M&A activity in China increased due to Covid-19
Mergers and acquisitions (M&A) in China’s medical device industry have increased significantly since 2018. According to GlobalData’s Medical Device Deal Database, the number of key M&A activities in major markets has almost quadrupled between 2018 and 2021. GlobalData expects a similar trend to continue. year. In vitro diagnostics (IVD) remains the most active market for investors in China, especially in areas related to Covid-19 testing.
The medical device industry has faced fierce competition due to China’s volume-based sourcing policy in recent years. Players in the medical device market have been under pressure for organic growth. Additionally, device manufacturers must continue to invest in new technologies to update mature product lines or expand new product portfolios. Therefore, in order to continuously grow and enter high-potential market segments, many medical device companies choose to accelerate their development by accelerating mergers and acquisitions.
The most active market is the IVD market, followed by medical equipment distributors, specialized sectors, diagnostic imaging, cardiovascular devices and hospital supplies. The value of deals in the IVD represents approximately 31% of the total deal value from 2018 to 2021. While other medical device companies have struggled during the Covid-19 pandemic, revenues from IVD manufacturers, in particular Covid-19 testing companies, have received a big boost. As a result, players are actively seeking M&A opportunities to further strengthen their product offerings and expand their market share in China. Last year, Shenzhen Mindray Bio-Medical Electronics (Mindray) acquired HyTest, a maker of antibodies and antigens used in testing for Covid-19 and other diseases, for $660.4 million. The transaction would provide Mindray with the resources of a leading developer and manufacturer of antibodies and antigens for IVD products, securing its upstream supply chain.
Almost at the same time, Shengxiang Biotechnology announced its acquisition of an 18.63% stake in Shanghai Kehua Bio-Engineering for $303.3 million. Shengxiang Biotechnology has seen robust growth during the pandemic thanks to its diverse portfolio of Covid-19 testing products. As China’s IVD market leader, Shanghai Kehua Bio-Engineering has built technology platforms for clinical IVD reagents and automatic detection and analysis instruments. The acquisition brings together two leaders in technology platforms, product lines and sales channels.