“Practical and Low-Risk” choice of overseas M&A in European generic drug SMEs
Acquiring equity and influence in a small and medium-sized generic pharmaceutical companies has many advantages for the Chinese strategic pharmaceutical investors:
1. Clear Prospects, Controllable Risks:
Compared with patented pharmaceutical products, the prospects of generic drugs are relatively clear, and the risks are less significant. This is of great significance to Chinese investors with reduced risk tolerance. According to Across Partners’ screening, the products and pipelines of the generic drug companies in our database, are in short supply and in huge demand in China.
They cover all heated therapeutic areas in China such us cardiovascular, oncology, CNS (central nervous system) and so on.
2. Low Operating Costs, Immediate Profits:
Acquisition of R&D companies requires a continuously investment which results in a long payback period, not to mention the risk of failure during the period! Even when the patent-holding pharmaceutical companies own certain marketed products, they are still higher costed in terms of operation (especially the sales team). In contrast, the operating costs of generic pharmaceutical companies are significantly lower, making a returns of investments more controllable.
3. Frontier of Internationalization strategy:
Many Chinese pharmaceutical companies engaged in overseas mergers and acquisitions are hoping to enter the foreign markets. Many of the European generic drugs SMEs are well-established in not only product development, but also medical registration and business development. Some of them owns extremely extensive distribution network over the world. Naturally, it can become a frontier position for the internationalization of Chinese pharmaceutical enterprises and lay a solid foundation for further overseas markets expansion.
This a two-way synergy street for the transacting sides in a M&A deal.