Local Spotlight: Healthcare & Life Sciences Deal Drivers in China - Pulse of the Market

By Robert Torio, Content Marketing Manager, APAC

In addition to causing the most profound economic crisis since the Global Financial Crisis, COVID-19 was also a wake-up call to better prepare for global pandemics and public health emergencies. After several years’ growth in the Greater China region, Healthcare and Life Sciences is back under the spotlight as one of the most resilient sectors for investment and M&A. H1 2020 listings were up 29% in Greater China with Healthcare being one of the top sectors.

At a recent live virtual briefing hosted by Datasite and Mergermarket, Yiqing Wang, China Editor and Head of APAC Editorial Operations at Mergermarket led discussions around M&A activity in the Healthcare and Life Sciences sector in Mainland China, with a distinguished panel of experts:

• Michael Fu, Head of Everbright Healthcare Fund and Managing Director, China Everbright
• Frank Liu, Executive Director, Citic Securities
• Josh Shin, Partner, Fangda Partners
• Aaron Yu, Co-General Manager, Investment Department, Shanghai Fosun Pharmaceutical Group Co., Ltd.
• Jielun Zhu, Chief Financial Officer, I-Mab
• Toto Ku, Head of Greater China, Datasite

A healthy and bright future for M&A and IPOs

Out of our almost 300 webinar attendees, 90% have a positive outlook for the Healthcare and Life Sciences sector in terms of M&A activity and IPOs. 

This sentiment reflects the sector’s performance in recent months. Unlike the M&A slump in major traditional sectors, biotech in China and Hong Kong SAR enjoyed a 78% year-on-year growth in M&A deal value in H1 2020, as well as being the most robust subsector to recover in Q2.

The biotech listing boom in HKEX remains and was further fueled by dual-listing candidates from NYSE or Shanghai’s STAR board. Pharma, Medical and Biotech together recorded 67 deals worth US$6.9bn over the same period.

Compared to 16 transactions totaling US$1.74bn in H2 2019, the first half of 2020 recorded 19 deals worth US$3.1bn in the sector that focuses on the R&D of novel drugs and medical devices.

Fundraising and IPOs expected to dominate market, enabled by smart technologies

During the webinar, the panel looked at potential future investment hotspots in the next 6-12 months, as well as how regulatory changes can give dealmakers an advantage in closing deal opportunities.

More than 40% of webinar attendees say the fundraising will account for the majority transactions over the next 12 months, while at least a fifth believe IPOs will be the dominant activity.

There are mixed views on whether the biotech trend will continue, or investors will take a more conservative approach and manage their expectation in profit return in a post-COVID world. While valuation could be at the center of the discussion, now is the time for dealmakers to rebuild deal pipelines and to restart negotiations.

And to enable them to get deals done during this crisis, dealmakers are relying on technology to conduct due diligence virtually or remotely, with AI and machine learning becoming more instrumental in streamlining the process.