GLOBAL DRUGMAKERS SCOUR CHINA FOR DEALS IN SPITE OF GROWING SINO-US TENSIONS
SOME of the biggest global drugmakers, undeterred by mounting Sino-US tensions, are scouring China for deals to replenish drug pipelines and boost their presence in the world’s second-biggest pharmaceutical market, industry executives and investment bankers said. Several major deals have already been completed this year, including AstraZeneca’s $1.2 billion purchase of China-based cell therapy developer Gracell Biotechnologies and Novartis’s acquisition of the remaining shares of kidney disease therapy developer SanReno Therapeutics for an undisclosed amount. South Africa’s Aspen Pharmacare, which announced in December that it had agreed to buy Swiss group Sandoz’s China unit, is expanding in other markets to balance China risk while continuing to scout for Chinese assets, said Larry Merizalde, the firm’s China CEO. China accounted for about 10% of Aspen’s global revenue, Merizalde said before the Sandoz deal was announced, but it is only one of the dozens of countries where Africa’s biggest pharmaceutical company operates. Bristol Myers Squibb and Sanofi are also hunting for deals, according to company employees, even as some rivals have looked to exit China in the wake of Covid-19-related supply chain disruptions, a local economic slowdown and price cuts to get state insurance listing. The foreign interest in Chinese drugmakers is a blessing for struggling local firms and weary investors eager to cash out on their investments as regulators tighten initial public offering rules, putting pressure on businesses that have faced difficulty in raising cash to support their research work. Manas Chawla, CEO of global political risk advisory firm London Politica, which has worked with multinational pharmaceutical clients, said acquisitions would help them bring down costs, tap into innovative companies and get exposure to China’s large consumer market. But it is not without risk. “Hawkishness on China is a form of rare bipartisan consensus (in the US).” The majority of buyers of Chinese healthcare companies have been domestic in the past two decades, LSEG data showed. Announced acquisitions of Chinese healthcare companies totalled $6.8bn as of July 16 this year, the lowest in a decade for the same period, the data showed. Among them, foreign acquisitions accounted for $720 million in value, down 52% year-onyear, the data showed.