China top choice for health sector M&A

China Daily/Asia News NetworkSaturday, May 19, 2012China is considered to be a top destination for mergers and acquisitions in the healthcare sector, experts said."As the world's second-largest economy, China is a primary region for mergers and acquisitions, especially in the healthcare sector, " said Matthew Layton, head of global corporate practice at law firm Clifford Chance LLP.He said about 61 per cent of the Asian-Pacific respondents to a survey in the healthcare sector consider M&A as their preferred growth strategy, while 55.6 per cent of such respondents consider China to be the prime opportunity for M&A activity.Clifford Chance carried out a report earlier this year after surveying 377global high-level executives from companies with annual revenues in excess of $ 1 billion in different industry sectors. Asia Pacific representatives made up one-third of the total respondents."As China has identified biotechnology as one of the seven key priority industries in the 12th Five-Year Plan (2011-2015), and encouraged foreign investment in the healthcare sector, we expect a surge of M&A activities in this sector in China," said Layton."There is no question that the healthcare industry will continue to focus on China, given personal and household incomes are on the rise," said Emma Davis, partner and head of Clifford Chance's Asia-Pacific healthcare group.Davis said that they have seen a marked increase in interest by foreign companies looking to break through regulatory barriers by partnering with local companies, even if this means ceding control.Global pharmaceutical company Pfizer Inc and Zhejiang Hisun Pharmaceutical Co Ltd, a leading pharmaceutical company in China, announced in February they would establish a joint venture to develop, manufacture and commercialize off-patent pharmaceutical products in China and the global markets.Hisun would own 51 per cent and Pfizer would own 49 per cent of the company, with total investment of RMB$295 million (S$60 million).As an advisor of the deal, Layton told China Daily that Pfizer has global experience and Hisun has local expertise, so their cooperation benefits both parties.Layton added that healthcare companies without a presence in China or those looking to increase their Chinese market share will plan to acquire established businesses or companies in China, which is likely to fuel competition for attractive targets.