Tuesday, November 5, 2024

Due to Covid-19, China’s merger and acquisition activity intensified

Since 2018, the number of mergers and acquisitions (M&As) in the Chinese medical device market has risen dramatically. From 2018 to 2021, the number of notable M&A activities in major markets nearly doubled, according to GlobalData’s Medical Devices Deal Database. A similar trend is expected to continue this year, according to GlobalData. The most active market for investors in China is in-vitro diagnostics (IVD), particularly in areas relating to Covid-19 testing.

In recent years, China’s volume-based procurement policy has put the medical equipment industry under intense pressure. Medical equipment manufacturers have been under pressure to grow organically. Furthermore, device manufacturers must continue to invest in new technologies in order to update existing product lines or expand new product portfolios. As a result, many medical device businesses choose to expedite M&As in order to continue to grow and access high-potential market categories.

Medical equipment distributors, specialized sectors, diagnostic imaging, cardiovascular devices, and hospital supplies are the most active markets. From 2018 to 2021, the value of IVD deals accounts for roughly 31% of the entire deal value. While other medical equipment companies struggled during the Covid-19 outbreak, IVD makers, specifically Covid-19 testing companies, saw a significant increase in income. As a result, companies are aggressively looking for M&A opportunities to grow their product lines and market dominance in China. HyTest, a manufacturer of antibodies and antigens used in tests for Covid-19 and other disorders, was purchased by Shenzhen Mindray Bio-Medical Electronics (Mindray) for $660.4 million last year.

Mindray would gain resources from a leading developer and manufacturer of antibodies and antigens for IVD products as part of the deal, securing its upstream supply chain.

Shengxiang Biotechnology announced the purchase of an 18.63 percent stake in Shanghai Kehua Bio-Engineering for $303.3 million almost simultaneously. Because of its extensive line of Covid-19 testing kits, Shengxiang Biotechnology experienced rapid development throughout the pandemic. Shanghai Kehua Bio-Engineering, a market leader in China’s IVD sector, has developed technology platforms for clinical IVD reagents and autonomous detection and analysis tools. The merger brings together two industry leaders in terms of technological platforms, product ranges, and distribution methods.

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