The development trend of medical device enterprises is merger and reorganization

Looking back on the past and looking forward to the future, it is expected that mergers, especially M & A, will play an important role in the capital market.

Ye Lin, head of Asia Pacific Medical Research at Goldman Sachs

The medical industry has achieved very high growth in the past 15 years. However, in the capital market, compared with other related industries such as pharmacy and circulation, the investment in the medical device industry is still relatively small. However, this also means that there is a lot of room for the development of medical devices in the future.

Last year, China's entire pharmaceutical industry was about 200 billion yuan, while medical devices accounted for less than 15%, that is, the scale of the pharmaceutical industry was about seven times that of medical devices.

From the perspective of profit and growth space, comparing A-share listed medical device enterprises with Hong Kong listed medical device enterprises, we can see that the profit proportion of this industry is relatively high.

Looking at the market value, the market value proportion of China's medical device industry is about 7%, and that of the United States is almost 21%, so our growth space is very considerable.

In terms of valuation, in mature markets such as the United States, medical devices are relatively respected, and the valuation is higher, indicating that everyone is still very optimistic about this industry.

We found that the general trend in the future is mergers and acquisitions, at least in pharmaceutical and other fields.

In China's Hong Kong market, three major mergers and acquisitions occurred 3-4 weeks ago: Fosun Pharmaceutical (600196) acquired Indian pharmaceutical company, Shanghai Pharmaceutical (601607) acquired Australian health products company and a pharmaceutical company purchased by Germany. We can see that Chinese enterprises have gone out and are making a global layout, including entering the U.S. market and the European market. In the past, the fields that have done relatively large in the capital market, such as minimally invasive field, are slowly beginning to integrate. Chinese pharmaceutical enterprises may connect together through mergers and acquisitions in the future. I believe more and more Chinese enterprises will do this.

Looking back on the past and looking forward to the future, it is expected that mergers, especially M & A (enterprise mergers and acquisitions, including two meanings and two ways of mergers and acquisitions) will play an important role in the capital market. We have made statistics of A-share listed companies and compared the cash flow in the past three years with that in the present through financial accounting. We believe that half of the enterprises in the A-share market have the ability to do M & A. This is a relatively large trend in the future.