Global Pharma Giants Eye Chinese Market Despite Geopolitical Tensions
Major pharmaceutical companies are actively seeking acquisitions in China, despite Sino-U.S. tensions. This trend highlights the strategic importance of the Chinese market for global drugmakers.
Global pharmaceutical giants are actively pursuing acquisitions in China, undeterred by escalating Sino-U.S. tensions. This strategic move aims to replenish drug pipelines and strengthen their presence in the world's second-largest pharmaceutical market.
AstraZeneca and Novartis have already completed significant deals in 2023. AstraZeneca acquired Gracell Biotechnologies, a China-based cell therapy developer, for $1.2 billion, while Novartis purchased the remaining shares of SanReno Therapeutics, a kidney disease therapy developer, for an undisclosed amount.
Bristol Myers Squibb and Sanofi are also actively seeking acquisition opportunities in China. Bristol Myers Squibb is particularly interested in antibody-drug conjugates, a type of cancer treatment that combines targeted therapy and chemotherapy.
"Multinational companies are keen to look at potential acquisition targets in biotech, innovative drugs and the top-ranked companies in other sectors."
This foreign interest provides a lifeline for struggling local firms and investors looking to exit their investments. However, the pursuit of Chinese assets is not without risks. Political tensions between China and the U.S. remain a significant concern for multinational companies.
Acquisition data reveals a decline in overall deal value. As of July 16, 2023, announced acquisitions of Chinese healthcare companies totaled $6.8 billion, the lowest in a decade for the same period. Foreign acquisitions accounted for $720 million, a 52% year-on-year decrease.
Despite these challenges, companies like Aspen Pharmacare, Africa's largest pharmaceutical firm, are expanding their presence in China while balancing risks. In December 2022, Aspen Pharmacare agreed to acquire Sandoz's China unit.
Regulatory hurdles, including antitrust scrutiny and intellectual property transfer considerations, add complexity to the acquisition process. Recent concerns about data transfer restrictions and the potential extension of China's regulations to investments have also emerged.
As global pharmaceutical companies navigate these challenges, their continued interest in the Chinese market underscores its strategic importance in the industry's long-term growth plans.
