On 28 July, Fosun Pharma (600196.SH) announced to merge an Indian injection pharmaceutical company named Gland Pharma in USD 1.2 billion. Then on 4th August, Shanghai Pharma.(601607), a member of China Entrepreneur Club, announced to merge an Australian health products company named Vitaco in CNY 0.98 billion.

In the eyes of Sun Chao, a medical partner of Strategy in PWC think, nowadays, hot overseas targets in the medical industry are medical service, medical devices and pharmaceuticals.

“The reason why the medical service industry has become popular target is that, nationally there has been a big supply gap in the medical service focusing on hospitals, and a reasonable cause to transfer the social capital abroad, which usually aims at transformed public hospitals with mostly incorporated and high costs.” Sun Chao said.

In addition to medical service, medical devices and pharmaceutical companies are popular targets, with low registration limitations, high levels of iterative new products and profits for medical devices companies. With merger and acquisition of pharmaceutical companies, domestic companies can gain new products faster in order to get rid of gaining profits by a single variety in the past. Sun Chao said, at present, domestic companies attempt to obtain international research and development abilities from merger and acquisition, expecting to further expanding potential overseas channels in the future.

As a part of the values of overseas targets, it is still a big challenge to know how to keep the original technologies and management teams since Chinese teams lack of managerial experiences in overseas merger and acquisition. Especially in the case of merger with developed countries for high-quality targets, the “endemic” management will become more obvious.