensors Consumerables A private-equity arm of Citic Group Corp has

agreed to buy the rest of Singapore-listed medical

device maker Biosensors International Group for

about S$1.1 billion.

2 28/01/2016 273 SANNUO (Sinocare) Trividia IVD China-based health technology company Sinocare

Group has finalized its acquisition of diabetes

management specialist Diagnostics and renamed it

Trividia Health.

3 29/04/2016 110 SANNUO (Sinocare) PTS Diagnostics IVD PTS Diagnostics, the US-based manufacturer of

point-of-care biometric testing devices, has been

acquired by Sinocare for $110 million in cash with

additional contingent consideration of up to $90

million upon the successful accomplishment of

certain milestones over the next 18 months.

Date

announced Acquirer Target Target industry Brief introduction

PwC

Developed economies continue to be the favoured outbound destinations, among which, Europe and North America came in top two in terms of volume in 2016.

3

North America

72

South America

0 0

0

8

2

1210

00

2016 2015

Outbound M&A deal volume by region of destination 2016 vs. 2015

Europe Asia

Africa Oceanic


19


April 2017

PwC


20

Xun Tang

PwC China Deals Partner, Pharmaceuticals and Life Sciences Industry

[email protected]

Janelle Fei

PwC China Deals Associate Director, Pharmaceuticals and Life Sciences Industry

[email protected]

April 2017

Thank you

This content is for general information purposes only, and should not be used as a substitute for consultation

with professional advisors.

© 2017 PricewaterhouseCoopers Management Consulting (Shanghai) Limited. All rights reserved. PwC

refers to the China member firm, and may sometimes refer to the PwC network. Each member firm is a

separate legal entity. Please see www.pwc.com/structure for further details CN-20170425-1-C1.

m&a 2016 review china medical …...destinations, among which, europe and north america came in...

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