Reporter |
Editor |Xie Xin
Recently, AstraZeneca, CICC Capital Operation Co., Ltd., and Wuxi Guolian Development (Group) Co., Ltd. officially announced their strategic cooperation intention. The three parties plan to collaborate on raising a fund with a total scale of 5 billion RMB. This marks the second phase of fundraising for the AstraZeneca CICC Healthcare Industry Fund.
AstraZeneca CICC Global Healthcare Fund was established at the end of 2020. It is a market-oriented healthcare industry private equity fund jointly initiated by AstraZeneca and CICC Capital, marking the first collaboration between a Chinese investment bank and a multinational biopharmaceutical company to promote industry-finance integration. After completing its first-phase fundraising of 2.2 billion yuan in March 2021, the fund has so far invested in 10 healthcare innovation companies, including Abbisko Therapeutics, Zhi Zhong Medical, Deepwise Healthcare, Eto Pharmatech, and Cellular Biomedicine Group.
From simple acquisitions to participating in early investments in local pharmaceutical companies in various forms, the investment strategies of multinational pharmaceutical companies in China have undergone significant changes over the past decade.
In 1980, when the first foreign-invested pharmaceutical company, Japan's Otsuka Pharmaceutical Co., Ltd., entered China, Yangtze River Pharmaceutical, now an industry giant, was still an obscure small factory in a town, and Hengrui Medicine’s predecessor, Lianyungang Pharmaceutical Factory, was still a small state-owned pharmaceutical plant. At that time, investing in factories was the first choice for multinational pharmaceutical companies newly entering China, and building standardized, large-scale production lines became the mainstream choice for each company.
At the turn of the century, multinational pharmaceutical companies began to invest heavily in building R&D centers in China. In 1997, Danish pharmaceutical company Novo Nordisk established an R&D center in Beijing, becoming the first multinational biopharmaceutical enterprise to set up an R&D center in China. In 2001, after China joined the World Trade Organization, multinational pharmaceutical companies began more frequently establishing offices, founding investment companies, and continuing to build factories in China. After January 2002, more than 10 giants such as AstraZeneca, Roche, Takeda, Pfizer, GlaxoSmithKline, and AbbVie also successively set up R&D centers in China.
In 2000, Pfizer spent $90 billion overseas to win the largest acquisition in the history of the pharmaceutical industry, bringing atorvastatin (trade name: Lipitor) into its portfolio, and securing the top position in pharmaceutical revenue. This was followed by a wave of mergers and acquisitions in China's pharmaceutical industry.
In July 2008, Bayer acquired Dongsheng Technology's Phenylephrine, Dextromethorphan, and Chlorphenamine Maleate Tablets II and Phenylephrine and Chlorphenamine Maleate Tablets (brand name: Day & Night) for 1.072 billion yuan, marking the beginning of multinational pharmaceutical companies' investment and mergers and acquisitions in Chinese pharmaceutical enterprises/products. In the following decade, foreign companies continued to strengthen their efforts in mergers and acquisitions. Among them, Sanofi spent approximately 3.5 billion yuan to acquire the local pharmaceutical company Mei Hua Sun Stone Group, becoming the largest acquisition in China’s pharmaceutical industry at that time. The target company owned a well-known domestic health brand.
In addition to investing heavily in acquiring core products, during the same period, joint venture models between foreign and local pharmaceutical companies also emerged as an investment approach, with local pharmaceutical enterprises beginning to stand out. In September 2012, Simcere MSD was officially established, with MSD holding 51% of the shares and Simcere Pharmaceutical holding 49%. Pfizer and Hisun Pharmaceuticals also established a joint venture, Hisun Pfizer, in the same year.
However, most of these partnerships did not end well. In 2015, the joint venture between Simcere and Merck ended, and after 2017, Pfizer chose to exit from Hisun Pfizer. Similar stories include Sanofi and Minsheng Pharmaceuticals, Amgen and Betta Pharmaceuticals, Santen Pharmaceutical and Corelink Pharmaceuticals, GlaxoSmithKline and Haiwang Biotechnology, among others.
As innovative pharmaceutical companies begin to make their mark, foreign pharmaceutical firms are also starting to explore investments in China's innovative drug companies. Lilly Asia Ventures (LAV), under Eli Lilly, can trace its investment in CanSino back to August 2013, while its investment in Innovent Biologics was a landmark event at the time, setting a record for the largest investment by a foreign pharmaceutical company in a Chinese innovative drug firm that year. Since then, collaborations such as BeiGene with Amgen, Pfizer with CStone Pharmaceuticals, and on August 4 this year, Sanofi with Innovent Biologics, have become the norm.
Subsequently, with significant policy changes, the rise of innovative drugs and the implementation of bulk procurement took place. In addition to mature products facing fierce competition, new products from multinational pharmaceutical companies also encountered price reductions in national insurance negotiations and rapid attacks from competitors. To maintain their advantages and seek new growth points, besides divesting non-core businesses, multinational pharmaceutical companies have been continuously attempting adjustments and breakthroughs.
In January 2019, just two months after the significant cardiovascular drug Rosuvastatin (brand name: Crestor) failed to secure a bid in the "4+7 Volume-based Procurement Pilot," AstraZeneca announced that it had obtained the exclusive promotion rights for Lipidcom in mainland China from Luye Group. The move of a multinational pharmaceutical company selling traditional Chinese medicine also marks that foreign pharmaceutical companies have broadened their horizons.
Regarding the shift in investment trends of multinational pharmaceutical companies in China, Leon Wang, Executive Vice President of AstraZeneca Global, President of International Business and China, at the fifth AstraZenecaMr. KangAt the Tai Circle Conference, it was summarized that in the past, as China is one of the largest consumer markets in the world, most multinational companies considered China an important marketing market. Later, based on China’s strong supply chain capabilities, they also regarded China as a manufacturing base; many countries around the world use drugs produced in China. In this process, a new trend has emerged: with the enhancement of China's independent innovation capabilities, breakthroughs in technology, and inventions by talented individuals, China is gradually transitioning from being just a marketing market and manufacturing base to becoming a source of innovation. Investment has followed this trend as well—previously, investments were made in factories and representative offices, but in recent years, there has been a shift towards establishing global R&D centers in China, creating international life science innovation parks and industrial parks, which have become new directions for investment.