The future of Pharmaceutical Enterprises -- merger and acquisition

1, background 2 The driving force of M & A 3 Case analysis: Geely's way of M & a development 4 Comparison of M & A transactions in the pharmaceutical industry at home and abroad 5 Enlightenment to domestic pharmaceutical enterprises For a long time, China's drug market has been dominated by generic drugs, which account for more than 80% of the sales volume In recent years, with the implementation of policies such as generic consistency evaluation and volume purchase, the price of generic drugs has been greatly reduced (Figure 1) It is difficult for traditional generic companies to gain the high profit space before, and it is conservatively estimated that more than half of them will be eliminated in the next five years At the same time, the growth of the pharmaceutical industry is expected to slow down under the medical insurance fee control policies such as rational drug use and reform of medical insurance payment mode Traditional pharmaceutical enterprises are facing the test of transformation and upgrading In order to encourage the research and development of high-quality innovative drugs, the State Food and drug administration has successively implemented policies and regulations such as accelerating the examination and approval of innovative drugs, accelerating the domestic listing of imported drugs, joining the ICH, the MAH system for drug listing license holders, and the revision of the drug administration law, greatly improving the speed of research and development of new drugs and drug quality (Figure 1, figure 2) At present, many domestic pharmaceutical companies are carrying out innovative drug research and development, but also a number of biotechnology companies have emerged to develop original new drugs, and their research and development capabilities are constantly improving Figure 1 Number of class 1 new drugs approved for marketing by nmpa (CFDA) over the years in China Figure 2 Number of new drug applications in China over the years From the innovative point of view, at present, most of the new drug research and development in China is based on me too / me better, usually aiming at the target of the existing drugs on the market for differentiation research In the early stage of innovation and transformation of the pharmaceutical industry, this R & D mode can gradually improve the R & D ability of enterprises and narrow the gap with foreign large pharmaceutical enterprises But from a long-term perspective, on the one hand, me too / me better drugs usually have similar efficacy with existing drugs, and it is difficult to solve unmet clinical needs; on the other hand, in some hot research areas, it is easy to have serious homogenization competition (Figure 3) Under a series of medical reform policies such as medical insurance cost control, these drugs are also difficult to bring significant benefits to enterprises 。 Taking Japan as an example, under the promotion of national new drug approval and medical insurance policies, Japanese pharmaceutical enterprises have also experienced the transformation and upgrading from me too / me better to original new drugs, with the continuous improvement of innovation and R & D capabilities, and local pharmaceutical enterprises have gradually moved to the international market Figure 3 Number of popular tumor targets on the market and drugs under research in China Only by developing more original new drugs based on new technology and new mechanism and solving the unmet clinical needs, can we calmly face the market competition from home and abroad and the deepening reform of medical system, and occupy a larger market share However, the development of modern science and technology is very rapid, and the cycle of drug research and development is very long The knowledge update of the internal R & D personnel of traditional enterprises often cannot keep up with the development of new technology Pharmaceutical companies often face the operating pressure of heavy drug patent expiration and new product R & D can't keep up with product renewal At the same time, with the increasingly strict approval of new drugs by FDA, the R & D risk is also increasing At this time, it is usually the main strategy for enterprises to acquire promising technologies or drugs under development from outside For domestic pharmaceutical enterprises, especially large-scale R & D enterprises, we should focus on the innovation and upgrading of R & D through M & A transactions, pay attention to the start-ups of new drug R & D at home and abroad, and lay out the frontier technology field prospectively In addition, China's pharmaceutical market accounts for only about 10% of the global market, and traditional Chinese patent medicines and generic drugs account for the main part of sales The domestic market alone is still not enough to support the development of innovative drugs with huge costs Domestic pharmaceutical enterprises should actively open up foreign markets through M & A transactions and further improve the industrial chain This paper mainly discusses the innovation and upgrading of pharmaceutical enterprises from the perspective of M & A transactions, analyzes the driving force of M & A transactions in the pharmaceutical industry, compares the differences at home and abroad, and provides suggestions for the M & A of domestic pharmaceutical enterprises The merger and acquisition of pharmaceutical industry is an important way to realize the integration of resources within the industry, the continuous growth of revenue and the acceleration of new drug R & D efficiency under the market economy environment A large number of merger and acquisition transactions are carried out by large pharmaceutical enterprises According to incomplete statistics, the total merger and acquisition of the top 10 pharmaceutical enterprises in the world has reached nearly 500 billion US dollars since 2010 Looking back at the development of major pharmaceutical companies around the world, most of the important development transitions of enterprises are related to M & A transactions (Figure 4) In general, the main driving forces of M & A transactions of pharmaceutical enterprises include innovation and upgrading, collaborative development and overseas market expansion Innovation and upgrading New drug research and development is a high-risk and high investment investment, and the early development of new technology and new therapy often comes from small biotechnology companies These innovative companies focus on early drug development, and lack sufficient experience in clinical research, market development and other aspects For large pharmaceutical enterprises, they have a complete industrial chain from early development, clinical research to commercialization By acquiring some innovative companies with core technologies and potential products, they can quickly bring their products to the market and improve the overall R & D efficiency At the same time, it can reduce R & D risk, enrich product pipeline and maintain the company's profit growth For small technology companies, this is a fast marketing process, which can achieve market returns faster According to statistics, more than half of the top 10 heavyweight drugs sold in 2015-2018 were obtained through M & A transactions, including star drugs such as adalimumab, opdivo and keytruda (Table 1) We should expand the market scale to achieve synergy and scale effect Biopharmaceutics is one of the most frequent industries among enterprises, and the scale of M & A is huge In the past two years, there have been more than 50 billion US dollar M & A events, including BMS's acquisition of Xinji, Takeda's acquisition of shire and aierjian's acquisition of aibowei The M & A between pharmaceutical enterprises can rapidly expand the market scale, obtain advantageous resources from each other, and form complementary product portfolio At the same time, it can greatly reduce the financial and operational costs, and generate synergy effect According to BMS, the acquisition of new base will save it $2.5 billion in operating costs Develop overseas market By acquiring overseas pharmaceutical companies and acquiring their medical affairs, clinical development and sales teams, enterprises can quickly enter the local market At the beginning of this century, Japanese pharmaceutical companies such as Takeda and anstelai gradually opened the European and American markets through overseas M & A and became the world's leading pharmaceutical enterprises If these companies stick to Japan, their development will be very limited Figure 4 Statistics of M & A transactions of top 10 pharmaceutical companies in the world since 2010 Table 1 Some blockbuster drugs obtained through trade Gilead Science Co., Ltd is a R & D biopharmaceutical company with the characteristics of antiviral / anti infective drugs It has many kinds of heavyweight drugs In the field of anti hepatitis C, it has the star drug sofibupro, and is leading the era of "hepatitis C cure" based on sofibupro; in the field of anti HIV, it has occupied nearly 50% market share for many years With its absolute dominance in the field of antiviral drugs, Geely's sales reached US $32.15 billion in 2015, ranking sixth in the world's pharmaceutical enterprises The company, which has only been established for more than 30 years, has become a global pharmaceutical giant Gilead was founded in 1987 After obtaining venture capital, it mainly relied on contract research projects to obtain profits In 1991, Gilead obtained the right to develop a group of nucleotide compounds from a laboratory of a European University, and started the research of antiviral drugs In 1996, the first new drug, cidofovir, was approved by FDA for listing Although the drug did not bring significant revenue growth to Gilead, the listing of the first new drug raised 250 million US dollars for the company, which laid the foundation for the later M & A transactions Since then, Geely has started the road of M & a development In 1999, Geely purchased nexstar Pharma with an annual sales of 130 million US dollars at a price of 550 million US dollars, and obtained two liposome products, ambiosome and daunoxome Subsequently, through the acquisition of triangle Gilead, the company obtained the anti HIV drug enrotabine Based on enrotabine, the company successively launched genvoya, truvada, odefsey and other heavy-duty compound drugs By 2018, the total sales volume of Gilead's HIV drugs had exceeded 14 billion US dollars In 2011, Gilead acquired pharmaset for us $11.2 billion, and obtained three chronic hepatitis C drugs including sofibvir Sofibvir was approved for marketing in 2013 The cure rate of its combination drug program and compound drug for multiple genotypes of hepatitis C patients was more than 95%, creating an era of pure oral hepatitis C cure From 2014 to 2017, the anti hepatitis C drugs based on sofibovir brought more than $55 billion to Gilead, which once became the top 10 pharmaceutical company in global revenue In recent years, with the cure of a large number of hepatitis C patients, the global hepatitis C drug market shrank from $23.6 billion in 2015 to $7.8 billion in 2018 In addition to the fierce market competition of companies such as Aberdeen, Gilead's corresponding drug sales also fell precipitously On the other hand, the early anti HIV drugs are also coming to the patent cliff Gilead needs to enter into new treatment areas to achieve revenue growth In 2017, the company acquired kit Pharma, a pioneer in the field of car-t, for us $11.9 billion, and Cell Design Labs for two car-t technology platforms, starting to enter the field of cell therapy During this period, Geely has also enriched its R & D pipeline in NASH, tumor, inflammation and other treatment fields through acquisition and cooperative development Filgotinib, a Jak1 inhibitor developed jointly with Galapagos, has submitted a listing application to FDA, which is expected to bring new sales growth to Geely Figure 5 Gilead's revenue and growth rate over the years Table 2 Summary of Geely's M & A transactions Geely's development history is the history of its M & A transactions, in which several successful M & as, correct post investment operations and subsequent R & D capabilities play an important role (Figure 5, table 2) From the early liposome drugs to those that brought huge profits, both enterapine and sofibvir were acquired through M & A in the critical period of revenue decline in recent years, Gilead is also enriching its R & D pipeline through M & A transactions in a number of treatment fields Currently, it has 31 new drugs in the treatment fields of HIV, HBV, Nash, tumor and immune diseases Bed study and NDA phase In fact, compared with other large pharmaceutical companies, Geely's M & A transactions are not many, but Geely's always able to accurately find the right acquisition target, and complete further R & D upgrading after the M & A from the early stage of the company's development to the acquisition of pharmaset, every investment can significantly promote the company's development Therefore, on the basis of rich R & D experience, a forward-looking, effective and accurate M & a transaction strategy is essential for the development of pharmaceutical enterprises In recent years, driven by the policies of two vote system, consistency evaluation, volume purchasing and capital market, the M & A transactions in the pharmaceutical industry have become increasingly active Traditional generic pharmaceutical enterprises are completing the integration of resources through M & A large pharmaceutical enterprises such as China Resources pharmaceutical, Fosun Pharmaceutical and Shanghai Pharmaceutical are also actively participating in the M & A at home and abroad