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Emerging Markets | 1 Private and Confidential

PharmaVentures Opportunities in Emerging Markets

December 2013


Contents

Introduction

Overview

China

Latin America

Emerging Markets Strategy

Introduction to PharmaVentures

Appendices

3

4

13

21

25

30

35

Slide


Emerging Markets (EMs) are increasingly a key part of the growth strategy of many life science/healthcare companies; the

vast majority of healthcare spend growth in pharmaceuticals, medical devices and equipment will be in EMs over the next

decade

This presentation provides an overview of the EM opportunity, including some analysis of the financial performance of

selected EM pharmaceutical industries and respective benchmark valuation metrics

There is a brief section on the China opportunity, as it is by far the largest high growth market, and also an overview of

healthcare in Latin America, which is a particularly promising EM region

Additionally, this presentation also sets out a framework that can help life science/healthcare companies determine an

effective EM strategy that is aligned with its broader growth objectives. External development options (eg. M&A) are

outlined, including some key transaction considerations of doing deals in EMs

PharmaVentures is a leading advisory firm in the life science and other healthcare sectors that is particularly active in EMs

with extensive knowledge, capabilities and reach in these high growth regions

Introduction:


LT GDP Growth for Selected Countries* (%) LT Share of Global Growth* (%)

Key Drivers Industrialisation: 30-40% plus investment rates in EMs will drive industrial productivity

Urbanisation: another 700m people will become urban dwellers in next 10 years with 92% in EMs

Demographics: working population increasing by 5% p.a. (though old people growing faster)

Synergies from trade: further gains, particularly intra-EM trade

Technology: continuing to enhance productivity, especially IT and communications

* Includes assumed currency appreciations

Source: Analyst reports, PharmaVentures analysis

* Includes assumed currency appreciations


Future economic growth will be largely driven by EMs. 60-65% of long term (LT) growth will be from EMs, with over half of that from the BRICs.

This growth is structural, brought about by further integration of the 5 billion EM population into the global economy over the next 10-20 years

Overview:

Emerging Markets will drive future global growth

0

2

4

6

8

10

Ch

ina

Ind

ia

Ind

on

es

ia

Tu

rke

y

Bra

zil

Me

xic

o

Ru

ss

ia

Ko

rea

US

Ca

na

da

Fra

nc

e

UK

Ge

rma

ny

Ja

pa

n

9.0%

(%)

7.4%

6.5%

5.8%5.5% 5.4% 5.3%

3.7%

2.5%2.2% 2.1% 1.9%

1.5%1.2%

0

5

10

15

20

Ch

ina

US

Ind

ia

Bra

zil

Ru

ss

ia

Fra

nc

e

Ge

rma

ny

UK

Me

xic

o

Ind

on

es

ia

Ja

pa

n

Tu

rke

y

Ko

rea

Ca

na

da

22%

15%

4% 4% 4% 3% 3%3% 3% 2% 2% 2% 2% 1%

60-65% of

Growth from EMs

>50% of EM

Growth from BRICs

(%)


Overview:

Per capita healthcare spend vs. GDP set to rise across EMs

Healthcare Expenditure vs. GDP (per capita basis) Health Expenditure as % of GDP

Global healthcare spend set to rise from EM GDP growth and a greater percentage of income (both public and private) being used for

healthcare

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0 10,000 20,000 30,000 40,000 50,000

($)

GDP per Capita

`

Healthcare

Expenditureper Capita

EM healthcare expenditure is still very low relative to Developed Markets (DMs) both in terms of absolute per capita spend as well as spend as

a % of GDP. The EM healthcare boom may play out for a long period of time

Source: WHO, World Bank, IMF, analyst reports, PharmaVentures analysis Source: WHO, World Bank, IMF, analyst reports, PharmaVentures analysis

0

2

4

6

8

10

12

14

(%)

<$2k $2k-$5k $5k-$10k $10k-$20k $20k-$40k >$40k

GDP per Capita (2007)

3.6%

4.4%

6.7% 6.8%

9.0%

13.3%

5.6%

10.1%

(inc. US)

(inc. Brazil

& S Africa)

Healthcare

Expenditure as %GDP


0

200

400

600

800

0.0 5.0 10.0 15.0

5 Year

Growth

($bn)

5 Year Market Growth (%)

Source: Analyst and market research reports (inc. EIU, BMI 2013), publications of institutions and NGOs, PharmaVentures analysis

Overview:

EM healthcare markets – over $1 trillion in growth over next 5 years

EMs are leading the way in healthcare

growth

Top 7 EM countries account for 77%

of total 5Y EM growth or $773 billion of

total $1.04 trillion

Top 7 EMs have a combined

healthcare expenditure of over

$1 trillion, similar to EU 5 ($1.3 trillion)

Latin America as a region is a $400bn

market with $195bn in 5Y growth

South Asia and Sub Sahara Africa

have high growth rates albeit from

lower bases

Central & Eastern Europe is slowest

EM region with projected growth of

5.4%

US remains a very important country

for healthcare growth although there

are questions on sustainability given

already high spend as % of GDP

US $766bn DM

Europe $233bn EMs $1,040bn

EM 7 US

EU 5

China

Latin

America

South

Asia

Sub Sahara

Africa Asia

Pacific 8 Central &

E. Europe MENA

= Relative Size of 2012

Market (Eg. US is $2.8trn)

Japan


Change in DM/EM Pharma Growth 2005-2020 DM/EM Pharma Market Breakdown 2005-2020

In just a decade, we are seeing a change from Developed Market (DM) growth prominence to EM growth prominence, necessitating funda-

mental shifts in many company growth strategies; DMs remain the largest markets by value, such as in the pharmaceutical market (see below)

Source: IMS, analyst reports, PharmaVentures analysis Source: IMS, analyst reports, PharmaVentures analysis

This growth in healthcare expenditure in EMs is across the board from pharmaceuticals and medical devices to hospital construction and

healthcare delivery services. Accordingly, Western companies in almost all segments of healthcare may benefit from a meaningful EM strategy

in their overall growth strategy

Overview:

Healthcare growth will continue to shift to EMs

0.0

20.0

40.0

60.0

80.0

100.0

2005 2010 2015P 2020P

DMs

EMs

(%)

72%

28%

DMs

EMs

56%

44%

DMs

EMs

20%

80%

DMs

EMs

9%

91%

0.0

20.0

40.0

60.0

80.0

100.0

2005 2010 2015P 2020P

DMs

EMs

(%)

82%

18%

DMs

EMs

74%

26%

DMs

EMs

65%

35%

DMs

EMs

56%

44%


Overview:

Summary of selected EM pharmaceutical markets

China India MENA Asia Pacific

8* Brazil Turkey

2012E Market Size

12-17E Growth

Industry Structure

Market

Distribution

Pharmacies

End-Users

Highly fragmented,

over 3,000 local

manufacturers;

MNCs have 27% of

sales & 33% profits

Fragmented with

some notable large

players with

significant exports to

DMs; 4th largest

producer of generics

Primarily branded

generics (~90% of

prescription drugs).

OTC ~16% by value

$82.2 billion

13-18%

Huge but complex,

64% generics by

value. OTC ~23%

of total market

Fragmented,

regional, need to

rely on numerous

distributors; top 3

have ~31% share

$16.1 billion $28.5 billion $26.6 billion $26.8 billion $12.5 billion

12-16% 8-10% 8-10% 7-12% 7-9%

Highly fragmented,

~$32bn in retail

sales

Fragmented but

operates a CFA,

stockist model

~$10bn retail sales,

highly fragmented;

organised market

(5%) dominated by

12-15 chains

~56% hospitals,

~24% pharmacies

and local health

centres ~20%

20-30% hospitals,

70-80% pharmacies

Mixed, depending

on country;

generally strong

presence of inter-

national players

Varies by country

(eg. 25% generics in

Singapore, 90%+ in

Vietnam)

Varies by country;

Zuellig Pharma is a

leading regional

player

Depends on territory

but chains are

common

Varies by country

Mixed, GCC has

more international

presence; thriving

local players across

territories

~Mixed, but oil rich

states have high

patented drug sales

(eg. 50%+ in Saudi)

Varies by country

(eg. Saudi has

sizeable state

presence)

Depends on

territory; chains are

present (eg. UAE,

Saudi Arabia)

Varies by country

Dominance of

internationals (65-

75%) but rapidly

growing local

industry

Primarily branded

generics of

internationals; ~12%

patented; OTC

~17%

Relatively frag-

mented; top 3 have

~45%+ share, rest

~3,000 wholesalers

Highly fragmented,

but chains allowed;

top 5 have ~20%

share

Principally

pharmacies/retail

(71%) and hospitals

(8%)

Fragmented with

some 85 manufact-

urers (~13% MNC)

Generics over 50%

by volume and

~38% by value.

OTC ~12% of total

market

Concentrated, top 2

(Hedef & Selcuk

Ecza) have nearly

70% share); region-

al co-ops have 15%

~25,000 pharma-

cies, chains not

allowed (1 per 3,000

pop.)

Principally pharma-

cies, hospitals and

clinics; OTC only

pharmacies

Source: Analyst reports, governmental publications, BMI (2013), EIU, IMS, PharmaVentures analysis * Hong Kong, Singapore, Taiwan, Malaysia, Philippines, Indonesia, Thailand and Vietnam


Overview:

Share of global pharmaceutical growth by country/region

0

50

100

150

200

250

300

Ch

ina

Ru

ssia

Ind

ia

Bra

zil

Mexic

o

Ko

rea

Tu

rkey

ME

NA

Asia

Pac.

8

Oth

er

EM

s

US

EU

5

Jap

an

Oth

er

DM

s

5Y to

2017P

Growth

($bn)

67% of medium term growth (5Y to 2017) in pharmaceuticals will come from EMs. Whilst China is the biggest single growth market (25% of

total global growth), other EMs collectively make up 42% of total global growth over the same period

25% 29% 33% 38% 40% 43% 45% 50% 55% 67% 86% 90% 97% 100% Cumulative

Share DM growth principally driven by

new products/technologies,

generics and population ageing

US and Japan considered best

markets for DM growth

US growth boosted by public

spending increases (Medicare)

EM growth principally driven by

increasing usage and greater

penetration of products

Large percentage of growth to be

driven by sales force expansion

Ageing related a secondary but

still material component of

demand growth

Strong growth across all EM

territories, including Africa (8-10%

plus growth)

Latin America market is $73bn

with $36bn 5Y growth

Source: Analyst reports, governmental publications, BMI (2013), IMS, EIU, PharmaVentures analysis


China India MENA Asia Pacific

8 Brazil Turkey

2013E Market Size*

13-18E Growth

Industry Structure

Market

Distribution

Very fragmented,

over 13,000 local

manufacturers,

mainly focused on

low-mid end. High-

end dominated by

foreign players

(~70% share). Low

industry profit margin

(~11%)

Many local players

in medical

consumables but

high-end (75% of

market) is imports/

international.

Increasing local

presence in mid-end

devices

Lack of general

penetration, particul-

arly outside large

cities

$17.1 billion

18-22%

Huge but very

complex market;

wide variations in

characteristics

Highly fragmented,

with 150,000 plus

distributors; can be

very regional/local

Top players use a

large number of

distributors


17-21% 11-14% 7-10% 13-16% 9-11%

Fragmented;

regional distributors

with sub-distributor

networks

Varies but strong

presence of

international

players. Singapore

is a local

manufacturing &

R&D hub

Varies by country

Varies by country

Heavily reliant on

imports (eg. Saudi

Arabia)

Largest device

markets are Saudi,

Israel and UAE. Oil

rich GCC countries

purchase higher end

Significant private

hospital presence in

some territories

Varies by country

Domestic and inter-

national players

supply ~75% of

needs with ~25%

imports

Regional in public

sector

Significant private

hospital sector

Fragmented, some

3,000 distributors

with few large

operators

Many local

manufacturers of

low-tech items,

including for export;

85% imported

Dominated by

Ministry of Health

but active private

sector purchasing

Private hospitals

~11% bed capacity

Fragmented

* Business Monitor International (BMI) definition

Source: Analyst reports, governmental publications, BMI (Q3/Q4 2013), PharmaVentures analysis

Overview:

Summary of selected EM medical device markets


10.0

15.0

20.0

25.0

30.0

0.0 5.0 10.0 15.0 20.0

EBITDA

Margin

(%)

Forward Market Growth(3) (%)

Source: Analyst and market research reports (inc. BMI Q3,Q4 2013 & EIU 2013), company accounts, PharmaVentures analysis

X%

Return

on

Invested

Capital(2)

=

26% India

13% China

16%

MENA

Vietnam

26%

(1) Aggregated data from selected sample of companies for each territory or region together with available industry data

(2) EBIT/(average equity plus debt)

(3) Average of analyst forecasts or PharmaVentures estimate

(4) 2012 financials unless not available

Notes:

Russia

30%

Indonesia DM Generics

9%

Overview:

EM pharmaceuticals is a profitable growth opportunity

Engaging in the pharmaceutical market in EMs has generally been a profitable activity, particularly for global pharma. Nevertheless

determining the right market strategies and implementing them well is critical to successful development

n.a.

MNC EM

Performance

The relatively low aggregate

EBITDA margin in China is largely

due to the fragmented nature of the

industry and many players

producing low-end generics

Margins of domestic players can be

relatively attractive for those with

good product portfolios and

distribution (eg. Hengrui with 27.0%

2013E EBITDA margin)

Material variation of profit margins

in all EMs underline need to get the

right strategy to deliver shareholder

value on EM expansion

Aggregate MNC performance may

be lower as less well performing

companies may be less inclined to

disclose separate EM data

21%

Latam 21%


5.0

10.0

15.0

20.0

25.0

30.0

0.0 5.0 10.0 15.0 20.0 25.0 30.0

2013E

PER

(x)

Forward EPS Growth (%)

Notes: (1) Each regions/category represented by analyst selected number of quoted companies; forward EPS growth periods of different categories may not be exactly the same

(2) Market data as of 30 October 2013

Source: Analyst reports, company accounts, Capital IQ, PharmaVentures analysis

$100bn

market

value =

less

expensive

more

expensive

lndia

China

Russia

US Large

Biotech

Europe

Generic US

Major

Pharma US

Generic

Valuations of pharma companies in different territories (and sectors) principally reflect expectations of growth in earnings. Current PE ratios

of EM pharma sectors imply an approximate IRR of 13-16% versus DM pharma of 8-11%

Overview:

Valuation metrics of selected EMs vs. DMs

Absolute valuations have

generally risen since last year

along with the general market

US Large Biotech figures heavily

influenced by Gilead

Europe

Major

Pharma


The Chinese pharmaceutical market is roughly divided into more established markets such as Beijing and Shanghai and higher growth less

established regions; with regards therapeutic areas, many of these are enjoying 20% plus growth

Market Breakdown by Region Market Breakdown by Therapeutic Class

Source: Analyst reports (inc. Citi Nov 2012), industry data (2008-2011) Source: Analyst reports (inc. Citi Nov 2012), industry data (2008-2011)

China:

Breakdown of the pharmaceutical market

Companies may need a multi-pronged strategy in China given the wide ranging characteristics of different provinces and their respective cities

5

10

15

20

25

30

35

0 5 10 15 20

Biologics

Bone &

Mascular

Narcotics RespiratoryCNS

Anti-

Cancer

Mental

Disorder

Endocrine

Digestive

SystemImmuno-

modulators

Blood

System

Cardiovascular

Antibiotics

CAGR Growth (%)

Market Share (%)

Dermatology

Urinary System

Sensory

Reproductive

10

15

20

25

30

0 5 10 15

Jilin

Guizhou

Shijiazhuang

Jinan Tianjin

Hubei

Xi’an

Shenyang

Hunan

Fujian

Hangzhou

Guangzhou

Beijing

CAGR Growth (%)

Market Share (%)

Pearl River Delta

Shanghai

ChongqingHarbin

Nanjing

Zhengzhou

Chengdu


China:

Selected notable Chinese companies by therapeutic classes

Anti-cancer

Biologics

Blood &

Hematopoietic

Bone &

Muscular

Cardio-

vascular

Ebay Pharma

Hansoh Pharma

Hengrui

Medicine

Luye Pharma

Qilu Pharma

Tasly Pharma

Anke Biotech

Beijing SL

Beijing Huasu

3S Bio

Qilu Pharma

Sinovac

Shangdong

Quangang

9.5%

3S Bio

Kelun

Lingkang

North China

Shangdong

Lukang

Rongsheng

Harbin Sanlian

Immuno-

Modulators

Changzheng

Xinkai

Sino Biopharm

Harbin Sanlian

Jiangshi

Qizheng

Yuheng Pharma

Zhongyuanwei

Beijing SL

Pharma

Sihuan Pharma

Sino Biopharm

Wuxi Shanhe

Zhongheng

Group

Aohong

Double Crane

Harbin Sanlian

Nhwa

Qilu Pharma

Shineway

Pharma

Simcere

2.7%

11.2%

Digestive

System

Endocrine

CNS

Mental

Disorder Respiratory

Aosaikang

Changzhou

Siyao

Lanling Pharma

Qilu Pharma

Qirui Pharma

Sino Biopharm

Southwest

Changchun

Jinsai

Double Crane

East China

Pharma

Kumming

Neptune Group

Sino Biopharm

Taiji Pharma

8.1%

Changbaishan

China East

Diao Pharma

Jinling Pharma

Joincare

Shiqiao Pharma

Vaccines

Dongting

Hansoh Pharma

Hengrui

Medicine

Huahai Pharma

Kumming

Nhwa Pharma

Changzhou

Siyao

Fuhe Huaxing

Hanmei Pharma

Kelun Pharma

Reyoung

Pharma

Shenyang

Xinma

Changsheng

China National

Biotech Group

Shenzhen

Kantai

Zhejiang

Tianyuan

Sinovac

Yangsheng

5.9%

7.3%

X%

Source: Citi Research (November 2012), other analyst and market research reports, industry data, company accounts, PharmaVentures analysis

2.5% 1.7%

13.1%

2.6%

7.1%

1.3%

= Share of pharmaceutical market for therapeutic class


Aging population, more active lifestyles, greater willingness/ability

to treat conditions and growing number of orthopaedic surgeons;

at least 3 notable domestic players (Weigao, Kanghui & Trauson).

15% plus growth forecast

$1.2bn

The total medical device market in China was estimated to be worth $22.8 billion in 2012 (22% growth). Forecast growth of 18-22%

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

22.5

2012E

$22.8bn

Diagnostic Imaging

$5.0bn

Growth from hospital upgrades and new hospitals. MNC

dominance (80% plus share); ~15% growth

Consumables Catheters and syringes expected to enjoy 25% type growth. Local

players majority market share (62%)

Orthopaedic

$4.5bn

Cardiac Rhythm

Management

Figures excludes pacemakers. ~15% growth

Dialysers $1.2bn

Hospital equipment (eg. infection control), dental, surgery etc.

PMD/Life Support $0.9bn

Linear Accelerators $0.5bn

Biochem. Analysers $0.4bn

Stents $0.3bn

Respiratory $0.3bn

Pacemakers $0.2bn

Other $6.3bn

Strong growth of 15-20% expected

10-15% growth

Strong local player (Microport); market growth of ~18%

Strong growth of 15-20% expected in line with IVD market

Low penetration rate (~28%) but growth rate of 11-13%

Strong growth of 15-20% expected; PMDs most in demand

Strong growth of 15-20% expected

$1.6bn

Note: (1) This figure expands the definition of the BMI market to include other items as well as incorporates different estimates of segment sizes

Source: Analyst and market research reports, industry data, company accounts, PharmaVentures analysis

China:

Medical device market breakdown

($bn)

Endoscopes $0.4bn Strong growth of 15-20% expected


Orthopaedic

Biochem.

Analysers

Medical

Consumables

Stents

Diagnostic

Imaging

Shangdong

Weigao

Trauson

Kanghui

Beijing Libeier

Tianjin

Walkman

Suzhou Best

Mindray

KHB

Urit

Seeuco

7.0%

Shandong

Weigao

Jiangxi Hongda

Lepu Medical

PMD/Life

Support

Microport

JW Medical

Systems

(Biosensors)

Lepu Medical

Dalian Yinyi

Mindray

Landwind

Wandong

Xingaoyi

Anka

Neusoft

Goldway

Edan

Biolight

Dehaier

1.8%

21.9%

Dialysers

Linear

Accelerators

Cardiac

Rhythm Man.

Pacemakers Endoscopes

Shandong

Weigao

Chongqing

Shanwaishan

Guangzhou

Jihua

Jiangsu

Lengthen

Shinva

5.3%

Mindray

Lepu Medical

Seeuco

LifeTech

Respiratory

Lepu Medical

(Qinming)

Microport

Weigao

Guangzhou

Genial Tech.

Huangzhou

Hawk Optical

SMOIF

Chonqing

Jinshan

Huangzhou

Tonglu

Shanghai

Aohua

Huangzhou Jilin

Medical De-

vices (Kyoling)

Vincent Medical

2.2%

5.3%

X%

Source: Analyst and market research reports, industry data, company accounts, PharmaVentures analysis

1.3% 0.9%

19.7%

1.8%

4.0%

1.3%

= share of overall medical device market for the category

China:

Selected notable Chinese companies by medical device area


Between 2010 and 2015, over 5,000 new hospitals are forecast to be constructed, adding over 1.9 million beds or an additional 57% of 2010

bed capacity. Total hospital bed capacity is forecast to reach 5.3 million beds in 2015 with an overall 7.2 million beds including those from

township hospitals and community service centres

0

25

50

75

100

125

2009 2010 2011P 2012P 2013P 2014P 2015P Year End

2015P

New hospitals will be larger with

average 404 beds vs. average

162 beds of existing hospitals

New hospitals will have more

facilities and a wider range of

capabilities and services

Huge expansion of community

service centres to provide

primary care services to ‘free up’

hospital capacity

New centres will have an

average 9.2 bed capacity vs. 5.2

of existing centres

Continuing reduction in township

hospitals particularly smaller

less efficient ones. Average

26.3 bed capacity to increase to

33.5 by 2015

Source: Citigroup report (Jan 2012), governmental data, PharmaVentures analysis

No of Hospitals/Health Centres (000s)

20.3

38.5

27.3

25.7

34.2

63.2

Hospital

Community Health Centre

Township Hospital

China:

The hospital construction cycle will boost equipment demand significantly


Market valuations of different healthcare segments largely reflect variations in expected growth

China:

Healthcare valuations by different segments

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0

2013E

PER

(x)

Forward EPS Growth (%)

Notes: (1) Each regions/category represented by analyst selected number of quoted companies; forward EPS growth periods of different categories may not be exactly the same

(2) Market data as of 30 October 2013


less

expensive

more

expensive

Life

Science Tools

Some segment valuations may

reflect scarcity of ‘pure plays’

High growth rates of newer areas

such as CROs and diagnostic

laboratories reflect continuing

development of China healthcare

market as high value products and

services start to penetrate the

market

Pharma

Distribution

CROs

Medical

Devices Pharma

Hospitals

Diagnostic

Labs


Enterprise Value to Equity Value to

Date Target

Sector

Target Acquiror 100%

Enterprise

Value

Revenue EBITDA EBIT Net

Income

Net

Assets

Oct 13 Hospital Foshan Chancheng Hospital Shanghai Yicheng Hospital IM

(Fosun Group) (China)

RMB1.1bn 2.2 x n.a. n.a. n.a. 3.3 x

Aug 13 Diagnostic

imaging centers Concord Medical Services

(38%)

Management (China) $458m 3.2x 7.7 x 13.3 x 14.2 x 0.8 x

May 13 Injectables based

generics Kanghong Sagent (50%) Sagent Pharmaceuticals (US) $25m n.m. n.m. n.m. n.m. 1.5 x

Mar 13 Pharmaceuticals/

vaccines Simcere Pharmaceuticals Hony Capital (China) $580m 1.7 x 16.2 x 39.5 x 53.6 x 1.5 x

Jan 13 Medical devices Trauson Stryker (US) HK$5.8bn 7.8 x 14.3 x 17.7 x 21.9 x 3.8 x

Jan 13 Pharmaceuticals/

plasters Guilin Tianhe Pharmaceuticals China Resources Sanjiu

(China)

RMB601m 1.7 x n.a. n.a. 13.4 x 4.8 x

Dec 12 Pharmaceuticals Hunan Dongting Pharma Fosun Pharmaceutical (China) RMB753m 2.5 x n.a. n.a. 24.3 x 5.0 x

Nov 12 RNA detection

solutions Haoyuan Biotech PerkinElmer (US) Up to $68m n.a. n.a. n.a. n.a. n.a.

Sep 12 Medical devices China Kanghui Medtronic (US) $816m 12.3 x 24.7 x 32.2 x 40.9 x 4.2 x

Jul 12 Immuno-

diagnostics Changchun Bioxun Shinva (China) RMB418m 5.2 x n.a. n.a. 11.6 x n.a.

Jun 12 Orthopaedic

products Wuhan Dragonbio (51%) Mindray (China) $70m 9.0 x n.a. n.a. n.a. n.a.

Mar 12 Hospital Chang’an Hospital Concord Medical (China) RMB477m 1.2 x n.a. n.a. n.a. n.a.

Sep 11 Orthopaedic

implants Suzhou Best Microport (China) RMB110m 5.0 x n.a. n.a. 12.2 x n.a.

Sep 11 Pharmaceuticals 4 subs. of Beijing Pharma Shanjiu Medical (China) $65.2m n.a. n.a. n.a. 20.4 x 1.8 x

Source: Analyst reports, company accounts, Capital IQ, press articles, PharmaVentures analysis

China:

Selected recent M&A transactions in China healthcare



Date Target

Sector


Enterprise

Value


Income

Net

Assets

Sep 11 Drug distribution Shangyu Medicine Co. International Pharma (China) RMB80m 0.2 x n.a. n.a. 28.7 x n.a.

Aug 11 Molecular

diagnostics Shanghai Yuanqi Shanghai Pharma (China) RMB430m 0.4 x n.a. n.a. n.a. n.a.

Jul 11 Pharmaceuticals C&O Pharmaceutical Tech. Shionogi & Co (Japan) S$332m 3.3 x 11.3 x 12.6 x 15.6 x 4.4 x

Jun 11 Drug eluting

stents JW Medical (50%) Biosensors (Sin) $1.04bn >20x n.a. n.a. >45x n.a.

Apr 11 Drug marketing &

distribution Tianjin Precede China Medical System (China) HK$1.4bn 3.9-4.3 x n.a. 14.5-16 x 17-19 x 12-14 x

Oct 10 Drug distribution Yong Yu (Zuellig Pharma) Cardinal Health (US) $470m 0.47 x ~12-16 x n.a. n.a. n.a.

Oct 10 Dental labs New Perfect Q&M Dental Group (Sin) RMB200m n.a. n.a. n.a. 12.5 x 2.9 x

Oct 10 Consumer

healthcare BMP Sunstone Sanofi Aventis (F) $521m 2.68 x 22.8 x 26.4 x 45.1 x 3.2 x

Oct 10 Healthcare

services Quality Healthcare Fortis Healthcare (India) HK$1.5bn 1.50 x 17.4 x 22.2 x 27.0 x n.m.

Nov 09 Vaccines Tianyuan Bio-Pharma Novartis (CH) $130m 5.9 x n.a. n.a. n.a. n.a.

Sep 09 Diagnostic labs DA Diagnostics SB China VC/Fosun (China) $49m 1.23 x n.a. 8-12 x n.a. n.a.

Oct 08 Medical diag-

nostic services Shanghai Kang Pei Mingyuan Medicare (China) RMB310m 1.71 x n.a. 14.3 x 14.8 x 3.3 x

Oct 08 Pharma

distribution Nuo Hua American Oriental

Bioengineering (China)

RMB200m 0.5 x n.a. n.a. 17.2 x n.a.

Jan 07 Diagnostic

imaging Landwind Medical MBO/Citigroup (Asia) RMB818m 2.8 x 13.8 x 15.6 x 17.8 x 3.2 x

Source: Analyst reports, company accounts, Capital IQ, press articles, PharmaVentures analysis

China:

Selected recent M&A transactions in China healthcare (cont’d)


Latin America:

A region with nearly $200 billion in 5 year healthcare spend growth

* Defined as ‘Global Middle Class’ earning between $6,000 to $25,000 per year

Source: Analyst and market research reports, industry data, company accounts, IMF, PharmaVentures analysis and estimates

Latin America is one of the fastest growing large EM regions for healthcare spend and presents a considerable business opportunity for

Western players as well as EM players

Huge middle class driving healthcare demand

Latam

China

Asia Pacific 8

India

2012 GDP

per Capita

Est. Size of

Middle Class*

$10,052

$6,076

$5,445

$1,492

200m

175m

100m

50m

Pop. of Top

10 Cities

70m

115m

65m

75m

Mexico

Healthcare market

(2012): $73bn; growth

7-9%

Pharma market (2012):

$12.4bn; 7-10%

growth Brazil

Healthcare market

(2012): $203bn;

growth 8-10%


$26.8bn; 7-12%

growth

Argentina

Healthcare market

(2012): $44bn; growth

~10%


$8.7bn; 7-10% growth

Other Brazil Sectors

Medical devices

Clinical diagnostics

Diagnostic imaging

Healthcare IT

Medical tourism

Orthopaedics

Size

$5.9bn

$0.6bn

$0.6bn

$0.5bn

~$1.0bn

$0.4bn

Growth

13-16%

10%

12%

12%

>20%

13-16%

2017: Add.

Middle Class*

80m

330m

120m

100m

http://www.google.co.uk/url?sa=i&rct=j&q=latin+america+blank+map&source=images&cd=&cad=rja&docid=LbDmlsFePVk2IM&tbnid=OOkZ6f2khMpZbM:&ved=0CAUQjRw&url=http://avmats.com/contact/&ei=JgWVUZCxGMKc0wXakYH4DQ&psig=AFQjCNFXgGpW31GudMkAn9dNE2Yjy0dxhw&ust=1368807063634258


Latin America:

Summary of selected Latin American pharmaceutical markets

Brazil Mexico Venezuela Argentina Colombia Chile

2012E Market Size

12-17E Growth

Industry Structure

Market

Distribution

Pharmacies

End-Users

Fragmented;

domestic manu-

facturers (300+)

account for ~80% of

market

Primarily branded

generics (60%);

patented 20%; OTC

~16%

$26.8 billion

7-12%


7-10% 7-10% 7-10% 7-12% 7-10%

Relatively frag-

mented; new

channels developing

(eg. supermarkets)

~25,000 pharm-

acies; chains and

supermarkets 30%;

rest SMEs

20-30% hospitals,

70-80% pharmacies

~230 companies,

50% local with 60%

of market; many

MNCs present; 6 of

10 largest are local

Primarily patented

and branded

generics; OTC~14%

Dominated by

Pharma Star

(~65%) co-owned

by pharma groups

~12,000 pharm-

acies; limited chain

presence (5% by

number)

86% pharmacies;

13% hospitals; 1%

other

~33 manufacturers,

dependent on

imports; some

notable locals (eg.

Grupo Farma)

Generics ~37%;

patented ~39%;

OTC 24%

Strong state

presence,

particularly the infra-

structure

~6,000 pharmacies;

top 2 have 30%

share

Principally

pharmacies

~180 producers;

prominence of

internationals with

notable locals (eg.

Lafrancol)

Patented >50%;

OTC ~15%

~80% wholesalers;

20% government

Highly fragmented,

but chains allowed;

top 5 have ~20%

share

Principally

pharmacies/retail

(71%) and hospitals

(8%)

~40 producers; top

5 have ~24% of

market; international

players mainly

European

Unbranded generics

32%, patented 40%,

18% OTC

Concentrated in 3

pharmacy chains

(Cruz Verde, Ahum-

ada & Salcobrand

3 major pharmacy

chains control over

90% of market

80% pharmacies

Source: Analyst reports, governmental publications, BMI (2013), EIU, IMS, PharmaVentures analysis

Dominance of

internationals (65-

75%) but rapidly

growing local

industry (recent

consolidation)

Primarily branded

generics of

internationals; ~12%

patented; OTC

~17%

Relatively frag-

mented; top 3 have

~45%+ share, rest

~3,000 wholesalers

Highly fragmented,

but chains allowed;

top 5 have ~20%

share

Principally

pharmacies/retail

(71%) and hospitals

(8%)


Latin America:

Road map of Brazilian healthcare sector

APIs

Source: PharmaVentures research

CROs

Pharma

Medical Devices

CSOs

Hospitals

Amil

Santa Catarina

Santa Casa

Rede D’Or

Hospital IT

3rd Party

Labs

WPD (Agfa)

Web Sistemas

DASA

Fleury

Patients

Chemical Drugs Biologics Vaccines

Distributors

Pharmacies

Italfarmaco

ACS Dobfar

Aché Labs

BIOLAB

Cristália

Eurofarma

EMS

RaiaDrogasil

DPSP SA

Pague Menos

Panpharma

Profarma

Prodoctor RX

Pharmexx Brazil

Baumer SA

Ortosintese

Fanem

Biomecanica

Samtronic

Protalix

Indar

Fiocruz

Intrials

Eurotrials



Date Target

Sector


Enterprise

Value


Income

Net

Assets

Sep13 Pharmaceuticals Laboratorios Andrómaco

(Chile)

Grünenthal (Germany) CLP 227bn 2.4 x 14.0 x 17.0 x 27.1 x 4.2 x

Apr 13 Consumer health-

care/nutrition Grupo Nutrisa (Mexico) (33%) Gruop Herdez (Mexico) MXN 2.4bn 2.1 x 13.6 x 17.3 x 28.2 x 4.8 x

Feb 13 Private healthcare

services Red Salud UC (Chile) (40%) CHRISTUS Health $513m ~1.7 x n.a. >50 x >100 x 0.9 x

Jan 13 Pain relief

products Tafirol (Argentina) Genomma Lab (Mexico) $26.9m 2.2 x n.a. n.a. n.a. n.a.

Dec 12 Pharma manu-

facturing Manufacturing facility of

Hypermarcas (Brazil)

Avert Laboratórios (Brazil) $17m n.a. n.a. n.a. n.a. n.a.

Nov 12 Animal health Centrovet (Chile) Virbac (France) $61.4m 1.4 x n.a. n.a. n.a. 3.6 x

Oct 12 Pharmaceuticals Meizler Biopharma (Brazil) UCB (Belgium) $216m 4.6 x n.a. n.a. n.a. n.a.

Oct 12 Managed

healthcare Amil Participacoes (Brazil) UnitedHealth (US) B$11.5bn 1.1 x 35.1 x 64.9 x n.m. 8.0 x

Sep 12 Dental radiology

services Papaiz Associados Diagnóst-

icos por Imagem (Brazil

Clidec and Fleury Centro R$18.4m 1.4 x 5.0 x n.a. n.a. n.a.

Sep 12 Diagnostic

centres Sonorad I (Chile) Integramedica (Chile) $15m 1.1 x n.a. n.a. n.a. n.a.

Jul 12 Pharmaceuticals Lafrancol (Colombia) CFR International (Chile) $562m 2.8 x n.a. n.a. n.a. n.a.

Jun 12 Pharmaceuticals Sanobiol (Brazil) Cristalia (Brazil) ~B$100m 1.3 x n.a. n.a. n.a. n.a.

May 12 Pharmaceuticals Meizler Biopharma (Brazil) UCB (Belgium) $216m 4.6 x n.a. n.a. n.a. n.a.

May 12 Pharmaceuticals Multilab (MICPF) (Brazil) Takeda (Japan) B$540m 3.9 x n.a. n.a. n.a. n.a.


Latin America:

Selected recent M&A transactions in Latam healthcare


1

For many international Western healthcare companies, it is vital to determine a growth strategy that both strengthens its core Western markets

whilst expanding into EMs. Meaningful EM growth strategies may be substantially integral with core DM activities

Principal growth components applicable to most Western companies include:

Innovation driven growth

DM Angle EM Angle

DM orientated R&D:

DM developed products for principally DMs and high-

end segment of EMs (eg. patented drugs)

Potential option to manufacture in EMs (as

applicable)

EM centre for R&D:

EM developed products with principal applicability in

EMs but also potentially in DMs; likely to also involve

EM production (eg. medical equipment)

2 EM driven growth DM export model:

DM products exported to EMs, with many for high-

end segment of markets in EMs (eg. diagnostic

imaging equipment)

Adapted products exported to EMs for wider market

penetration

EM ‘growth platform’ model:

A proper ‘growth platform’ is developed in EMs that

can encompass R&D, production, marketing and

sales, servicing etc.

EM HQ is centre or ‘hub’ for development of EM

franchise

3 Consolidation driven

growth

DM consolidator:

Add market share in DMs and extract consolidation

synergies

EM acquisitions:

Acquire complementary EM businesses, extracting

consolidation synergies from EM ‘growth platform’

and from DM activities (as applicable)

Emerging Market Strategy:

Formulating a coherent growth strategy


Increasing Impact on Organisation

The whole spectrum of collaborative partnerships can be used, often in conjunction to implement an overall EM strategy from simple distribution

agreements to full scale majority control acquisitions

Distribution/

Sales Agreements

Out-licensing

Agreements Strategic Partnerships

50:50 Type

Joint-Ventures

Majority Control

Acquisitions

Simple distribution

agreements to more

substantial marketing and

sales agreements

Out-license one or more

products to EM parties

with distribution rights in

one or more EM

territories

Strategic partnership that

can involve a range of

activities (scope) and

have differing governance

structures

Equity based joint-venture

typically involving specific

products and/or

geographies

Acquisition with control

Example:

Licensing, co-R&D deal

between AstraZeneca

and Hutchison China

Meditech (cancer drug)

Example:

3SBio and Isotechnika

Pharma strategic

partnership to develop

and commercialise

Voclosporin in China

Examples:

Anti-infectives 50:50 JV

between DSM and

Sinochem ($270m)

Bayer/Cadila marketing

and distribution JV in India

Examples:

Sanofi acquisition of

Medley ($660m) in Brazil

Medtronic acquisition of

Kanghui ($816m)

Example:

Misonix (ultrasound

medical devices)

distribution agreement

with CICEL in China

Increasing importance of having right partner/target, strategic alignment,

management ‘fit’ and governance


Development options for Emerging Markets



Illustrative investment metrics of establishing an EM ‘hub’ in China by M&A

We set out below an illustrative example of the key financial metrics of a hypothetical but representative international Western (medical device)

company acquiring a target in China to establish an EM hub and to illustrate the potential synergies extractable and their impact on IRR

It sets out an approach for the financial evaluation of an acquisition/partnership and provides an example quantification of the potential synergy

value of entering into China on an EM ‘hub’ strategy


* DCF/Present Value of standalone assumes 18% discount rate, implying investment price is below inherent DCF Value, synergies assume 35% discount rate to reflect, in part, execution risks

60

80

100

120

140

20% +17% +11% 48%

0% +46% +49% 95%

IRR of Acquisition

Synergy Value as % of

Acquisition Price*

Synergy

Value from

Acquisition

Distribution of Acquiror products

through Acquiree channels

Distribution of Acquiree products

through Acquiror EM channels

Tangible synergies from NT know-how

transfer

Selected scale and scope

synergies and productivity

improvements

Expansion of EM ‘hub’

Flow back of Acquiree products into

Acquiror DM territories

DCF Value* ($m)

$75m

$146m

Standalone* Near Term*

Synergies

EM ‘Hub’ Dev.*

Synergies Total Value to*

Acquiror



Potential timeline for partnering/acquisition in EMs

Phase 1

Review/determine

strategy

Phase2

Active Partner/Target

Qualification

Phase 3

Due Diligence and

Negotiations

Phase 4

Closing and

Completion

Research long list of potential

partners/targets

Enter into structured dialogues with

a shortlist of candidates – discuss

scope & key deal principles

Field visits to prospective

partners/targets; on-the-ground

market research

High level determination of

potential synergies with each

partner/target

Comparison of prospective

partners/targets against key

strategic and deal criteria

Select a top prospective

partner/target

Enter into negotiations

Heads of terms signed – exclusivity

Final contractual negotiations

Closing; signing of legal

documentation

Completion conditions, including

necessary approvals

Completion

Which EM markets should the

company focus on?

Which areas of the company can

play well into EMs

Validation of proposed strategy

by on-the-ground research,

including discussions with

relevant people in selected EMs

Determine a long list of potential

partners/targets for selected EMs

Enter into due diligence (dd) and

negotiations

Financial, legal, and commercial

due diligence, including on-the-

ground research into prospective

partner/target, management,

shareholders, customers,

suppliers etc.

Firm up business and financial

case of prospective partner,

including potential synergies

Prepare and negotiate legal

documentation

Finalise key terms post dd,

including financial for a deal

~4-10 weeks* ~2-3 months ~3-4 months ~Approvals dependent

Emerging Market transactions are typically characterised by greater complexity, longer timelines and higher risk of failure to close. Given this,

we believe that proper qualification of candidates early on will help significantly reduce risks in a deal

Below is a timeline/activity flow chart that places emphasis on upfront research and partner/target evaluation to select best candidate before

entering into negotiations in earnest

* Depends on, inter alia, whether review or determination of EM strategy


The following are some typical transactional issues and considerations that are particularly applicable to EM deals. Having team members

and/or advisors on board who are familiar with EM deals will make process more effective and help reduce costs, time and risks

Constrained Due

Diligence

Often not possible to perform comprehensive due diligence in a timely manner. Missing documents, potential

low quality of financial information, extensive related party transactions and undisclosed contingent liabilities can

be some of the key features of EM due diligence. Notable other areas are tax, labour liabilities and non-

compliant business practices. Local due diligence firms who have local knowledge can be highly valuable

More Limited

Warranties

Obtaining warranties customary in West may not always be possible and enforceability varies

More Regulatory &

Approval Hurdles

There are typically more regulatory and approval hurdles to get through; many EM markets such as China have

capital controls and conditions on FDI

Align Consideration

Structure

If possible, aligning consideration to reflect uncertainties; deferred payments and earn-outs can help reduce risk

of a transaction. This is particularly do-able with private or founder businesses

Structuring Deal The acquiring vehicle should be structured to optimise tax planning; often this can involve off-shore vehicles;

there may also be profit repatriation considerations

Aligning Strategy and

Interests

Often in partnerships, strategic priorities and interests are not aligned and making the partnership sufficiently

aligned is a key part of getting the scope and governance right


Some key transactional considerations

Non-Compliant

Practices

Non-compliant business practices are quite common in EMs. Need to assess real risks and determine which

are manageable and which are potential deal breakers

More Protracted

Process

Process often more protracted and less structured; target and advisors can be less familiar with M&A, which

makes the process less straightforward and often difficult, resulting in more time and effort required


Introduction to PharmaVentures:

Overview

PharmaVentures is a leading life science and healthcare advisory firm providing M&A advisory, licensing/product/IP transaction

services, strategy/market advisory, commercial due diligence, and expert services such as valuation, IP and expert testimony

Founded in 1992 and based in Oxford and London, we have completed over 600 assignments for global pharma, biotech, medtech

and healthcare companies as well as for financial institutions such as private equity firms and international banks

Our M&A/transaction clients include industry leaders such as Novartis, Merck, Sanofi and UCB, and high profile financial investors

including Gulf Capital, 3i, Barclays and UBS; they also include leading innovation companies and privately owned businesses

Our multi-disciplinary teams are drawn from the life science and medical industries, investment banking and strategy consulting,

providing a holistic integrated offering to help clients in evaluating and executing transactions. We bring the exacting rigour and

quality service of top advisory houses and investment banks but flexibly tailored to our client’s specific needs

PharmaVentures operates globally and has a wide network of associates that extend our geographic reach as well as strengthen

our industry expertise. These market sector and specialist experts can be brought into assignments as applicable


PharmaVentures has developed expertise in a very broad range of life science and healthcare segments with extensive experience

in both Developed Markets and Emerging Markets


We have wide-ranging life science and healthcare industry expertise

Biopharma Other

Medical

pharma drugs/small

molecules

biologics/large

molecules

Healthcare

Services

diagnostic labs

diagnostic

imaging services

weight loss

programmes

drug/medical

distribution

pharmacies

medical/health

clinics

biopharma

packaging

vaccines

recombinant

DNA

siRNA/RNAi

living system

extractions

Health & Beauty /

Nutrition

clinical/medical

nutrition

nutraceuticals

food

technology

health and

wellness

nutrition

medical/

healthcare IT

Geographic

Experience

Europe

North America

Middle East

Australia/NZ

China/East Asia

India/South Asia

Africa

Russia

consumer

healthcare

products/OTC

Medical

Devices/Medtech

diagnosis

devices

therapeutic

devices

surgery devices

drug delivery

nano-

technology

antibodies

Latin America

gene therapy

formulations

generics

novel

biosimilars

dental

Contract

Organisations

research

clinical

manufacturing

sales

data

management

surveillance

instruments/

tools

diagnostic

imaging

weight

management

laser and cosmetic

medtech

skincare


PharmaVentures has developed a strong reputation for exceptional quality work, resulting in an increasing number of assignments, from global

pharma and PE firms to promising high growth companies and early stage innovation firms. Our clients include:


We work with leading life science and PE clients worldwide

http://www.gulfcapital.com/Home.aspx


PharmaVentures is particularly active in Emerging Markets and developed extensive experience in strategy and M&A in these regions

PharmaVentures has an experienced multi-

lingual team that has successfully transacted

many deals in Asia Pacific, India, MENA,

sub-Sahara Africa, CIS and Latin America

We have a large proprietary database of EM

life science and healthcare companies who

could be partner or acquisition candidates

PharmaVentures has wide ranging

knowledge of Emerging Markets and the life

science and healthcare sectors within those

markets, including the government and

regulation side

We have developed an extensive network of

relationships and contacts (commercial,

governmental, academic) that can the

applied in client projects

We work with local associates who can be

brought into to support projects,

complementing client and PharmaVentures

teams

Help put structure into EM M&A process and

increase effectiveness and efficiency of

initiative

PharmaVentures can help determine the

best growth strategy for EMs and optimal

routes for expansion

We can identify and qualify suitable

acquisition/partner candidates against client

criteria

PharmaVentures can provide advisory and

execution support for an M&A/partnership

transaction

We can provide a valuation of the target or

strategic partnership

PharmaVentures can provide strategic due

diligence to complement other forms of due

diligence to support the investment case for

acquiring or partnering with a proposed

candidate

First Class EM

Experience

Proprietary EM

Target Database

Wide-Ranging

EM Knowledge

Extensive EM

Network

Local ‘On-The-

Ground’ Presence

Why PharmaVentures? Services PharmaVentures can Provide

Determining EM

Growth Strategy

Target/Partner

Determination

M&A Advisory

Target/Deal Valuation

Due Diligence Support


How PharmaVentures can help in Emerging Markets

EM M&A Support



Selected senior EM team members

Dr Fintan Walton

Founder, CEO

Strategy consulting and life science management experience

Over 25 years experience in the life science industry

Founded PharmaVentures in 1990

Clients have included major pharmaceutical and biotechnology

companies, as well as chemical, medical device, generics and

OTC companies. His clients have also included major banks and

PE and VC groups

Before founding PharmaVentures, he was in management

positions at Bass and Celltech

Educated at University of Michigan (PhD) and Trinity College,

Dublin

Ping Shek

Vice President

Over 20 years in M&A, corporate finance and strategy consulting

with last 5 years specialising in life sciences and healthcare

Led or transacted over $20bn in completed deals, mostly

international cross-border; experienced in transacting deals in over

20 countries, in Developed Markets & Emerging Markets

EM experience includes: China, India, Russia, Egypt, Turkey,

Taiwan, South Africa, Eastern Europe, Mexico, Brazil, UAE, and

Indonesia

Clients have included: Glaxo, Pharmacia (now part of Pfizer),

Becton Dickinson, Smith & Nephew, Rhone-Poulenc (now part of

Sanofi), Shell, The Coca Cola Company (TCCC), Aventis

Formerly with Morgan Stanley, Lazard and Monitor Group

MA in Physics from Oxford University and MBA from London

Business School

Issac Jacob

Senior Director

Over 11 years in M&A and corporate finance, principally in

healthcare and consumer sectors

Led and executed advisory and financing projects exceeding

$30bn in North America, Europe and Emerging Markets

EM experience includes: China, India, Malaysia, Thailand, Korea,

Chile, Guinea, Uganda, Rwanda and Eastern Europe

Private equity assignments with Apax partners, KKR and CVC

Formerly with Citigroup, JP Morgan, Bank of America and

Standard Chartered Bank

Industry clients have included: AstraZeneca, Almirall, DuPont

Merck, Merck KGaA, Sinochem, Capio, Integrated Health

Services, MedPartners

BA Economics from Columbia College, MA in International Affairs

from Columbia University and MBA from Columbia Business

School

Jansen Jacob

Director

Over 15 years experience in life sciences sector covering research

and development, licensing and litigation support

Experienced transactions advisor, completing multiple

manufacturing divestments for pharma

Particular expertise in business strategy, commercial due

diligence, deal structuring and pharmaceutical (asset) disposals

such as R&D and manufacturing sites

Covers South Asia

Clients have included: Merck, Sanofi, Novartis, UCB

Chemistry degree from Ghandiji University, India, DPhil in

Biochemistry from Sussex University, and MBA from Oxford

Brookes University


Appendix 1:

Increasing intra-EM trade

The next decade will see, barring a global disruptive event, the most rapid growth in world trade in history in terms of size and pace

Split of Global World Trade to 2020 Top 10 Countries by Trade

0

10,000

20,000

30,000

40,000

50,000

60,000

2010 2015P 2020P

Intra DM

41.7%

Intra DM

31.2%

Intra DM

25.1%

DM-EM

38.5%

DM-EM

37.4%

DM-EM

37.5%

($bn)

23%

159%

9%

34%

62%

Intra EM

19.8%

Intra EM

31.3%

Intra EM

37.5%

61%

Key Implications Trade involving EMs will rise to nearly 75% by 2020; growing intra-EM trade will increase ‘decoupling’

World trade will be increasingly driven by EMs and predominantly so within next two decades

Western companies with an international growth strategy may need to consider how they will capture the

intra-EM trade aspect of their sectors

International company strategies likely to involve development/expansion of key EM ‘hub(s)’

Source: Analyst reports, PharmaVentures analysis Source: Analyst reports, PharmaVentures analysis

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2010 2015P 2030P

DM

81.7%

DM

64.1%

DM

41.3%

($bn)

208%

60%

304%

EM

18.3%

EM

35.9%

EM

58.7%

24%


Appendix 2:

EM M&A activity – 1 in 4 M&A deals now involve Emerging Markets

EM M&A activity has increased phenomenally since 2000 and will be a key plank of global M&A activity. Historically Western companies have

been taking the lead in M&A driven external development but increasingly EM companies have been expanding their acquisition activity

Source: BCG (September 2013), Thomson ONE Banker

0

20

40

60

80

100

(%)

= EM involvement

= DMs only

9% 9% 9%

91% 91% 91%

83% 75%

17% 25%

EM Share of Global M&A Activity

90-94 00-04 05-09 09-12 95-99

60%

40%

60% of all EM deals involve BRICs

M&A Activity in EMs (2010-2012)

Brazil

Russia

India

China

Deal

Volume

26%

17%

11%

47%

Deal

Volume

9%

46%

13%

32%

= BRIC countries

= Other EM countries


Contact details

PharmaVentures Ltd

Web: www.pharmaventures.com

Issac Jacob

Senior Director

Direct Line: +44 1865 332712

Mobile: + 44 7931 428 512

Email: [email protected]

Ping Shek

Vice President

Direct Line: +44 1865 332706

Mobile: + 44 7960 519 116

Email: [email protected]

Florey House

Oxford Science Park

Oxford, OX4 4GP

UK

Telephone: +44 (0) 1865 332700

Facsimile: +44 (0) 1865 332737

Oxford

33 St James’ Square

London, SW1Y 4JS

UK

Telephone: +44 (0) 20 7769 6756

Facsimile: +44 (0) 1865 332737

London

pharmaventures ltd. experts in deals and alliances · 2013-12-06 · zuellig pharma is a leading...

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