International pharmaceutical giants slim down as new opportunities for Sinopharm

Almost the top 10 pharmaceutical companies in the world have started mergers and acquisitions since late April. This wave of mergers and acquisitions is different from the past. In the past, the purpose of M&A was to make it bigger. This time it was mainly oriented toward being strong. If GSK and Novartis exchange assets, GSK will sell the entire cancer division to Novartis, and GSK will receive a vaccine business other than influenza vaccine. Similar transactions between Bayer and Merck. Bayer plans to purchase Merck's consumer healthcare unit for US$14.2 billion. Through this acquisition, Merck received Bayer support for its therapeutic drug research and development, and further concentrated its business on research and development.

From the above two cases, mergers and acquisitions between giants are thin and strong. After the successful merger and acquisition, from the perspective of the global situation, it will be the strong and permanent. From the domestic point of view, the impact may not be so great. Foreign companies in China focus on high-value, high value-added original research medicines. After domestic generic drugs are listed, they can compete on price. However, in the last two weeks, the voices questioning the quality and efficacy of generic drugs have risen. If domestic companies cannot improve the quality and efficacy of generic drugs, they will still be in a weak position in the competition among the top three hospitals.

The international giants are keen on mergers and acquisitions, and the enthusiasm of domestic pharmaceutical companies for mergers and acquisitions is not weak. Since the beginning of this year, Zhifei Bio and Connbay have acquired substantial purchases. Many listed pharmaceutical companies such as Laimei Pharmaceutical have established merger and acquisition funds. The mergers and acquisitions of domestic pharmaceutical companies have their own strong needs, but also because the new version of the GMP certification system leads to a large number of pharmaceutical companies will be eliminated by the market to bring opportunities for passive mergers and acquisitions. However, domestic pharmaceutical companies should learn from Fosun Pharma and look outward when looking for M&A targets. Some of the weak assets in the international giants' weight-loss campaign cannot be fully exchanged with counterparties and need to find additional buyers. For example, Merck recently announced that it will sell some ophthalmic products to Japan Sentic Pharmaceuticals for US$600 million. Domestic pharmaceutical companies should actively fight for such opportunities.

One of the realistic backgrounds of this wave of international pharmaceutical mergers and acquisitions is that patented medicines have expired, and the number and frequency of original research medicines have been greatly reduced. This is related to the reduction of R&D investment by international giants. Pfizer has closed a large number of R&D centers during its mergers and acquisitions activities over the past 10 years. Its former senior vice president, John Ramatiner, criticized in an article commenting: “In the past, the pharmaceutical industry was proud to invest more in R&D than in other industries. The investment in R&D of new drugs will account for average operating income. 20%, but this level is currently declining. Pfizer's R & D investment as a percentage of total revenue is currently only about 10%. "The biggest problem for domestic companies is lack of R & D capabilities, then you can now use the current opportunity to build international R & D platform.

In this regard, Nanjing Xiansong Pharmaceutical has already gone ahead. Last year, the company attracted the senior vice president of global GSK-Kyung Shin-Etsu to create an innovative drug risk fund platform named “Baijiahui”, and plans to establish a fund with a total size of RMB 3 billion by 2016 to invest in Nearly 100 innovative projects. According to reports, in the past three months, Baijiahui has approached nearly 200 projects from the United States, Europe, Israel, and China, and has selected several projects for investment. Just imagine that if only 10% of the success of 100 projects will bring huge profits.

In fact, Simcere Pharmaceutical has always been a R&D-oriented company, and it is also a small number of R&D companies that account for 10% of sales revenue. It is precisely because of this, leading to its poor performance in the United States after the listing, and eventually delisting. Therefore, external pharmaceutical support is required for Chinese pharmaceutical companies to transition to R&D. Recently, Professor Wang Bin from Fudan University sold global rights to pre-clinical drugs for Alzheimer's and multiple sclerosis to foreign companies. Due to lack of money and other reasons, China's independent research and development of large varieties, good varieties may be outflow, foreign good R & D platform, R & D personnel more difficult to attract over. Some pharmaceutical companies can only take second place and participate in the research and development of the original research medicines such as the United States in the form of participating small shares. We hope that in the future, when this original research drug enters, China can obtain exclusive agency rights.

Samsung's success is obvious to all, but its success cannot be separated from South Korea's ability to support one country. The history of Samsung's development can be described as the history of external experts. At the beginning of each weekend, Samsung sent planes to Japan to pick up engineers and dig a large amount of people to Japan at 3 times and 6 times the salary. It is said that there are hundreds of Japanese engineers working for Samsung. In the initial stage, Samsung did not have such an economic strength. The cost of digging people, Samsung out of a third, the Korean government out of two-thirds. Therefore, to develop Chinese pharmaceutical companies, the central government and local governments should also set up similar funds to support companies recruiting world-class R&D talent.

In fact, not only pharmaceutical companies, but also emerging industries have similar needs, and structural transformation needs to shorten the cycle. It is necessary for the government to do so.