Medical Device Firms Accelerate Acquisitions to Expand Market Reach Amid Industry Consolidation Wave

　　【Pharmaceutical Network Industry News】Medical devices refer to instruments, equipment, appliances, in vitro diagnostic reagents and calibrators, materials, and other similar or related articles that are used, directly or indirectly, in human beings. In recent years, driven by population aging and the upgrading of consumption levels, the scale of the medical device market has continued to expand. Faced with this vast market, alongside a growing number of new entrants, companies within the industry are accelerating mergers, acquisitions, and consolidation efforts to expand their business operations.
 

It is reported that since 2021, mergers and acquisitions (M&A) in China's medical device sector have been continuously taking place. Among them, at least eight transactions have exceeded 100 million RMB, involving acquirers such as Sansure Biotech, Sanyou Medical, Yuyue Medical, and Haohai Bio-Tech. As the year has now entered the second half, this M&A boom continues unabated.
 

For example, on September 12, MicroPort announced that its subsidiary, Shanghai MicroPort Medical (Group) Co., Ltd. (hereinafter referred to as "Shanghai MicroPort"), signed an equity transfer agreement with Six Hundred Eighteen Fujian Industrial Equity Investment Partnership (L.P.) and Fujian Mach.&Elec.Equipment Tendering Company. According to the agreement, Shanghai MicroPort, acting as a strategic investor, intends to acquire a 45% equity stake in Fujian Kerui Pharmaceutical Co., Ltd. (hereinafter referred to as "Kerui Pharmaceutical") for RMB 111 million.
 

According to reports, Fujian Kerui Pharmaceutical Co., Ltd. was established in 1999 and is a technology-oriented enterprise specializing in the research, development, production, and sales of active pharmaceutical ingredients (APIs) such as immunosuppressants and anti-tumor drugs. Upon completion of this transaction, Shanghai MicroPort Medical (Group) Co., Ltd. will become the largest single shareholder of Kerui Pharmaceutical and will obtain control over its daily operations through contractual arrangements. Regarding this investment, MicroPort stated that it is a crucial measure to strengthen supply chain security and quality assurance, and will facilitate the accelerated expansion of drug-eluting stents into major mainstream markets worldwide.
 

On July 15, Lepu Medical also announced that the company plans to invest RMB 237 million to acquire a 68.43% equity stake in Bosmei through equity transfer and capital increase, thereby securing a controlling interest. Regarding this acquisition, Lepu Medical stated that entering the orthodontics sector through its controlling stake in Bosmei constitutes a strategic investment aimed at actively expanding its presence in the consumer healthcare sector.
 

However, it is worth noting that Bosimei is not actually a financially robust acquisition target. According to publicly available information, Bosimei was established in January 2016 as a technology-driven company specializing in orthodontic solutions and the custom manufacturing of clear aligners. Its recent financial performance has been lackluster, recording net losses of RMB 9.6175 million in 2020 and RMB 2.296 million in the first quarter of 2021. Furthermore, both the company's total assets and total liabilities have been on a downward trajectory. Given these circumstances, industry analysts believe that it will be a long and arduous endeavor for Lepu Medical to successfully leverage this acquisition to break new ground and expand its market presence.
 

Overall, China's healthcare industry is entering a golden period of development. Faced with a massive market, the number of market entrants will continue to grow, while mergers, acquisitions, and industry consolidation will steadily accelerate. Industry experts predict that competition within the pharmaceutical and healthcare sector will likely become increasingly intense by then.