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Rude health: Asia surpasses EMEA as healthcare M&A reaches fever pitch

Despite waning infection rates and declining fatalities as the effects of the COVID-19 pandemic ebb, healthcare-related activity remains frenzied, particularly in Asia, which has leapfrogged EMEA to become the world’s second-largest healthcare M&A region, both in terms of deal value and deal count.

In 2022 year to date (YTD), APAC healthcare takeovers have generated USD 46.7bn, the highest YTD level on Dealogic record and up 48.35% from the same period in 2021 even though the number of transactions (442) has fallen 33.5%.

By contrast, EMEA’s deal value has tumbled 49.4% year-on-year (YoY) to USD 32bn. The Americas remains at the forefront of global healthcare M&A, recording USD 99.5bn, although this has retreated 61.1% YTD from 2021.

Smooth operators: Australia hogs headlines, China dominates fundraisings

Australia has surpassed China this year as APAC’s largest healthcare market in terms of value at USD 22.7bn, thanks largely to the blockbuster sale of Ramsay Health Care to a consortium led by KKR [NYSE:KKR] for more than USD 21bn, according to Dealogic data.

While YoY activity in China is down 51.5% by value and almost 54% by deal count to USD 9.5bn across 176 deals, it still accounts for the bulk of transactions in the Asia-Pacific region.

The country’s largest deal YTD has been the sale of a 28% stake in KPC Pharmaceuticals [SHA:600422] to China Resources Sanjiu Medical & Pharmaceutical [SHE:000999] for only USD 432m.

Nevertheless, Asia’s largest economy remains the biggest driver of healthcare-related fundraisings. China has accounted for USD 4.4bn out of USD 5.6bn raised in APAC since the start of the year.

Biotech boom: M&A has blown up in South Korea

Healthcare-related M&A activity has been brisk in South Korea, especially in biotechnology. The country has recorded 32 transactions – four of which are among the sector’s top 10 APAC deals – worth USD 5.7bn, a sevenfold increase from a year ago.

The USD 2.3bn sale of an almost 50% stake in Samsung Bioepis to Samsung Biologics [KRX:207940] is the second-largest YTD transaction in the region. Also significant has been the transfer of ABL Bio’s ABL301 antibody drug rights to a unit of Sanofi [EPA:SAN] for over USD 1bn.

Healthy outlook: unmasking future targets

South Korea, an Asian medical beauty heavyweight, is likely to see more activity. Private equity (PE) firm CBC Group is reported to be mulling a full takeover of biopharmaceuticals maker Hugel [KOSDAQ:145020], with a current market capitalization of USD 1.1bn.

Kyowa Kirin [TYO:4151], a Japan-based pharmaceuticals affiliate of conglomerate Kirin Holdings [TYO:2503], is exploring a potential sale of some of its international businesses valued at USD 1bn.

PE firms including Bain are circling Australia’s iNova Pharmaceuticals in a buyout deal that could be worth more than AUD 2bn (USD 1.4bn), while Chinese biotechnology firm I-Mab [NASDAQ:IMAB] is also said to be exploring options, including a sale amid takeover interest from other global drugmakers.

Sizeable fundraising opportunities continue to brew in China, where COVID drug API maker Desano Pharmaceuticals, medical AI image company Infervision and pet hospital operator New Ruipeng are all seeking funding in the region of USD 300m.

Southeast Asia is expected to see more action affecting healthcare and hospital facilities following a sale in March of Malaysia’s Ramsay Sime Darby Health Care for USD 1.3bn to IHH Healthcare [KLSE:IHH].

Singapore’s regional healthcare provider, HMI Group, is discussing a potential 30% stake sale at a SGD 1bn (USD 721m) valuation. Meanwhile, Singapore-based Quadria Capital is in early talks over the sale of a holding in Vietnam’s FV Hospital for up to USD 400m.