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China-Australia Medical Merger and Acquisition Events, Australian Capital Distribution in Medical Field

2019-6-6

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Looking back on the past two years, the medical investment transactions between China and Australia have been increasing rapidly, and the trend of warming up in 2017 is continuing. On June 13, the news of Australian blood products conglomerate CSL merging Chinese biotechnology newcomer Ryder Biology sounded like a deep-water thunderstorm, which made people feel that the investment activities around the Chinese and Australian medical sector are moving from "warm" to "fire", the scope is gradually expanding, and the heavyweight players began to appear one after another.
Any opportunity and cooperation has a certain social development background. The frequent cooperation between China and Australia in medical field in recent two years also reflects some demands of China in medical field in recent two years. What does China need? What can Australia do? These should be the original intention of many large-scale M&A projects.

Challenges China faces
Faced with future challenges, the Chinese government is prepared to focus on the development of health care and pension services in the coming decades, which will provide a rare historical opportunity for Australian companies.
NAB said that many countries are facing medical problems brought about by the aging population, and China is facing a particularly significant challenge. Nowadays, with the rapid growth of population, changes in living habits, urbanization and the increase of chronic diseases, the demand for health care and geriatric care has become increasingly prominent.

n China, the population base of up to 1.4 billion makes aging a huge phenomenon. From 2015 to 2050, the number of elderly people over 65 in China is expected to increase by 180% to 240 million.
China's medical health and elderly care system must meet the needs of rapid urbanization. There are also various practical problems, including the shrinkage of family size caused by social and cultural changes, and the inability of children to care for elderly parents. Environmental pollution, Western-style eating habits and lack of exercise in lifestyle have all brought certain damage to national health.
For example, the number of automobiles in China has increased from 16 million to 93 million over the past decade, resulting in a large amount of exhaust emissions, a third of the world's total tobacco consumption by Chinese residents, an increase in the number of obese people, and a fifth of the population suffering from chronic diseases.
On the other hand, China's emerging middle class is full of expectations for high-quality services. Michael Ball, head of Hong Kong banking institutions at the National Bank of Australia (NAB), said: "These factors make China's medical needs a huge global phenomenon."

What can Australian companies do?
The Chinese government has a keen understanding of medical problems. "As far as policy is concerned, pension services and health care issues are at the top of the list, with equal emphasis on food safety and national defense issues," Bauer said. Bauer pointed out that China is committed to health care reform and has sufficient funds to optimize and expand medical facilities. However, it lacks the necessary intellectual property laws and regulations, and it is urgent in time. Australian companies can play an important role right now.

China is seeking expertise and experience, and Australia is particularly good at it. "We have a balanced public and private health care system, high-quality clinical performance, and efficient and low-cost delivery of medical services. For our business community, the Chinese market represents a golden opportunity for business expansion and regional diversification.
Australia's strengths lie in private pension care and private hospitals, diagnostic methods, general practice and health information technology, all of which are in line with China's health care reform. "The point is how Australian companies can translate their unique intellectual property rights into large revenues, whether in hospitals, pathological departments or geriatric care," Bauer said.

China-funded enterprises frequently lay out heavy funds
Australian medical giant and centuries-old CSL (ASX: CSL) announced Tuesday that it would buy 80% of the controlling interest of Wuhan Zhongyuan Red Biological Products Company for $352 million from China Fukuo Pharmaceutical (600079). Both sides are closely aligned in both existing products and future R&D directions.
On May 25, Australian rubber protection giant Ansell (ASX: ANN) disclosed that Sexual Wellness (SW) was transferred to a buyer consortium of Renfu Pharmaceutical Group and CITIC Capital China Partners for $600 million. Renfu Pharmaceutical's two successive large-scale transactions, business assets rights and interests to buy and sell, but all around Australia.

Since the entry into force of the Sino-Australian Free Trade Agreement, many tangible results have been brought to the trade level. At this stage, investment is becoming an important part of bilateral relations. The rapid rise of two-way investment in the medical industry has made an excellent note. However, Bingyue Capital believes that all the acquisitions at this stage take place in Chinese listed companies. For the discovery of new opportunities and the development of new markets, listed companies are still at the forefront. For Chinese private enterprises, at this stage, there is no good "curve overtaking". What new characteristics and trends will emerge in the future in the medical field between China and Australia, and what Chinese giants will come to Australia to explore opportunities, let's wait and see.