Business Club December 17 News recently, the merger and acquisition of pharmaceutical companies once again warming. Apart from the policy promoters, M&A and restructuring are increasingly narrowing the living space for SMEs. For the majority of small and medium-sized pharmaceutical companies, they must adapt to the advent of the era of mergers and acquisitions in advance, and for those companies with merger intentions, how to distinguish high-quality medical assets is particularly important.

The recent mergers and acquisitions of pharmaceutical companies are frequent. For example, Shanghai Pharmaceuticals acquired a total of more than RMB 3.8 billion in cash for the Shanghai Pharmaceutical Group's antibiotic business and assets with Xinya Pharmaceutical as the core, and 65.24% of the CHS controlling stake; Fosun Pharma passed the equity transfer. In this way, 70% of Shenyang Hongqi Pharmaceutical, a Chinese anti-tuberculosis leading enterprise, was acquired. Earlier, Southwest Synthetic announced that it plans to issue shares to Peking University International Hospital Group to purchase 100% equity of Beijing Beifang Medicine and Pharmaceutical Co., Ltd. held by it.

Whether it is a pharmaceutical production company or a distribution company, the first priority for integrating mergers and acquisitions is to achieve greater growth through the selection of quality assets. This is also in line with the improvement of industry concentration advocated by the recent medical policy. The "Guidance Opinion on Accelerating the Structural Adjustment of the Pharmaceutical Industry" released in November this year proposes that the pharmaceutical industry should take the structural adjustment as the main line and gradually realize the transformation of the domestic pharmaceutical industry from big to strong.

The acquisition of Shanghai Pharmaceuticals directly promotes the overall listing of the pharmaceutical business assets of Shanghai Pharmaceutical Group, which is conducive to further concentration of advantages of the company's pharmaceutical industry resources. Fosun Pharma acquired the equity of Hongqi Pharmaceuticals and intended to use the anti-TB drugs that Hongqi Pharmaceutical is good at to enter the international pharmaceutical market.

The analysis found that the protagonists of mergers and acquisitions in the pharmaceutical industry tend to be industry leaders or regional leaders, and the selection method is also "stronger and stronger" than "weak meat." The reason is that the current status of the “small and scattered” industry in the domestic pharmaceutical industry has determined that quality pharmaceutical assets are still scarce; and because of the strong local protection, a large number of small and medium-sized pharmaceutical manufacturers and circulation companies with general profitability are widespread and able to have long-term Survive.

With the gradual implementation of the policy of encouraging industry concentration, a large number of small and medium-sized enterprises are facing the pressure of integration, and the powerful pharmaceutical companies must also enhance their own strength through mergers and acquisitions to avoid integration by more powerful leading companies. Therefore, the identification of high-quality pharmaceutical assets appears to be Particularly important.

However, it is not easy to choose to purchase quality pharmaceutical assets. On the one hand, the reason is that the profitability of many pharmaceutical companies is closely linked with local medical institutions and even local governments. Once the controller changes, profitability may also change. On the other hand, the evaluation value of high-quality assets is often high, and it is difficult to obtain approval from the local government, which also puts pressure on the mergers and acquisitions. In addition, even after high-quality assets, mergers and acquisitions are not necessarily able to form good synergy with the original assets of mergers and acquisitions, and “big and full” mergers and acquisitions are also difficult to adapt to international competition.

It seems that the common characteristic of high-quality pharmaceutical manufacturers is that they have excellent product competitiveness or market share in a certain area, while high-quality medicine circulation companies need unique and difficult-to-replace sales channel resources. The lack of overall profitability and R&D capabilities of domestic pharmaceutical companies also makes domestic M&A more willing to “strongly unite”, and even pharmaceutical companies extend M&A tentacles overseas.

For domestic small and medium-sized pharmaceutical companies, with the gradual convergence of pharmaceutical production and distribution, the living space will undoubtedly be greatly reduced. Instead of passively waiting for industry integration, it is better to actively adapt to the trend of industry consolidation. If conditions permit, you can choose to expand together with the “joint hands” approach to avoid mergers and acquisitions; if you do not have sufficient strength, you should “back on the big tree”. Highlight their value to attract M & A interest in the industry leader.