It seems appropriate that 2 more longtime-listed Chinese companies are bowing out of New York as we head into the final days of 2013, with word that shareholders have approved plans to privatize telecoms software maker AsiaInfo-Linkage (Nasdaq: ASIA) and drugmaker Simcere Pharmaceutical (NYSE: SCR). AsiaInfo was the more lively of these 2 de-listing stories, with a narrow majority of shareholders approving a buy-out offer after several months of protest from others who thought the price was too low. Meantime, Simcere’s looming privatization raises the question of what’s next for this neglected company, whose foreign partners include Bristol-Myers Squbb (NYSE: BMY) and Merck (NYSE: MRK). Read Full Post…
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China Tough Medicine For Simcere
US-listed drug maker Simcere Pharmaceutical (NYSE: SCR) must be eagerly looking forward to completing its pending privatization, following the release of its latest quarterly results that show the fast-growing Chinese healthcare market is suddenly losing some of its luster. Simcere is just the latest drug maker to encounter headwinds in China, where fierce competition and strict government oversight are suddenly giving both domestic and foreign drug makers a major headache. Many of those companies were hoping to make big bucks as China rolled out a new national healthcare network to replace its old system where everyone got medical care through their state-run work units. But Beijing is pushing back by showing it aims to get maximum value for its money, and also that it won’t tolerate aggressive sales tactics practiced by many companies. Read Full Post…
Bristol-Myers, J&J Find Opportunity, Risk In China Drugs
A few interesting news bits on the medical front are spotlighting both the opportunities and risks that drug and medical equipment makers face in developing the China market. On the opportunity side, Bristol-Myers Squibb (NYSE: BMY) has announced an expansion of its relationship with Simcere Pharmaceutical (NYSE: SCR) to introduce its drugs into China. Meantime, homegrown medical equipment maker Mindray Medical (NYSE: MR) is also banking on the market’s potential with its newly announced acquisition of a US ultrasound equipment maker. But US drug giant Johnson & Johnson (NYSE: JNJ) is also finding the market contains some risks, as it comes under fire for double standards related to its product recall policies in China. Read Full Post…
Bristol-Myers, EMC Tap China Priorities With New Tie-Ups 趁中国政策导向东风 百时美施贵宝与EMC联姻本土企业
A couple of new tie-ups involving major foreign players in pharmaceuticals and computing provide an interesting glimpse at how multinationals are trying to target their China initiatives to be in sync with Beijing’s latest policy agendas. The strategy of working with a local partner isn’t all that new, but in this case what’s more interesting is the targeted approach these two new tie-ups are taking, the first aimed at taking advantage of China’s ongoing massive overhaul of its healthcare system and the second at Beijing’s push to become a leader in cloud computing. Let’s look at the pharmaceuticals deal first, which is seeing Bristol-Myers Squibb (NYSE: BMY) teaming up with local drugmaker Simcere Pharmaceutical (NYSE: SCR) to make and sell a cardiovascular compound in China. (company announcement) The compound was developed by Bristol-Meyers Squibb, but Simcere will make and sell the drug in China, drawing on its strong connections to local regulators and other health care officials. This kind of deal is smart as it gives Bristol-Myers exposure to a coming boom for quality medicines as Beijing signs a series of multimillion-dollar deals to make those drugs available under its ongoing overhaul to make basic healthcare affordable for everyone. The second deal will see faded PC firm Great Wall Computer form a cloud computing joint venture with EMC (NYSE: EMC), the world’s biggest maker of data storage devices. (Chinese article) China has repeatedly said that cloud computing will be a major focus for development in the next few years, prompting a wide range of players to get in on the action, including Huawei and Alibaba. I see no reason why a big western name like EMC should try to get a piece of the action, and indeed, Microsoft (Nasdaq: MSFT) made a similar move last month with its own China-based R&D initiative in the space. (previous post) My only cause for concern with EMC is that Great Wall is hardly a big name in China anymore, and it also has a strong legacy as a state-run company, meaning it might not be the best partner for this kind of venture that calls for a more entrepreneurial approach. But that said, at least I have to credit EMC for being foresighted enough to get into this space while it’s still in the formative stages in China.
Bottom line: New China tie-ups between Bristol Myers-Squibb and EMC with partners in their respective sectors look like smart moves to take advantage of Beijing’s latest development priorities.
Related postings 相关文章:
◙ Microsoft Looks for Place in China Cloud 微软投身中国云计算大潮
News Digest: June 15-17, 2013
The following press releases and media reports about Chinese companies were carried on June 15-17. To view a full article or story, click on the link next to the headline.
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- EU Free-Trade States Urge Quick Resolution Of Chinese Solar Dispute (English article)
- Beijing Warns Johnson & Johnson (NYSE: JNJ) Over Recall Double Standards (English article)
- Bristol-Myers, Simcere (NYSE: SCR) To Co-Develop Orencia In China (PRNewswire)
- Ming Yang (NYSE: MY) Announces Change Of CFO (PRNewswire)
- Smithfield (NYSE: SFD) Profit Plunges After China Blocks Imports (English article)
Medtronic Swallows Kanghui, More M&A on Tap?
I’ve written lots about the huge potential that China offers for drug makers as Beijing rolls out a multibillion-dollar reform of the country’s medical system. But there’s also huge potential for medical equipment makers, whose devices will fill the thousands of smaller local clinics being set up as part of a massive national plan to provide basic medical coverage to hundreds of millions of Chinese who lack access to such services. That potential was on display with the announcement by US-based Medtronic (NYSE: MDT), one of the world’s top medical equipment suppliers, that it would buy New York-listed Chinese peer Kanghui Holdings (NYSE: KH) for a nifty $816 million, in what looks like the biggest acquisition of a Chinese medical device firm by a western company.
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China Patent Move Highlights Healthcare Risk 医改东风可借 药企切莫贪婪无度
Global drug makers like Merck (NYSE: MRK) and Bristol-Myers (NYSE: BMY) have been piling into China’s drug market over the last few years in a bid to take advantage of huge new opportunities presented by the nation’s ongoing health care reform, even as growing signs emerge that risks also exist alongside the potential to make money. The latest of those risks was recently on display in the nation’s patent office, where an intellectual property law was modified to make it easier for Chinese companies to make generic versions of drugs that otherwise would still receive patent protection. (English article) Under those changes, China can permit companies to make generic versions of drugs under patent protection if Beijing determines that there is a state of emergency, or that doing so is in the public interest. The new rules, which took effect on May 1, could also let Chinese companies apply to export such generic drugs. In fact, this kind of move isn’t new, as China took similar action several years ago with European drug maker Roche’s drug Tamiflu when many worried about a bird flu epidemic with the potential to sicken and kill millions of people globally. At that time, Theraflu was one of the few drugs that had been proven effective to treat bird flu, and China pressured Roche to license the drug to several domestic firms in order to boost stocks in case of an outbreak. This new move appears to not only address similar situations to the one with bird flu, but also looks like Beijing’s way of telling the big foreign drug firms that they need to keep prices for their patented drugs at reasonable levels or risk seeing Beijing permit other domestic firms to make generic versions of those drugs. This new message would come as foreign drug makers rush to find Chinese partners for new joint ventures to take advantage of Beijing’s ongoing healthcare overhaul, which is designed to provide basic services to many of the nation’s hundreds of millions of people who otherwise would be unable to afford such services. Most major companies have jumped on the healthcare reform bandwagon, with Bristol Myers, Pfizer (NYSE: PFE) and Merck all announcing new tie-ups with Chinese partners over the last 12 months. (previous post) But China has also sent out increasing signals that its mutibillion-dollar healthcare overhaul won’t just mean lots of new free money for makers of drugs and medical equipment, indicating it intends to control the prices it pays as it overhauls the system. Beijing’s desire to control costs was on display last summer, when domestic player Simcere Pharmaceutical (NYSE: SCR), which has a tie-up with Merck, posted quarterly results that showed its revenue growth was stagnating, and blamed the government’s tough pricing policies as a major factor for stagnation. (previous post) All of this goes to show that healthcare reform will indeed bring big new growth opportunities for both domestic and foreign makers of drugs and medical equipment. But at the same time, Beijing is clearly telling everyone to temper their profit expectations, and sending signals that those who get too greedy could find their patented drugs and other proprietary products being legally copied and manufactured by domestic manufacturers and sold for much lower prices.
Bottom line: New changes to China’s patent laws are sending a signal to drug makers not to get too greedy in their rush to capitalize on opportunities from the country’s healthcare reform.
Related postings 相关文章:
◙ Bristol-Myers, EMC Tap China Priorities With New Tie-Ups 趁中国政策导向东风 百时美施贵宝与EMC联姻本土企业
Medicine: Healthy Growth But Margins Squeezed 医疗行业增长良好 但是利润率受到冲击
Two companies in the medical space, Mindray Medical (NYSE: MR) and Wuxi PharmaTech (NYSE: WX) have just released preliminary results showing China’s spending boom on healthcare reform is likely to continue into 2012, but margins will come under growing pressure as Beijing seeks the good value in its multibillion dollar drive to overhaul the nation’s healthcare system. Mindray, which makes medical devices, has given preliminary results saying its revenue grew a healthy 25 percent to nearly $900 million last year, thanks in large part to Beijing’s overhaul that is part of its effort to build a nationwide network of clinics providing basic affordable healthcare for everyone. (company announcement) But while revenue growth was strong, non-GAAP profits will be up more modestly by “no less than 10 percent,” according to the company. It was also somewhat guarded on 2012, saying revenue growth for this year would be 18 percent or more. The company actually gets almost half of its revenue from China, while the other half comes from global markets, which it said would continue to be challenging this year. I suspect its revenue forecast for 2012 is quite conservative, and it could easily match its 2011 revenue growth rate of 25 percent in 2012 if China continues its strong spending on health care reform, pushing its top line past the $1 billion mark. But margins will continue to come under pressure amid weak global spending and fierce competition for lucrative Chinese contracts, and its profit could end up growing at about half that rate. Meantime, Wuxi PharmaTech, a drug maker, has provided more limited guidance, saying its 2011 revenue should come in around $404 million, up a similar 21 percent from 2011. (company announcement) Like Mindray, I would expect the company’s profit growth, which jumped 71 percent in 2010 but has fallen to the mid-teens in recent quarters, to trail its revenue growth, again for the same reasons of growing competition. On the whole, 2012 looks set to be a strong year for health care as China is likely to keep up its spending on reform, but margins will come under growing pressure as profit growth stabilizes in a healthy but not overly exciting 10-20 percent range.
Bottom line: China’s continued spending on health care reform will give medical firms a nice lift in 2012, but growing competition will put profit growth under pressure.
Related postings 相关文章:
◙ Simcere Suffers Side Effects of Health Care Reform
◙ Mindray Turns Focus to Home With M&A
◙ Bristol-Myers, EMC Tap China Priorities With New Tie-Ups 趁中国政策导向东风 百时美施贵宝与EMC联姻本土企业
News Digest: December 15, 2011
The following press releases and media reports about Chinese companies were carried on December 15. To view a full article or story, click on the link next to the headline.
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◙ Aramco, Sinopec (HKEx: 386), CNOOC (HKEx: 883) Pursue Frac Tech Stake: Sources (English article)
◙ China to Impose Duties on US-Imported Cars (English article)
◙ Huayi Bros (Shenzhen: 300027) Wins IPR Infringement Suit against Youku (NYSE: YOKU) (English article)
◙ Great Wall Computer, EMC (NYSE: EMC) In Cloud Computing JV – Source (Chinese article)
◙ Simcere (NYSE:SCR), Bristol-Myers Squibb (NYSE: BMY) Partner In Cardio Compound (Businesswire)