China Drug Firms Consolidate
HONG KONG -- China's highly fragmented drug industry, under siege from foreign rivals and new government quality standards, is entering a crushing round of consolidation.
More than 3,000 domestic players compete in the $10 billion market, but none control more than a small share. "In most industries [China has] national champions," says T.C. Chu, a director covering health-care for business consultants McKinsey & Co. in Hong Kong. "But in pharma, they don't."
That is starting to change as the Chinese government, eager to make its drug industry more competitive, enforces rigorous new quality controls. The tougher requirements, and rising competition from the likes of Pfizer Inc. and Novartis AG, are forcing smaller operations to shut down or fall prey to larger rivals. Those that remain, however, could prove a stubborn challenge to multinational drug giants eager to supply China's rising demand for pharmaceuticals.
Under China's centrally planned economy, the health-care system was a decentralized tangle of local providers, hospitals and drug makers. That gave rise to thousands of tiny fiefdoms, each controlled by a single manufacturer.
A hospital pharmacist dispenses prescription drugs in Shanghai.
But in less than a year, the number of Chinese drug companies has fallen by more than a quarter, to about 3,500 from more than 5,000 in 2004, according to government figures. The tally is expected to keep dropping.
"There will be significant consolidation," says John Tang , an analyst at Goldman Sachs in Hong Kong. "The majority of companies cannot survive."
With their low budgets for research and development, China's pharmaceutical makers are in a different league from the multinationals, but they do enjoy certain advantages. Many Chinese companies not only produce the pills but also own the pharmacies where they are dispensed, as well as the distribution networks that deliver them to the hospitals, where nearly 80% of drugs are sold. In addition, Chinese companies can churn out generic versions of branded drugs for a fraction of their price.
Because nearly all the Chinese companies lack a national footprint, some with monopolies in their local markets have begun banding together. Last year, more than a dozen pharmaceutical companies, including some of the nation's largest, began forming an alliance to produce a generic version of Pfizer's erectile-dysfunction drug, Viagra, according to a manager at one of the companies involved, Tonghua Hongtaomao Pharmaceutical Co. The move came after the Chinese government revoked New York-based Pfizer's patent in China. The company is appealing that decision.
"We'll be seeing many more alliances, particularly over particular drugs, and that will be a stepping stone toward deeper integration," says Gustav Ando, an analyst for Global Insight, an economic-forecasting firm in Waltham, Mass.
Demand for drugs in China is poised to boom as household incomes across the country increase. The market grew by nearly a third last year and is on pace to become one of the top five markets globally in the next five years, by some estimates.
Foreign players account for 10% to 20% of overall sales, depending on the types of medicines and ventures included in the count. But sales at the top-tier Chinese companies are growing faster than at Western ones, according to Fairfield, Conn., consultancy IMS Health Inc.
"They make us look small," says Andrew Howden, regional vice president in Asia for AstraZeneca PLC, the London drug maker.
One of the few drug makers in China that have already achieved national brand status is Harbin Pharmaceutical Group Co., which has an aggressive advertising campaign (it spends one billion yuan, or about $121 million, on television spots a year) and a sales force of 2,400 working with local distributors nationwide. Harbin is strong in a variety of products, from antibiotics to chemotherapy pain relievers. It also offers a variety of nutritional supplements, such as calcium and zinc, and a host of traditional Chinese medicines.
The company is about to become more competitive, with a planned two billion yuan capital infusion from two foreign investors, Warburg Pincus of New York and Citic Capital of Hong Kong. That money will allow Harbin to expand its research-and-development efforts -- the company spends about 5% of revenue on R&D, exceptional for a Chinese drug maker yet just a third of what most multinationals spend -- and help it become predator rather than prey as the consolidation gets more ferocious.
"If we just grow with the market, the opportunity is huge," says Chang Sun, managing director and head of North Asia for Warburg Pincus. "But because it is so fragmented, the potential is even greater."
As the shakeout continues, Chinese drug companies also could become global exporters of cheap generic drugs. Some are already beginning to resemble standout Indian generics manufacturers such as Ranbaxy Laboratories Ltd. and Dr. Reddy's Laboratories Ltd. when they were in their infancy years ago, according to Yehong Zhang, an analyst in Shanghai with IMS.
To be sure, the Indian generics players that some Chinese companies emulate spent years perfecting the art of copying Western drugs, fostering sophisticated research operations and medicines. Meanwhile, Chinese drug makers have enjoyed decades of safe monopolies in their local markets.
But Mr. Zhang maintains that "down the road" China's drug companies will become "formidable competitors" of the multinationals. "Some of the big guys are becoming very concerned about them," he says.
中国制药业迎来整合大潮
面对外国竞争对手的强大攻势和政府有关质量标准的新规定，市场格局非常分散的中国医药业正在进入一波决定性的整合大潮。
在规模达100亿美元的中国医药市场上分散著3,000多家本地企业，没有一家企业能控制著相当规模的市场。商业咨询公司麦肯锡(McKinsey & Co.)驻香港医药行业主管周天助(T.C. Chu)说，中国大多数行业都有全国性的领先企业，但医药行业是个例外。
但是，由于希望加强医药行业竞争力的中国政府开始实施新的质量控制标准，这种情况正在开始转变。面对更加严格的质量要求和来自辉瑞(Pfizer Inc.)、诺华制药(Novartis AG)等国际医药巨头的激烈竞争，一些小公司正被迫关闭或成为实力更强的竞争对手的盘中餐。不过，对急于进入中国庞大的医药市场的跨国巨头而言，那些能存活下来的国内企业也有可能成为他们很难对付的挑战者。
在中国计划经济时代，由各地医药供应站、医院和制药企业组成的医疗保健体系非常分散。全国数千家医药企业各自控制著很小一块领地。
但在不到一年的时间里，医药企业的数量大幅减少，据政府部门公布的数据，目前已从2004年的5,000多家降到3,500家左右，降幅达四分之一以上。预计这个数字还会进一步下降。
高盛(Goldman Sachs)驻香港分析师John Tang说，中国医药行业未来将出现大规模的整合。多数企业到最后都会被淘汰。
中国医药企业在研发方面的预算很少，这一点跟跨国医药企业非常不同，但他们也有自己的优势。许多企业不仅生产药品，还拥有自己的药店和分销网络，通过这些网络，他们将自己的产品销往医院，而医院是中国药品零售的主渠道，通过医院销售出去的药品占市场总销量的80%。另外，中国企业还可以以机低的成本生产仿制药。
由于中国很少有全国性的制药企业，一些在地区性市场上实力强大的企业开始联合起来。据通化鸿淘茂药业有限公司(Tonghua Hongtaomao Pharmaceutical Co.)一位管理人士说，去年他们和其他十多家企业（其中包括一些国内规模最大的企业）开始联手生产辉瑞药品“伟哥”(Viagra, 又名：万艾可)的仿制药。在此之前，中国政府宣布“伟哥”在华不享受专利保护。目前辉瑞已对此提出上诉。
位于马萨诸塞州沃瑟的经济预测机构Global Insight的分析师安德(Gustav Ando)表示，他认为今后还将有更多的这种联合，特别是针对某些特定药物的联合行动，这种联合将为进一步整合奠定基础。
随著中国人收入水平的提高，人们对药品的需求也将明显增加。去年，中国医药市场增长了接近三分之一；一些人预计，5年后，其总规模有可能进入全球前五名。
按照不同药物种类和企业类型统计，外国制药企业目前在中国市场总销量中占10%到20%不等。但据位于康涅狄格州法菲尔德的咨询机构IMS Health Inc.认为，中国一流制药企业的销售增长速度要快于西方同行。
英国制药企业阿斯特拉捷利康(AstraZeneca PLC)亚洲区副总裁霍登(Andrew Howden)说，这种情况使外国大公司反而显得很小。
在中国少数几家有全国影响力的制药厂中，哈药集团(Harbin Pharmaceutical Group Co.)就是一家。该公司一直保持强大的广告攻势（每年仅仅花在电视广告上的费用高达10亿元人民币），并在全国拥有一支2,400人的销售队伍，协助经销商开拓市场。
哈药集团拥有从抗生素到抗化疗制剂等多种拳头产品。它还生产多种补充钙、锌等元素的营养补剂以及很多传统中药。
随著华平创业投资有限公司(Warburg Pincus)和中信资本(Citic Capital)参股哈药集团，其竞争实力有望得到进一步提升。这些资金将帮助哈药加强研发，并有助于增强它在日益激烈的整合浪潮中的收购能力。目前哈药用于研发的资金占收入的5%，这个比例虽然只有跨国公司的三分之一，但在国内企业中还属于鹤立鸡群。
华平创业北亚分部负责人孙强说，如果能跟中国市场一同增长，机会非常多。而由于中国市场非常分散，因此潜力就更大。
在行业整合的同时，中国制药企业还有可能成为廉价仿制药出口商。IMS驻上海分析师张也洪（音）说，已有一些中国企业开始仿效印度著名仿制药企业如Ranbaxy Laboratories Ltd.和Reddy's Laboratories Ltd.在创业时期的做法了。
这些印度仿制药生产商花费了数年时间完善仿制技术，从而建立起了自己的研发队伍及开发出高科技含量的药品。
另外，中国制药企业已有几十年高枕无忧地的独享中国市场的经历了。而据麦肯锡驻香港主管克里斯南(Sankar Krishnan)说，“在印度，会有三十家企业销售同一种药品，因此企业要立足必须有独到之处”。
张也洪认为，“将来”中国制药企业将成为令跨国公司畏惧的竞争对手。他说，有些跨国公司现在已对它们感到担忧了。
(back)Deal Makers Are Looking Outside the Wall
HONG KONG -- Prospective banking deals in China draw the headlines these days, but so far this year it is the rest of Asia that has been generating the business for the region's investment bankers.
Rory Tapner's passport tells the story. The investment-banking chairman and chief executive for Asia at UBS AG has spent more time this year in Southeast Asia than in China.
"The league tables, the surveys, the fee pools -- they all show the same thing: There's more to Asia than China," Mr. Tapner says. "China is critically important and will be even more so in five, 10 or 15 years, but the returns that [bank] shareholders demand today are being generated in Japan, Southeast Asia and Australia."
So far this year, Australia, Indonesia and South Korea have produced Asia's biggest merger-and-acquisition deals. Australia alone accounts for four of the 10 biggest mergers, and South Korea for two, according to market-data provider Dealogic. China has had just one transaction in the top 10, an asset swap between related companies. By comparison, China racked up three such deals in the year-earlier period.
All the deals are boosting Asian investment-banking fees, which rose 25% last year to $8.3 billion, according to consultancy Freeman Data. That is a tiny share of total global investment-banking fees. While fees from China-related business are growing steadily, rising by about a third each year for the past two years, they only accounted for about a tenth of the regional fee pool. That is partly because China is in the early stages of opening financial services to foreign investment banks.
Last year, for example, Australia generated nearly twice the investment-banking fees that China did, and Japan produced more than four times as much as China's $875 million in fees.
"Everybody loves to talk about China," says Paul Calello , Asia chairman for Credit Suisse First Boston, which advised Altria Group Inc.'s Philip Morris International on its $5.2 billion takeover of Indonesian cigarette maker PT Hanjaya Mandala Sampoerna, the second-biggest transaction in Asia outside Japan so far this year. "The rest of Asia is also very interesting. It doesn't get the focus it should."
Each country or region has a different story to tell. South Korea's biggest deals this year have been driven by foreigners selling out of investments made in the aftermath of the 1997-98 Asian financial crisis. In Southeast Asia, vigorous economic growth and robust equity markets are attracting foreign and regional investors looking for growth to such industries as telecommunications. For instance, Hong Kong-based Hutchison Telecommunications International Ltd., a mobile-phone company with operations in several emerging markets, agreed to acquire a 60% stake in Indonesian cellular operator, PT Cyber Access Communications in March.
Australia has benefited in part from Southeast Asian companies seeking to expand their reach as well as domestic consolidation in such industries as natural resources, transportation and wine.
Nobody is writing off China. With economic growth running at 9.5% currently, 1.3 billion people and the world's lowest-cost manufacturing base, it remains very much at the top of bankers' agendas. Chinese computer maker Lenovo Group Ltd.'s $1.25 billion purchase of International Business Machines Corp.'s personal-computer business late last year was a watershed. And bankers say there is plenty afoot in China for the rest of the year, including more than $6 billion of expected new-stock sales in the next three months from companies including the country's biggest coal producer, China Shenhua Energy Co., and shipping company China Cosco Holdings.
Still, the activity elsewhere in Asia shows that investment banks need to maintain a broad presence across the region. Southeast Asia -- which includes the world's fourth-most populous country, Indonesia, and the city-state of Singapore -- has been fertile ground for foreign companies seeking to tap Asia's fast-growing economies and large populations -- like the Philip Morris-Sampoerna deal.
Within the region, companies are consolidating across borders to better compete with global players and to tap less-developed, high-growth markets. In January, Malaysian investment bank CIMB Bhd. agreed to buy Singaporean brokerage firm G.K. Goh Holdings Ltd. to expand in the region. Similar moves are starting to pay off for companies like Singapore Telecommunications Ltd., which announced higher-than-expected profit last week helped by acquisitions made last year in Indonesia and Thailand.
Philippine food-and-beverage maker San Miguel Corp. emerged victorious in a three-month bidding war against New Zealand's Fonterra Cooperative Group Ltd. to buy Australia's biggest dairy company, National Foods Ltd., with a US$1.5 billion offer. San Miguel is trying to become one of Asia's biggest food-and-beverage makers and says it is still on the acquisition trail, eyeing closely held New Zealand Dairy Foods, maker of Anchor brand butter in New Zealand, which is up for sale.
"Southeast Asia tends to be more cyclical. You don't have the large China privatizations to focus on. You have to be creative and anticipate trends," says Kate Richdale, Morgan Stanley's Singapore-based head of investment banking for Southeast Asia. Moreover, she says, companies in Southeast Asia are more willing to look at bolder deals.
Take Singapore Power Ltd. The company -- which is controlled by Singapore state-owned investment company Temasek Holdings Pte. Ltd. -- spent US$3.7 billion buying power assets in Australia from TXU Corp. of the U.S. In less than a year, the company sold some of those assets for US$1.7 billion to CLP Holdings Ltd. of Hong Kong, which wants to diversify around the region. Singapore Power now is considering selling more of those assets through a public offer, according to people familiar with the matter.
Temasek and companies that it controls -- such as Singapore Power -- will continue to be a source of investment-banking business as Temasek tries to expand its holdings outside of Singapore. Bankers expect Temasek to make some significant purchases outside of Asia this year in line with its stated aim of balancing its portfolio equally among Singapore, Asia and Western countries. Temasek declined to comment on specific investment opportunities.
Within Asia, Temasek may increase its 4.6% stake in China Minsheng Banking Corp. in the bank's public stock offering in Hong Kong later this year, according to a person familiar with the matter. And just last month, Temasek chipped in financing for the purchase of Brookstone Inc. of the U.S by Singaporean retailer OSIM International Ltd.
In Korea, Temasek is looking to join Hana Bank, Korea's fourth-largest lender by assets, in its 475 billion won (US$473 million) acquisition of the country's leading asset manager, Daehan Investment & Securities Co. Temasek is Hana Bank's largest shareholder with a 10% stake.
Elsewhere in Korea, distressed-debt buyers and private-equity funds that bought in just after the Asian financial crisis are cashing out. Newbridge Capital sold Korea First Bank to Standard Chartered PLC for $3.2 billion in January. A Korean court is on the verge of selling Korea's largest spirits maker, Jinro Ltd., for $3.1 billion to a consortium-led by the country's biggest beer maker, Hite Brewery Co. The company was placed in receivership by its creditors including Goldman Sachs Group Inc. and Morgan Stanley, which acquired Jinro's debt at a steep discount.
"Korea is on track to have a very active year and continues to deliver some of the largest transactions across the region," said Todd Marin, head of Asian investment banking for J.P. Morgan Chase & Co. in Hong Kong. "The M&A market in Asia is more diverse than it has been for several years."
That is going to keep UBS's Mr. Tapner spending more time in immigration lines, especially as Southeast Asian countries such as Malaysia and Thailand replicate the Temasek model by putting government investments under one institution, and after UBS won a place to advise the Australian government on how to sell its more than A$30 billion (US$23 billion) of shares in Telstra Corp., the country's dominant phone company.
中国企业并购交易落后于亚洲其他国家
近来有关中国企业并购前景的消息时常成为报纸的头条，但今年迄今为止给亚洲地区投资银行家们带来并购业务的却一直是亚洲其他国家。
这从谭信乐(Rory Tapner)的护照上就可见一斑。这位瑞士银行(UBS AG)亚太区主席兼首席执行长今年在东南亚停留的时间一直要多于在中国的时间。
谭信乐说，无论是收入排名表、行业调查还是收入记录都显示，与中国相比，来自亚洲其他地区的并购业务更多。他说，中国是非常重要的市场，而且5年、10年、15年后它甚至会变得更加重要，但并购业务方面目前能为投资银行的股东们创造利润的却是日本、东南亚和澳大利亚市场。
今年迄今为止，亚洲规模最大的并购交易都出现在澳大利亚、印尼和韩国。据市场数据提供商Dealogic称，在前十大并购交易中澳大利亚就占了四宗，韩国占了两宗。在这十大交易里中国只占了一宗，这是一起相关公司间的资产互换交易。而去年同期中国在亚太区十大并购交易中却占有三宗。
这些并购交易正在推升亚洲投资银行业务的收入，据咨询公司Freeman Data称，该地区的投资银行业务收入去年增长25%，达到了83亿美元。不过与全球投资银行业务的总收入相比这只不过是九牛一毛。虽然与中国有关的投资银行业务收入一直在稳定增长，过去两年中每年都增长三分之一左右，但这一收入却只占亚太地区投资银行总收入的十分之一。这其中的部分原因是，中国金融服务业向外国投资银行的开放目前尚处在初期阶段。
以去年为例，澳大利亚的投资银行业务收入是中国的近两倍，而日本的收入则是中国的四倍多。中国去年的投资银行业务收入为8.75亿美元。
瑞士信贷第一波士顿(Credit Suisse First Boston)亚太区主席柯磊洛(Paul Calello)说，人们都喜欢谈论中国，其实亚洲其他国家的投资银行业务也非常令人感兴趣，这些业务没有得到应有的关注。瑞士信贷第一波士顿为菲利普莫里斯集团公司(Altria Group Inc.)的旗下子公司菲利普莫里斯国际公司(Philip Morris International)以52亿美元收购印尼香烟生产商PT Hanjaya Mandala Sampoerna的交易提供了顾问服务。这是亚洲除日本以外地区今年规模第二大的并购交易。
每个国家或地区的并购交易情况都各不相同。在韩国，外国投资者出售其1997-98年亚洲金融危机后在韩国所作投资的交易一直是该国规模最大的并购业务。在东南亚，强劲的经济增长以及繁荣兴旺的股市正在吸引外国和本地投资者到电信等行业寻找获利机会。例如，总部位于香港的移动电话公司和记电讯国际有限公司(Hutchison Telecommunications International Ltd.)今年3月就做出了收购印尼移动电话运营商PT Cyber Access Communications 60%股份的决定。和记电讯国际在好几个新兴市场都有业务。
东南亚公司在澳大利亚的业务扩张以及澳大利亚自然资源、运输及葡萄酒等行业的整合都推动了澳大利亚并购业务的增长。
中国是没有人能忽视的。这是一个经济年增长率达9.5%、有著13亿人口的国家，它目前是世界上生产成本最低的制造业基地，在投资银行家们的心目中，它依然有著非常重的分量。中国的电脑生产商联想集团(Lenovo Group Ltd.)去年底斥资12.5亿美元收购国际商业机器公司(International Business Machines Corp.)的个人电脑业务就是一项具有分水岭意义的交易。投资银行家们说，今年余下时间中国将涌现大量投资银行业务，包括中国最大的煤炭生产商神华能源股份有限公司(China Shenhua Energy Co.)和海运企业中国远洋控股公司(China COSCO Holdings)，预计它们在未来3个月将发行价值60亿美元的新股。
不过，亚太其他地区活跃的并购交易显示，各投资银行需要使自己的业务在该地区各地均衡发展。对那些希望从亚洲迅速发展的经济及庞大的人口中觅得商机的外国公司来说，包括世界第四人口大国印尼以及城市国家新加坡的东南亚一直是一块投资沃土。菲利普莫里斯对印尼香烟生产商Sampoerna的投资即是一例。
而在亚太地区内部，为了与跨国公司更好地竞争以及进军那些欠发达、高增长的市场，本地企业正在进行跨国整合。为了扩大在本地区的业务，马来西亚投资银行CIMB Bhd.今年1月达成了收购新加坡证券公司G.K. Goh Holdings Ltd.的协议。而新加坡电信(Singapore Telecommunications Ltd.)等公司已开始从类似交易中获益，该公司上周宣布取得了高于预期的利润，而这应部分归功于它去年在印尼和泰国进行的收购。
菲律宾的食品及饮料生产商San Miguel Corp.经过三个月的收购大战成功击败新西兰竞争对手Fonterra Cooperative Group Ltd.，最后斥资15亿美元收购了澳大利亚最大的奶制品公司National Foods Ltd.。San Miguel正努力成为亚洲最大的食品及饮料生产商之一，并表示它仍有意进行收购，而生产Anchor牌黄油的新西兰企业New Zealand Dairy Foods已经进入了它的视线。
摩根士丹利(Morgan Stanley)驻新加坡的东南亚投资银行业务负责人凯特?里奇戴尔(Kate Richdale)说，东南亚的投资银行业务更具周期性，这里没有中国那样规模的民营化，因此在这里从事投行业务必须具有创造性且能预见趋势。她还说，东南亚的公司如今都更希望进行更大规模的并购交易。
以新加坡能源有限公司(Singapore Power Ltd.)为例。这家为新加坡国有投资公司淡马锡控股(Temasek Holdings Pte. Ltd.)所控制的企业半年多以前斥资37亿美元收购了美国公司TXU Corp.在澳大利亚的电力资产，该公司又作价17亿美元将这些资产中的一部分卖给了香港的中电控股(CLP Holdings Ltd.)，后者希望在亚太地区进行多元化发展。据知情人士称，新加坡能源有限公司正考虑通过公开拍卖的方式出售更多上述资产。
淡马锡及其控股的企业（如新加坡能源）将继续成为投资银行的业务来源，因为淡马锡正努力到新加坡以外去收购资产。银行家们预计，淡马锡今年将在亚洲以外进行一些大规模的收购，以实现其平衡自己在新加坡、亚洲和欧洲国家投资的既定目标。淡马锡控股拒绝对具体的投资机会发表评论。
在亚洲内部，据知情人士说，淡马锡控股有可能乘中国民生银行(China Minsheng Banking Corp.)的股票今年晚些时候在香港公开上市之机增持该行的股票，使自己在民生银行的持股在目前4.6%的基础上进一步增加。就在上个月，淡马锡控股还为新加坡零售商OSIM International Ltd.收购美国公司Brookstone Inc.提供了融资帮助。
在韩国，淡马锡控股正希望与该国资产规模居第四的银行韩亚银行(Hana Bank)合作，出资4,750亿韩圆(4.73亿美元)收购该国主要的资产管理公司大韩投资证券公司(Daehan Investment & Securities Co.)，淡马锡是韩亚银行最大的股东，持有该行10%的股份。
也是在韩国，那些亚洲金融危机爆发后专门低价收购资产的不良债权买家以及私人资本运营基金正纷纷开始套现。新桥资本(Newbridge Capital Inc.)今年1月作价32亿美元向渣打银行(Standard Chartered PLC)出售了韩国第一银行(Korea First Bank)。而韩国一家法院即将作价31亿美元将该国最大的烈酒生产商Jinro Ltd.出售给由该国最大啤酒生产商Hite Brewery Co.牵头的一个财团。Jinro Ltd.目前正由其债权人托管，这批包括高盛(Goldman Sachs Group Inc.)和摩根士丹利在内的债权人当年以超低价格收购了Jinro的债务。
摩根大通(J.P. Morgan Chase & Co.)驻香港的亚洲投资银行业务负责人马宏涛(Todd Marin)说，正常情况下韩国今年的并购业务将非常活跃，这里将继续出现一些亚太区最大规模的并购交易。他说，亚洲的并购市场比几年前更具有多样性了。
瑞士银行的谭信乐看来要花更多时间往来奔波了，因为马来西亚和泰国等东南亚国家正在学习淡马锡控股的模式，将政府投资交由一个机构来运作，而瑞士银行又获得了为澳大利亚政府出售其在澳大利亚电信(Telstra Corp. Ltd.)价值300多亿澳元(230亿美元)资产的交易提供顾问服务的合同。
