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Emerging Markets | 1 Private and Confidential
PharmaVentures Opportunities in Emerging Markets
December 2013
Emerging Markets | 2 Private and Confidential
Contents
Introduction
Overview
China
Latin America
Emerging Markets Strategy
Introduction to PharmaVentures
Appendices
3
4
13
21
25
30
35
Slide
Emerging Markets | 3 Private and Confidential
Emerging Markets (EMs) are increasingly a key part of the growth strategy of many life science/healthcare companies; the
vast majority of healthcare spend growth in pharmaceuticals, medical devices and equipment will be in EMs over the next
decade
This presentation provides an overview of the EM opportunity, including some analysis of the financial performance of
selected EM pharmaceutical industries and respective benchmark valuation metrics
There is a brief section on the China opportunity, as it is by far the largest high growth market, and also an overview of
healthcare in Latin America, which is a particularly promising EM region
Additionally, this presentation also sets out a framework that can help life science/healthcare companies determine an
effective EM strategy that is aligned with its broader growth objectives. External development options (eg. M&A) are
outlined, including some key transaction considerations of doing deals in EMs
PharmaVentures is a leading advisory firm in the life science and other healthcare sectors that is particularly active in EMs
with extensive knowledge, capabilities and reach in these high growth regions
Introduction:
Emerging Markets | 4 Private and Confidential
LT GDP Growth for Selected Countries* (%) LT Share of Global Growth* (%)
Key Drivers Industrialisation: 30-40% plus investment rates in EMs will drive industrial productivity
Urbanisation: another 700m people will become urban dwellers in next 10 years with 92% in EMs
Demographics: working population increasing by 5% p.a. (though old people growing faster)
Synergies from trade: further gains, particularly intra-EM trade
Technology: continuing to enhance productivity, especially IT and communications
* Includes assumed currency appreciations
Source: Analyst reports, PharmaVentures analysis
* Includes assumed currency appreciations
Source: Analyst reports, PharmaVentures analysis
Future economic growth will be largely driven by EMs. 60-65% of long term (LT) growth will be from EMs, with over half of that from the BRICs.
This growth is structural, brought about by further integration of the 5 billion EM population into the global economy over the next 10-20 years
Overview:
Emerging Markets will drive future global growth
0
2
4
6
8
10
Ch
ina
Ind
ia
Ind
on
es
ia
Tu
rke
y
Bra
zil
Me
xic
o
Ru
ss
ia
Ko
rea
US
Ca
na
da
Fra
nc
e
UK
Ge
rma
ny
Ja
pa
n
9.0%
(%)
7.4%
6.5%
5.8%5.5% 5.4% 5.3%
3.7%
2.5%2.2% 2.1% 1.9%
1.5%1.2%
0
5
10
15
20
Ch
ina
US
Ind
ia
Bra
zil
Ru
ss
ia
Fra
nc
e
Ge
rma
ny
UK
Me
xic
o
Ind
on
es
ia
Ja
pa
n
Tu
rke
y
Ko
rea
Ca
na
da
22%
15%
4% 4% 4% 3% 3%3% 3% 2% 2% 2% 2% 1%
60-65% of
Growth from EMs
>50% of EM
Growth from BRICs
(%)
Emerging Markets | 5 Private and Confidential
Overview:
Per capita healthcare spend vs. GDP set to rise across EMs
Healthcare Expenditure vs. GDP (per capita basis) Health Expenditure as % of GDP
Global healthcare spend set to rise from EM GDP growth and a greater percentage of income (both public and private) being used for
healthcare
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0 10,000 20,000 30,000 40,000 50,000
($)
GDP per Capita
`
Healthcare
Expenditureper Capita
EM healthcare expenditure is still very low relative to Developed Markets (DMs) both in terms of absolute per capita spend as well as spend as
a % of GDP. The EM healthcare boom may play out for a long period of time
Source: WHO, World Bank, IMF, analyst reports, PharmaVentures analysis Source: WHO, World Bank, IMF, analyst reports, PharmaVentures analysis
0
2
4
6
8
10
12
14
(%)
<$2k $2k-$5k $5k-$10k $10k-$20k $20k-$40k >$40k
GDP per Capita (2007)
3.6%
4.4%
6.7% 6.8%
9.0%
13.3%
5.6%
10.1%
(inc. US)
(inc. Brazil
& S Africa)
Healthcare
Expenditure as %GDP
Emerging Markets | 6 Private and Confidential
0
200
400
600
800
0.0 5.0 10.0 15.0
5 Year
Growth
($bn)
5 Year Market Growth (%)
Source: Analyst and market research reports (inc. EIU, BMI 2013), publications of institutions and NGOs, PharmaVentures analysis
Overview:
EM healthcare markets – over $1 trillion in growth over next 5 years
EMs are leading the way in healthcare
growth
Top 7 EM countries account for 77%
of total 5Y EM growth or $773 billion of
total $1.04 trillion
Top 7 EMs have a combined
healthcare expenditure of over
$1 trillion, similar to EU 5 ($1.3 trillion)
Latin America as a region is a $400bn
market with $195bn in 5Y growth
South Asia and Sub Sahara Africa
have high growth rates albeit from
lower bases
Central & Eastern Europe is slowest
EM region with projected growth of
5.4%
US remains a very important country
for healthcare growth although there
are questions on sustainability given
already high spend as % of GDP
US $766bn DM
Europe $233bn EMs $1,040bn
EM 7 US
EU 5
China
Latin
America
South
Asia
Sub Sahara
Africa Asia
Pacific 8 Central &
E. Europe MENA
= Relative Size of 2012
Market (Eg. US is $2.8trn)
Japan
Emerging Markets | 7 Private and Confidential
Change in DM/EM Pharma Growth 2005-2020 DM/EM Pharma Market Breakdown 2005-2020
In just a decade, we are seeing a change from Developed Market (DM) growth prominence to EM growth prominence, necessitating funda-
mental shifts in many company growth strategies; DMs remain the largest markets by value, such as in the pharmaceutical market (see below)
Source: IMS, analyst reports, PharmaVentures analysis Source: IMS, analyst reports, PharmaVentures analysis
This growth in healthcare expenditure in EMs is across the board from pharmaceuticals and medical devices to hospital construction and
healthcare delivery services. Accordingly, Western companies in almost all segments of healthcare may benefit from a meaningful EM strategy
in their overall growth strategy
Overview:
Healthcare growth will continue to shift to EMs
0.0
20.0
40.0
60.0
80.0
100.0
2005 2010 2015P 2020P
DMs
EMs
(%)
72%
28%
DMs
EMs
56%
44%
DMs
EMs
20%
80%
DMs
EMs
9%
91%
0.0
20.0
40.0
60.0
80.0
100.0
2005 2010 2015P 2020P
DMs
EMs
(%)
82%
18%
DMs
EMs
74%
26%
DMs
EMs
65%
35%
DMs
EMs
56%
44%
Emerging Markets | 8 Private and Confidential
Overview:
Summary of selected EM pharmaceutical markets
China India MENA Asia Pacific
8* Brazil Turkey
2012E Market Size
12-17E Growth
Industry Structure
Market
Distribution
Pharmacies
End-Users
Highly fragmented,
over 3,000 local
manufacturers;
MNCs have 27% of
sales & 33% profits
Fragmented with
some notable large
players with
significant exports to
DMs; 4th largest
producer of generics
Primarily branded
generics (~90% of
prescription drugs).
OTC ~16% by value
$82.2 billion
13-18%
Huge but complex,
64% generics by
value. OTC ~23%
of total market
Fragmented,
regional, need to
rely on numerous
distributors; top 3
have ~31% share
$16.1 billion $28.5 billion $26.6 billion $26.8 billion $12.5 billion
12-16% 8-10% 8-10% 7-12% 7-9%
Highly fragmented,
~$32bn in retail
sales
Fragmented but
operates a CFA,
stockist model
~$10bn retail sales,
highly fragmented;
organised market
(5%) dominated by
12-15 chains
~56% hospitals,
~24% pharmacies
and local health
centres ~20%
20-30% hospitals,
70-80% pharmacies
Mixed, depending
on country;
generally strong
presence of inter-
national players
Varies by country
(eg. 25% generics in
Singapore, 90%+ in
Vietnam)
Varies by country;
Zuellig Pharma is a
leading regional
player
Depends on territory
but chains are
common
Varies by country
Mixed, GCC has
more international
presence; thriving
local players across
territories
~Mixed, but oil rich
states have high
patented drug sales
(eg. 50%+ in Saudi)
Varies by country
(eg. Saudi has
sizeable state
presence)
Depends on
territory; chains are
present (eg. UAE,
Saudi Arabia)
Varies by country
Dominance of
internationals (65-
75%) but rapidly
growing local
industry
Primarily branded
generics of
internationals; ~12%
patented; OTC
~17%
Relatively frag-
mented; top 3 have
~45%+ share, rest
~3,000 wholesalers
Highly fragmented,
but chains allowed;
top 5 have ~20%
share
Principally
pharmacies/retail
(71%) and hospitals
(8%)
Fragmented with
some 85 manufact-
urers (~13% MNC)
Generics over 50%
by volume and
~38% by value.
OTC ~12% of total
market
Concentrated, top 2
(Hedef & Selcuk
Ecza) have nearly
70% share); region-
al co-ops have 15%
~25,000 pharma-
cies, chains not
allowed (1 per 3,000
pop.)
Principally pharma-
cies, hospitals and
clinics; OTC only
pharmacies
Source: Analyst reports, governmental publications, BMI (2013), EIU, IMS, PharmaVentures analysis * Hong Kong, Singapore, Taiwan, Malaysia, Philippines, Indonesia, Thailand and Vietnam
Emerging Markets | 9 Private and Confidential
Overview:
Share of global pharmaceutical growth by country/region
0
50
100
150
200
250
300
Ch
ina
Ru
ssia
Ind
ia
Bra
zil
Mexic
o
Ko
rea
Tu
rkey
ME
NA
Asia
Pac.
8
Oth
er
EM
s
US
EU
5
Jap
an
Oth
er
DM
s
5Y to
2017P
Growth
($bn)
67% of medium term growth (5Y to 2017) in pharmaceuticals will come from EMs. Whilst China is the biggest single growth market (25% of
total global growth), other EMs collectively make up 42% of total global growth over the same period
25% 29% 33% 38% 40% 43% 45% 50% 55% 67% 86% 90% 97% 100% Cumulative
Share DM growth principally driven by
new products/technologies,
generics and population ageing
US and Japan considered best
markets for DM growth
US growth boosted by public
spending increases (Medicare)
EM growth principally driven by
increasing usage and greater
penetration of products
Large percentage of growth to be
driven by sales force expansion
Ageing related a secondary but
still material component of
demand growth
Strong growth across all EM
territories, including Africa (8-10%
plus growth)
Latin America market is $73bn
with $36bn 5Y growth
Source: Analyst reports, governmental publications, BMI (2013), IMS, EIU, PharmaVentures analysis
Emerging Markets | 10 Private and Confidential
China India MENA Asia Pacific
8 Brazil Turkey
2013E Market Size*
13-18E Growth
Industry Structure
Market
Distribution
Very fragmented,
over 13,000 local
manufacturers,
mainly focused on
low-mid end. High-
end dominated by
foreign players
(~70% share). Low
industry profit margin
(~11%)
Many local players
in medical
consumables but
high-end (75% of
market) is imports/
international.
Increasing local
presence in mid-end
devices
Lack of general
penetration, particul-
arly outside large
cities
$17.1 billion
18-22%
Huge but very
complex market;
wide variations in
characteristics
Highly fragmented,
with 150,000 plus
distributors; can be
very regional/local
Top players use a
large number of
distributors
$3.7 billion $7.1 billion $5.8 billion $5.9 billion $2.6 billion
17-21% 11-14% 7-10% 13-16% 9-11%
Fragmented;
regional distributors
with sub-distributor
networks
Varies but strong
presence of
international
players. Singapore
is a local
manufacturing &
R&D hub
Varies by country
Varies by country
Heavily reliant on
imports (eg. Saudi
Arabia)
Largest device
markets are Saudi,
Israel and UAE. Oil
rich GCC countries
purchase higher end
Significant private
hospital presence in
some territories
Varies by country
Domestic and inter-
national players
supply ~75% of
needs with ~25%
imports
Regional in public
sector
Significant private
hospital sector
Fragmented, some
3,000 distributors
with few large
operators
Many local
manufacturers of
low-tech items,
including for export;
85% imported
Dominated by
Ministry of Health
but active private
sector purchasing
Private hospitals
~11% bed capacity
Fragmented
* Business Monitor International (BMI) definition
Source: Analyst reports, governmental publications, BMI (Q3/Q4 2013), PharmaVentures analysis
Overview:
Summary of selected EM medical device markets
Emerging Markets | 11 Private and Confidential
10.0
15.0
20.0
25.0
30.0
0.0 5.0 10.0 15.0 20.0
EBITDA
Margin
(%)
Forward Market Growth(3) (%)
Source: Analyst and market research reports (inc. BMI Q3,Q4 2013 & EIU 2013), company accounts, PharmaVentures analysis
X%
Return
on
Invested
Capital(2)
=
26% India
13% China
16%
MENA
Vietnam
26%
(1) Aggregated data from selected sample of companies for each territory or region together with available industry data
(2) EBIT/(average equity plus debt)
(3) Average of analyst forecasts or PharmaVentures estimate
(4) 2012 financials unless not available
Notes:
Russia
30%
Indonesia DM Generics
9%
Overview:
EM pharmaceuticals is a profitable growth opportunity
Engaging in the pharmaceutical market in EMs has generally been a profitable activity, particularly for global pharma. Nevertheless
determining the right market strategies and implementing them well is critical to successful development
n.a.
MNC EM
Performance
The relatively low aggregate
EBITDA margin in China is largely
due to the fragmented nature of the
industry and many players
producing low-end generics
Margins of domestic players can be
relatively attractive for those with
good product portfolios and
distribution (eg. Hengrui with 27.0%
2013E EBITDA margin)
Material variation of profit margins
in all EMs underline need to get the
right strategy to deliver shareholder
value on EM expansion
Aggregate MNC performance may
be lower as less well performing
companies may be less inclined to
disclose separate EM data
21%
Latam 21%
Emerging Markets | 12 Private and Confidential
5.0
10.0
15.0
20.0
25.0
30.0
0.0 5.0 10.0 15.0 20.0 25.0 30.0
2013E
PER
(x)
Forward EPS Growth (%)
Notes: (1) Each regions/category represented by analyst selected number of quoted companies; forward EPS growth periods of different categories may not be exactly the same
(2) Market data as of 30 October 2013
Source: Analyst reports, company accounts, Capital IQ, PharmaVentures analysis
$100bn
market
value =
less
expensive
more
expensive
lndia
China
Russia
US Large
Biotech
Europe
Generic US
Major
Pharma US
Generic
Valuations of pharma companies in different territories (and sectors) principally reflect expectations of growth in earnings. Current PE ratios
of EM pharma sectors imply an approximate IRR of 13-16% versus DM pharma of 8-11%
Overview:
Valuation metrics of selected EMs vs. DMs
Absolute valuations have
generally risen since last year
along with the general market
US Large Biotech figures heavily
influenced by Gilead
Europe
Major
Pharma
Emerging Markets | 13 Private and Confidential
The Chinese pharmaceutical market is roughly divided into more established markets such as Beijing and Shanghai and higher growth less
established regions; with regards therapeutic areas, many of these are enjoying 20% plus growth
Market Breakdown by Region Market Breakdown by Therapeutic Class
Source: Analyst reports (inc. Citi Nov 2012), industry data (2008-2011) Source: Analyst reports (inc. Citi Nov 2012), industry data (2008-2011)
China:
Breakdown of the pharmaceutical market
Companies may need a multi-pronged strategy in China given the wide ranging characteristics of different provinces and their respective cities
5
10
15
20
25
30
35
0 5 10 15 20
Biologics
Bone &
Mascular
Narcotics RespiratoryCNS
Anti-
Cancer
Mental
Disorder
Endocrine
Digestive
SystemImmuno-
modulators
Blood
System
Cardiovascular
Antibiotics
CAGR Growth (%)
Market Share (%)
Dermatology
Urinary System
Sensory
Reproductive
10
15
20
25
30
0 5 10 15
Jilin
Guizhou
Shijiazhuang
Jinan Tianjin
Hubei
Xi’an
Shenyang
Hunan
Fujian
Hangzhou
Guangzhou
Beijing
CAGR Growth (%)
Market Share (%)
Pearl River Delta
Shanghai
ChongqingHarbin
Nanjing
Zhengzhou
Chengdu
Emerging Markets | 14 Private and Confidential
China:
Selected notable Chinese companies by therapeutic classes
Anti-cancer
Biologics
Blood &
Hematopoietic
Bone &
Muscular
Cardio-
vascular
Ebay Pharma
Hansoh Pharma
Hengrui
Medicine
Luye Pharma
Qilu Pharma
Tasly Pharma
Anke Biotech
Beijing SL
Beijing Huasu
3S Bio
Qilu Pharma
Sinovac
Shangdong
Quangang
9.5%
3S Bio
Kelun
Lingkang
North China
Shangdong
Lukang
Rongsheng
Harbin Sanlian
Immuno-
Modulators
Changzheng
Xinkai
Sino Biopharm
Harbin Sanlian
Jiangshi
Qizheng
Yuheng Pharma
Zhongyuanwei
Beijing SL
Pharma
Sihuan Pharma
Sino Biopharm
Wuxi Shanhe
Zhongheng
Group
Aohong
Double Crane
Harbin Sanlian
Nhwa
Qilu Pharma
Shineway
Pharma
Simcere
2.7%
11.2%
Digestive
System
Endocrine
CNS
Mental
Disorder Respiratory
Aosaikang
Changzhou
Siyao
Lanling Pharma
Qilu Pharma
Qirui Pharma
Sino Biopharm
Southwest
Changchun
Jinsai
Double Crane
East China
Pharma
Kumming
Neptune Group
Sino Biopharm
Taiji Pharma
8.1%
Changbaishan
China East
Diao Pharma
Jinling Pharma
Joincare
Shiqiao Pharma
Vaccines
Dongting
Hansoh Pharma
Hengrui
Medicine
Huahai Pharma
Kumming
Nhwa Pharma
Changzhou
Siyao
Fuhe Huaxing
Hanmei Pharma
Kelun Pharma
Reyoung
Pharma
Shenyang
Xinma
Changsheng
China National
Biotech Group
Shenzhen
Kantai
Zhejiang
Tianyuan
Sinovac
Yangsheng
5.9%
7.3%
X%
Source: Citi Research (November 2012), other analyst and market research reports, industry data, company accounts, PharmaVentures analysis
2.5% 1.7%
13.1%
2.6%
7.1%
1.3%
= Share of pharmaceutical market for therapeutic class
Emerging Markets | 15 Private and Confidential
Aging population, more active lifestyles, greater willingness/ability
to treat conditions and growing number of orthopaedic surgeons;
at least 3 notable domestic players (Weigao, Kanghui & Trauson).
15% plus growth forecast
$1.2bn
The total medical device market in China was estimated to be worth $22.8 billion in 2012 (22% growth). Forecast growth of 18-22%
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
20.0
22.5
2012E
$22.8bn
Diagnostic Imaging
$5.0bn
Growth from hospital upgrades and new hospitals. MNC
dominance (80% plus share); ~15% growth
Consumables Catheters and syringes expected to enjoy 25% type growth. Local
players majority market share (62%)
Orthopaedic
$4.5bn
Cardiac Rhythm
Management
Figures excludes pacemakers. ~15% growth
Dialysers $1.2bn
Hospital equipment (eg. infection control), dental, surgery etc.
PMD/Life Support $0.9bn
Linear Accelerators $0.5bn
Biochem. Analysers $0.4bn
Stents $0.3bn
Respiratory $0.3bn
Pacemakers $0.2bn
Other $6.3bn
Strong growth of 15-20% expected
10-15% growth
Strong local player (Microport); market growth of ~18%
Strong growth of 15-20% expected in line with IVD market
Low penetration rate (~28%) but growth rate of 11-13%
Strong growth of 15-20% expected; PMDs most in demand
Strong growth of 15-20% expected
$1.6bn
Note: (1) This figure expands the definition of the BMI market to include other items as well as incorporates different estimates of segment sizes
Source: Analyst and market research reports, industry data, company accounts, PharmaVentures analysis
China:
Medical device market breakdown
($bn)
Endoscopes $0.4bn Strong growth of 15-20% expected
Emerging Markets | 16 Private and Confidential
Orthopaedic
Biochem.
Analysers
Medical
Consumables
Stents
Diagnostic
Imaging
Shangdong
Weigao
Trauson
Kanghui
Beijing Libeier
Tianjin
Walkman
Suzhou Best
Mindray
KHB
Urit
Seeuco
7.0%
Shandong
Weigao
Jiangxi Hongda
Lepu Medical
PMD/Life
Support
Microport
JW Medical
Systems
(Biosensors)
Lepu Medical
Dalian Yinyi
Mindray
Landwind
Wandong
Xingaoyi
Anka
Neusoft
Goldway
Edan
Biolight
Dehaier
1.8%
21.9%
Dialysers
Linear
Accelerators
Cardiac
Rhythm Man.
Pacemakers Endoscopes
Shandong
Weigao
Chongqing
Shanwaishan
Guangzhou
Jihua
Jiangsu
Lengthen
Shinva
5.3%
Mindray
Lepu Medical
Seeuco
LifeTech
Respiratory
Lepu Medical
(Qinming)
Microport
Weigao
Guangzhou
Genial Tech.
Huangzhou
Hawk Optical
SMOIF
Chonqing
Jinshan
Huangzhou
Tonglu
Shanghai
Aohua
Huangzhou Jilin
Medical De-
vices (Kyoling)
Vincent Medical
2.2%
5.3%
X%
Source: Analyst and market research reports, industry data, company accounts, PharmaVentures analysis
1.3% 0.9%
19.7%
1.8%
4.0%
1.3%
= share of overall medical device market for the category
China:
Selected notable Chinese companies by medical device area
Emerging Markets | 17 Private and Confidential
Between 2010 and 2015, over 5,000 new hospitals are forecast to be constructed, adding over 1.9 million beds or an additional 57% of 2010
bed capacity. Total hospital bed capacity is forecast to reach 5.3 million beds in 2015 with an overall 7.2 million beds including those from
township hospitals and community service centres
0
25
50
75
100
125
2009 2010 2011P 2012P 2013P 2014P 2015P Year End
2015P
New hospitals will be larger with
average 404 beds vs. average
162 beds of existing hospitals
New hospitals will have more
facilities and a wider range of
capabilities and services
Huge expansion of community
service centres to provide
primary care services to ‘free up’
hospital capacity
New centres will have an
average 9.2 bed capacity vs. 5.2
of existing centres
Continuing reduction in township
hospitals particularly smaller
less efficient ones. Average
26.3 bed capacity to increase to
33.5 by 2015
Source: Citigroup report (Jan 2012), governmental data, PharmaVentures analysis
No of Hospitals/Health Centres (000s)
20.3
38.5
27.3
25.7
34.2
63.2
Hospital
Community Health Centre
Township Hospital
China:
The hospital construction cycle will boost equipment demand significantly
Emerging Markets | 18 Private and Confidential
Market valuations of different healthcare segments largely reflect variations in expected growth
China:
Healthcare valuations by different segments
5.0
10.0
15.0
20.0
25.0
30.0
35.0
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0
2013E
PER
(x)
Forward EPS Growth (%)
Notes: (1) Each regions/category represented by analyst selected number of quoted companies; forward EPS growth periods of different categories may not be exactly the same
(2) Market data as of 30 October 2013
Source: Analyst reports, company accounts, Capital IQ, PharmaVentures analysis
less
expensive
more
expensive
Life
Science Tools
Some segment valuations may
reflect scarcity of ‘pure plays’
High growth rates of newer areas
such as CROs and diagnostic
laboratories reflect continuing
development of China healthcare
market as high value products and
services start to penetrate the
market
Pharma
Distribution
CROs
Medical
Devices Pharma
Hospitals
Diagnostic
Labs
Emerging Markets | 19 Private and Confidential
Enterprise Value to Equity Value to
Date Target
Sector
Target Acquiror 100%
Enterprise
Value
Revenue EBITDA EBIT Net
Income
Net
Assets
Oct 13 Hospital Foshan Chancheng Hospital Shanghai Yicheng Hospital IM
(Fosun Group) (China)
RMB1.1bn 2.2 x n.a. n.a. n.a. 3.3 x
Aug 13 Diagnostic
imaging centers Concord Medical Services
(38%)
Management (China) $458m 3.2x 7.7 x 13.3 x 14.2 x 0.8 x
May 13 Injectables based
generics Kanghong Sagent (50%) Sagent Pharmaceuticals (US) $25m n.m. n.m. n.m. n.m. 1.5 x
Mar 13 Pharmaceuticals/
vaccines Simcere Pharmaceuticals Hony Capital (China) $580m 1.7 x 16.2 x 39.5 x 53.6 x 1.5 x
Jan 13 Medical devices Trauson Stryker (US) HK$5.8bn 7.8 x 14.3 x 17.7 x 21.9 x 3.8 x
Jan 13 Pharmaceuticals/
plasters Guilin Tianhe Pharmaceuticals China Resources Sanjiu
(China)
RMB601m 1.7 x n.a. n.a. 13.4 x 4.8 x
Dec 12 Pharmaceuticals Hunan Dongting Pharma Fosun Pharmaceutical (China) RMB753m 2.5 x n.a. n.a. 24.3 x 5.0 x
Nov 12 RNA detection
solutions Haoyuan Biotech PerkinElmer (US) Up to $68m n.a. n.a. n.a. n.a. n.a.
Sep 12 Medical devices China Kanghui Medtronic (US) $816m 12.3 x 24.7 x 32.2 x 40.9 x 4.2 x
Jul 12 Immuno-
diagnostics Changchun Bioxun Shinva (China) RMB418m 5.2 x n.a. n.a. 11.6 x n.a.
Jun 12 Orthopaedic
products Wuhan Dragonbio (51%) Mindray (China) $70m 9.0 x n.a. n.a. n.a. n.a.
Mar 12 Hospital Chang’an Hospital Concord Medical (China) RMB477m 1.2 x n.a. n.a. n.a. n.a.
Sep 11 Orthopaedic
implants Suzhou Best Microport (China) RMB110m 5.0 x n.a. n.a. 12.2 x n.a.
Sep 11 Pharmaceuticals 4 subs. of Beijing Pharma Shanjiu Medical (China) $65.2m n.a. n.a. n.a. 20.4 x 1.8 x
Source: Analyst reports, company accounts, Capital IQ, press articles, PharmaVentures analysis
China:
Selected recent M&A transactions in China healthcare
Emerging Markets | 20 Private and Confidential
Enterprise Value to Equity Value to
Date Target
Sector
Target Acquiror 100%
Enterprise
Value
Revenue EBITDA EBIT Net
Income
Net
Assets
Sep 11 Drug distribution Shangyu Medicine Co. International Pharma (China) RMB80m 0.2 x n.a. n.a. 28.7 x n.a.
Aug 11 Molecular
diagnostics Shanghai Yuanqi Shanghai Pharma (China) RMB430m 0.4 x n.a. n.a. n.a. n.a.
Jul 11 Pharmaceuticals C&O Pharmaceutical Tech. Shionogi & Co (Japan) S$332m 3.3 x 11.3 x 12.6 x 15.6 x 4.4 x
Jun 11 Drug eluting
stents JW Medical (50%) Biosensors (Sin) $1.04bn >20x n.a. n.a. >45x n.a.
Apr 11 Drug marketing &
distribution Tianjin Precede China Medical System (China) HK$1.4bn 3.9-4.3 x n.a. 14.5-16 x 17-19 x 12-14 x
Oct 10 Drug distribution Yong Yu (Zuellig Pharma) Cardinal Health (US) $470m 0.47 x ~12-16 x n.a. n.a. n.a.
Oct 10 Dental labs New Perfect Q&M Dental Group (Sin) RMB200m n.a. n.a. n.a. 12.5 x 2.9 x
Oct 10 Consumer
healthcare BMP Sunstone Sanofi Aventis (F) $521m 2.68 x 22.8 x 26.4 x 45.1 x 3.2 x
Oct 10 Healthcare
services Quality Healthcare Fortis Healthcare (India) HK$1.5bn 1.50 x 17.4 x 22.2 x 27.0 x n.m.
Nov 09 Vaccines Tianyuan Bio-Pharma Novartis (CH) $130m 5.9 x n.a. n.a. n.a. n.a.
Sep 09 Diagnostic labs DA Diagnostics SB China VC/Fosun (China) $49m 1.23 x n.a. 8-12 x n.a. n.a.
Oct 08 Medical diag-
nostic services Shanghai Kang Pei Mingyuan Medicare (China) RMB310m 1.71 x n.a. 14.3 x 14.8 x 3.3 x
Oct 08 Pharma
distribution Nuo Hua American Oriental
Bioengineering (China)
RMB200m 0.5 x n.a. n.a. 17.2 x n.a.
Jan 07 Diagnostic
imaging Landwind Medical MBO/Citigroup (Asia) RMB818m 2.8 x 13.8 x 15.6 x 17.8 x 3.2 x
Source: Analyst reports, company accounts, Capital IQ, press articles, PharmaVentures analysis
China:
Selected recent M&A transactions in China healthcare (cont’d)
Emerging Markets | 21 Private and Confidential
Latin America:
A region with nearly $200 billion in 5 year healthcare spend growth
* Defined as ‘Global Middle Class’ earning between $6,000 to $25,000 per year
Source: Analyst and market research reports, industry data, company accounts, IMF, PharmaVentures analysis and estimates
Latin America is one of the fastest growing large EM regions for healthcare spend and presents a considerable business opportunity for
Western players as well as EM players
Huge middle class driving healthcare demand
Latam
China
Asia Pacific 8
India
2012 GDP
per Capita
Est. Size of
Middle Class*
$10,052
$6,076
$5,445
$1,492
200m
175m
100m
50m
Pop. of Top
10 Cities
70m
115m
65m
75m
Mexico
Healthcare market
(2012): $73bn; growth
7-9%
Pharma market (2012):
$12.4bn; 7-10%
growth Brazil
Healthcare market
(2012): $203bn;
growth 8-10%
Pharma market (2012):
$26.8bn; 7-12%
growth
Argentina
Healthcare market
(2012): $44bn; growth
~10%
Pharma market (2012):
$8.7bn; 7-10% growth
Other Brazil Sectors
Medical devices
Clinical diagnostics
Diagnostic imaging
Healthcare IT
Medical tourism
Orthopaedics
Size
$5.9bn
$0.6bn
$0.6bn
$0.5bn
~$1.0bn
$0.4bn
Growth
13-16%
10%
12%
12%
>20%
13-16%
2017: Add.
Middle Class*
80m
330m
120m
100m
Emerging Markets | 22 Private and Confidential
Latin America:
Summary of selected Latin American pharmaceutical markets
Brazil Mexico Venezuela Argentina Colombia Chile
2012E Market Size
12-17E Growth
Industry Structure
Market
Distribution
Pharmacies
End-Users
Fragmented;
domestic manu-
facturers (300+)
account for ~80% of
market
Primarily branded
generics (60%);
patented 20%; OTC
~16%
$26.8 billion
7-12%
$12.4 billion $8.7 billion $9.6 billion $4.2 billion $3.3 billion
7-10% 7-10% 7-10% 7-12% 7-10%
Relatively frag-
mented; new
channels developing
(eg. supermarkets)
~25,000 pharm-
acies; chains and
supermarkets 30%;
rest SMEs
20-30% hospitals,
70-80% pharmacies
~230 companies,
50% local with 60%
of market; many
MNCs present; 6 of
10 largest are local
Primarily patented
and branded
generics; OTC~14%
Dominated by
Pharma Star
(~65%) co-owned
by pharma groups
~12,000 pharm-
acies; limited chain
presence (5% by
number)
86% pharmacies;
13% hospitals; 1%
other
~33 manufacturers,
dependent on
imports; some
notable locals (eg.
Grupo Farma)
Generics ~37%;
patented ~39%;
OTC 24%
Strong state
presence,
particularly the infra-
structure
~6,000 pharmacies;
top 2 have 30%
share
Principally
pharmacies
~180 producers;
prominence of
internationals with
notable locals (eg.
Lafrancol)
Patented >50%;
OTC ~15%
~80% wholesalers;
20% government
Highly fragmented,
but chains allowed;
top 5 have ~20%
share
Principally
pharmacies/retail
(71%) and hospitals
(8%)
~40 producers; top
5 have ~24% of
market; international
players mainly
European
Unbranded generics
32%, patented 40%,
18% OTC
Concentrated in 3
pharmacy chains
(Cruz Verde, Ahum-
ada & Salcobrand
3 major pharmacy
chains control over
90% of market
80% pharmacies
Source: Analyst reports, governmental publications, BMI (2013), EIU, IMS, PharmaVentures analysis
Dominance of
internationals (65-
75%) but rapidly
growing local
industry (recent
consolidation)
Primarily branded
generics of
internationals; ~12%
patented; OTC
~17%
Relatively frag-
mented; top 3 have
~45%+ share, rest
~3,000 wholesalers
Highly fragmented,
but chains allowed;
top 5 have ~20%
share
Principally
pharmacies/retail
(71%) and hospitals
(8%)
Emerging Markets | 23 Private and Confidential
Latin America:
Road map of Brazilian healthcare sector
APIs
Source: PharmaVentures research
CROs
Pharma
Medical Devices
CSOs
Hospitals
Amil
Santa Catarina
Santa Casa
Rede D’Or
Hospital IT
3rd Party
Labs
WPD (Agfa)
Web Sistemas
DASA
Fleury
Patients
Chemical Drugs Biologics Vaccines
Distributors
Pharmacies
Italfarmaco
ACS Dobfar
Aché Labs
BIOLAB
Cristália
Eurofarma
EMS
RaiaDrogasil
DPSP SA
Pague Menos
Panpharma
Profarma
Prodoctor RX
Pharmexx Brazil
Baumer SA
Ortosintese
Fanem
Biomecanica
Samtronic
Protalix
Indar
Fiocruz
Intrials
Eurotrials
Emerging Markets | 24 Private and Confidential
Enterprise Value to Equity Value to
Date Target
Sector
Target Acquiror 100%
Enterprise
Value
Revenue EBITDA EBIT Net
Income
Net
Assets
Sep13 Pharmaceuticals Laboratorios Andrómaco
(Chile)
Grünenthal (Germany) CLP 227bn 2.4 x 14.0 x 17.0 x 27.1 x 4.2 x
Apr 13 Consumer health-
care/nutrition Grupo Nutrisa (Mexico) (33%) Gruop Herdez (Mexico) MXN 2.4bn 2.1 x 13.6 x 17.3 x 28.2 x 4.8 x
Feb 13 Private healthcare
services Red Salud UC (Chile) (40%) CHRISTUS Health $513m ~1.7 x n.a. >50 x >100 x 0.9 x
Jan 13 Pain relief
products Tafirol (Argentina) Genomma Lab (Mexico) $26.9m 2.2 x n.a. n.a. n.a. n.a.
Dec 12 Pharma manu-
facturing Manufacturing facility of
Hypermarcas (Brazil)
Avert Laboratórios (Brazil) $17m n.a. n.a. n.a. n.a. n.a.
Nov 12 Animal health Centrovet (Chile) Virbac (France) $61.4m 1.4 x n.a. n.a. n.a. 3.6 x
Oct 12 Pharmaceuticals Meizler Biopharma (Brazil) UCB (Belgium) $216m 4.6 x n.a. n.a. n.a. n.a.
Oct 12 Managed
healthcare Amil Participacoes (Brazil) UnitedHealth (US) B$11.5bn 1.1 x 35.1 x 64.9 x n.m. 8.0 x
Sep 12 Dental radiology
services Papaiz Associados Diagnóst-
icos por Imagem (Brazil
Clidec and Fleury Centro R$18.4m 1.4 x 5.0 x n.a. n.a. n.a.
Sep 12 Diagnostic
centres Sonorad I (Chile) Integramedica (Chile) $15m 1.1 x n.a. n.a. n.a. n.a.
Jul 12 Pharmaceuticals Lafrancol (Colombia) CFR International (Chile) $562m 2.8 x n.a. n.a. n.a. n.a.
Jun 12 Pharmaceuticals Sanobiol (Brazil) Cristalia (Brazil) ~B$100m 1.3 x n.a. n.a. n.a. n.a.
May 12 Pharmaceuticals Meizler Biopharma (Brazil) UCB (Belgium) $216m 4.6 x n.a. n.a. n.a. n.a.
May 12 Pharmaceuticals Multilab (MICPF) (Brazil) Takeda (Japan) B$540m 3.9 x n.a. n.a. n.a. n.a.
Source: Analyst reports, company accounts, Capital IQ, PharmaVentures analysis
Latin America:
Selected recent M&A transactions in Latam healthcare
Emerging Markets | 25 Private and Confidential
1
For many international Western healthcare companies, it is vital to determine a growth strategy that both strengthens its core Western markets
whilst expanding into EMs. Meaningful EM growth strategies may be substantially integral with core DM activities
Principal growth components applicable to most Western companies include:
Innovation driven growth
DM Angle EM Angle
DM orientated R&D:
DM developed products for principally DMs and high-
end segment of EMs (eg. patented drugs)
Potential option to manufacture in EMs (as
applicable)
EM centre for R&D:
EM developed products with principal applicability in
EMs but also potentially in DMs; likely to also involve
EM production (eg. medical equipment)
2 EM driven growth DM export model:
DM products exported to EMs, with many for high-
end segment of markets in EMs (eg. diagnostic
imaging equipment)
Adapted products exported to EMs for wider market
penetration
EM ‘growth platform’ model:
A proper ‘growth platform’ is developed in EMs that
can encompass R&D, production, marketing and
sales, servicing etc.
EM HQ is centre or ‘hub’ for development of EM
franchise
3 Consolidation driven
growth
DM consolidator:
Add market share in DMs and extract consolidation
synergies
EM acquisitions:
Acquire complementary EM businesses, extracting
consolidation synergies from EM ‘growth platform’
and from DM activities (as applicable)
Emerging Market Strategy:
Formulating a coherent growth strategy
Emerging Markets | 26 Private and Confidential
Increasing Impact on Organisation
The whole spectrum of collaborative partnerships can be used, often in conjunction to implement an overall EM strategy from simple distribution
agreements to full scale majority control acquisitions
Distribution/
Sales Agreements
Out-licensing
Agreements Strategic Partnerships
50:50 Type
Joint-Ventures
Majority Control
Acquisitions
Simple distribution
agreements to more
substantial marketing and
sales agreements
Out-license one or more
products to EM parties
with distribution rights in
one or more EM
territories
Strategic partnership that
can involve a range of
activities (scope) and
have differing governance
structures
Equity based joint-venture
typically involving specific
products and/or
geographies
Acquisition with control
Example:
Licensing, co-R&D deal
between AstraZeneca
and Hutchison China
Meditech (cancer drug)
Example:
3SBio and Isotechnika
Pharma strategic
partnership to develop
and commercialise
Voclosporin in China
Examples:
Anti-infectives 50:50 JV
between DSM and
Sinochem ($270m)
Bayer/Cadila marketing
and distribution JV in India
Examples:
Sanofi acquisition of
Medley ($660m) in Brazil
Medtronic acquisition of
Kanghui ($816m)
Example:
Misonix (ultrasound
medical devices)
distribution agreement
with CICEL in China
Increasing importance of having right partner/target, strategic alignment,
management ‘fit’ and governance
Emerging Market Strategy:
Development options for Emerging Markets
Emerging Markets | 27 Private and Confidential
Emerging Market Strategy:
Illustrative investment metrics of establishing an EM ‘hub’ in China by M&A
We set out below an illustrative example of the key financial metrics of a hypothetical but representative international Western (medical device)
company acquiring a target in China to establish an EM hub and to illustrate the potential synergies extractable and their impact on IRR
It sets out an approach for the financial evaluation of an acquisition/partnership and provides an example quantification of the potential synergy
value of entering into China on an EM ‘hub’ strategy
Source: Analyst reports, PharmaVentures analysis
* DCF/Present Value of standalone assumes 18% discount rate, implying investment price is below inherent DCF Value, synergies assume 35% discount rate to reflect, in part, execution risks
60
80
100
120
140
20% +17% +11% 48%
0% +46% +49% 95%
IRR of Acquisition
Synergy Value as % of
Acquisition Price*
Synergy
Value from
Acquisition
Distribution of Acquiror products
through Acquiree channels
Distribution of Acquiree products
through Acquiror EM channels
Tangible synergies from NT know-how
transfer
Selected scale and scope
synergies and productivity
improvements
Expansion of EM ‘hub’
Flow back of Acquiree products into
Acquiror DM territories
DCF Value* ($m)
$75m
$146m
Standalone* Near Term*
Synergies
EM ‘Hub’ Dev.*
Synergies Total Value to*
Acquiror
Emerging Markets | 28 Private and Confidential
Emerging Market Strategy:
Potential timeline for partnering/acquisition in EMs
Phase 1
Review/determine
strategy
Phase2
Active Partner/Target
Qualification
Phase 3
Due Diligence and
Negotiations
Phase 4
Closing and
Completion
Research long list of potential
partners/targets
Enter into structured dialogues with
a shortlist of candidates – discuss
scope & key deal principles
Field visits to prospective
partners/targets; on-the-ground
market research
High level determination of
potential synergies with each
partner/target
Comparison of prospective
partners/targets against key
strategic and deal criteria
Select a top prospective
partner/target
Enter into negotiations
Heads of terms signed – exclusivity
Final contractual negotiations
Closing; signing of legal
documentation
Completion conditions, including
necessary approvals
Completion
Which EM markets should the
company focus on?
Which areas of the company can
play well into EMs
Validation of proposed strategy
by on-the-ground research,
including discussions with
relevant people in selected EMs
Determine a long list of potential
partners/targets for selected EMs
Enter into due diligence (dd) and
negotiations
Financial, legal, and commercial
due diligence, including on-the-
ground research into prospective
partner/target, management,
shareholders, customers,
suppliers etc.
Firm up business and financial
case of prospective partner,
including potential synergies
Prepare and negotiate legal
documentation
Finalise key terms post dd,
including financial for a deal
~4-10 weeks* ~2-3 months ~3-4 months ~Approvals dependent
Emerging Market transactions are typically characterised by greater complexity, longer timelines and higher risk of failure to close. Given this,
we believe that proper qualification of candidates early on will help significantly reduce risks in a deal
Below is a timeline/activity flow chart that places emphasis on upfront research and partner/target evaluation to select best candidate before
entering into negotiations in earnest
* Depends on, inter alia, whether review or determination of EM strategy
Emerging Markets | 29 Private and Confidential
The following are some typical transactional issues and considerations that are particularly applicable to EM deals. Having team members
and/or advisors on board who are familiar with EM deals will make process more effective and help reduce costs, time and risks
Constrained Due
Diligence
Often not possible to perform comprehensive due diligence in a timely manner. Missing documents, potential
low quality of financial information, extensive related party transactions and undisclosed contingent liabilities can
be some of the key features of EM due diligence. Notable other areas are tax, labour liabilities and non-
compliant business practices. Local due diligence firms who have local knowledge can be highly valuable
More Limited
Warranties
Obtaining warranties customary in West may not always be possible and enforceability varies
More Regulatory &
Approval Hurdles
There are typically more regulatory and approval hurdles to get through; many EM markets such as China have
capital controls and conditions on FDI
Align Consideration
Structure
If possible, aligning consideration to reflect uncertainties; deferred payments and earn-outs can help reduce risk
of a transaction. This is particularly do-able with private or founder businesses
Structuring Deal The acquiring vehicle should be structured to optimise tax planning; often this can involve off-shore vehicles;
there may also be profit repatriation considerations
Aligning Strategy and
Interests
Often in partnerships, strategic priorities and interests are not aligned and making the partnership sufficiently
aligned is a key part of getting the scope and governance right
Emerging Market Strategy:
Some key transactional considerations
Non-Compliant
Practices
Non-compliant business practices are quite common in EMs. Need to assess real risks and determine which
are manageable and which are potential deal breakers
More Protracted
Process
Process often more protracted and less structured; target and advisors can be less familiar with M&A, which
makes the process less straightforward and often difficult, resulting in more time and effort required
Emerging Markets | 30 Private and Confidential
Introduction to PharmaVentures:
Overview
PharmaVentures is a leading life science and healthcare advisory firm providing M&A advisory, licensing/product/IP transaction
services, strategy/market advisory, commercial due diligence, and expert services such as valuation, IP and expert testimony
Founded in 1992 and based in Oxford and London, we have completed over 600 assignments for global pharma, biotech, medtech
and healthcare companies as well as for financial institutions such as private equity firms and international banks
Our M&A/transaction clients include industry leaders such as Novartis, Merck, Sanofi and UCB, and high profile financial investors
including Gulf Capital, 3i, Barclays and UBS; they also include leading innovation companies and privately owned businesses
Our multi-disciplinary teams are drawn from the life science and medical industries, investment banking and strategy consulting,
providing a holistic integrated offering to help clients in evaluating and executing transactions. We bring the exacting rigour and
quality service of top advisory houses and investment banks but flexibly tailored to our client’s specific needs
PharmaVentures operates globally and has a wide network of associates that extend our geographic reach as well as strengthen
our industry expertise. These market sector and specialist experts can be brought into assignments as applicable
Emerging Markets | 31 Private and Confidential
PharmaVentures has developed expertise in a very broad range of life science and healthcare segments with extensive experience
in both Developed Markets and Emerging Markets
Introduction to PharmaVentures:
We have wide-ranging life science and healthcare industry expertise
Biopharma Other
Medical
pharma drugs/small
molecules
biologics/large
molecules
Healthcare
Services
diagnostic labs
diagnostic
imaging services
weight loss
programmes
drug/medical
distribution
pharmacies
medical/health
clinics
biopharma
packaging
vaccines
recombinant
DNA
siRNA/RNAi
living system
extractions
Health & Beauty /
Nutrition
clinical/medical
nutrition
nutraceuticals
food
technology
health and
wellness
nutrition
medical/
healthcare IT
Geographic
Experience
Europe
North America
Middle East
Australia/NZ
China/East Asia
India/South Asia
Africa
Russia
consumer
healthcare
products/OTC
Medical
Devices/Medtech
diagnosis
devices
therapeutic
devices
surgery devices
drug delivery
nano-
technology
antibodies
Latin America
gene therapy
formulations
generics
novel
biosimilars
dental
Contract
Organisations
research
clinical
manufacturing
sales
data
management
surveillance
instruments/
tools
diagnostic
imaging
weight
management
laser and cosmetic
medtech
skincare
Emerging Markets | 32 Private and Confidential
PharmaVentures has developed a strong reputation for exceptional quality work, resulting in an increasing number of assignments, from global
pharma and PE firms to promising high growth companies and early stage innovation firms. Our clients include:
Introduction to PharmaVentures:
We work with leading life science and PE clients worldwide
Emerging Markets | 33 Private and Confidential
PharmaVentures is particularly active in Emerging Markets and developed extensive experience in strategy and M&A in these regions
PharmaVentures has an experienced multi-
lingual team that has successfully transacted
many deals in Asia Pacific, India, MENA,
sub-Sahara Africa, CIS and Latin America
We have a large proprietary database of EM
life science and healthcare companies who
could be partner or acquisition candidates
PharmaVentures has wide ranging
knowledge of Emerging Markets and the life
science and healthcare sectors within those
markets, including the government and
regulation side
We have developed an extensive network of
relationships and contacts (commercial,
governmental, academic) that can the
applied in client projects
We work with local associates who can be
brought into to support projects,
complementing client and PharmaVentures
teams
Help put structure into EM M&A process and
increase effectiveness and efficiency of
initiative
PharmaVentures can help determine the
best growth strategy for EMs and optimal
routes for expansion
We can identify and qualify suitable
acquisition/partner candidates against client
criteria
PharmaVentures can provide advisory and
execution support for an M&A/partnership
transaction
We can provide a valuation of the target or
strategic partnership
PharmaVentures can provide strategic due
diligence to complement other forms of due
diligence to support the investment case for
acquiring or partnering with a proposed
candidate
First Class EM
Experience
Proprietary EM
Target Database
Wide-Ranging
EM Knowledge
Extensive EM
Network
Local ‘On-The-
Ground’ Presence
Why PharmaVentures? Services PharmaVentures can Provide
Determining EM
Growth Strategy
Target/Partner
Determination
M&A Advisory
Target/Deal Valuation
Due Diligence Support
Introduction to PharmaVentures:
How PharmaVentures can help in Emerging Markets
EM M&A Support
Emerging Markets | 34 Private and Confidential
Introduction to PharmaVentures:
Selected senior EM team members
Dr Fintan Walton
Founder, CEO
Strategy consulting and life science management experience
Over 25 years experience in the life science industry
Founded PharmaVentures in 1990
Clients have included major pharmaceutical and biotechnology
companies, as well as chemical, medical device, generics and
OTC companies. His clients have also included major banks and
PE and VC groups
Before founding PharmaVentures, he was in management
positions at Bass and Celltech
Educated at University of Michigan (PhD) and Trinity College,
Dublin
Ping Shek
Vice President
Over 20 years in M&A, corporate finance and strategy consulting
with last 5 years specialising in life sciences and healthcare
Led or transacted over $20bn in completed deals, mostly
international cross-border; experienced in transacting deals in over
20 countries, in Developed Markets & Emerging Markets
EM experience includes: China, India, Russia, Egypt, Turkey,
Taiwan, South Africa, Eastern Europe, Mexico, Brazil, UAE, and
Indonesia
Clients have included: Glaxo, Pharmacia (now part of Pfizer),
Becton Dickinson, Smith & Nephew, Rhone-Poulenc (now part of
Sanofi), Shell, The Coca Cola Company (TCCC), Aventis
Formerly with Morgan Stanley, Lazard and Monitor Group
MA in Physics from Oxford University and MBA from London
Business School
Issac Jacob
Senior Director
Over 11 years in M&A and corporate finance, principally in
healthcare and consumer sectors
Led and executed advisory and financing projects exceeding
$30bn in North America, Europe and Emerging Markets
EM experience includes: China, India, Malaysia, Thailand, Korea,
Chile, Guinea, Uganda, Rwanda and Eastern Europe
Private equity assignments with Apax partners, KKR and CVC
Formerly with Citigroup, JP Morgan, Bank of America and
Standard Chartered Bank
Industry clients have included: AstraZeneca, Almirall, DuPont
Merck, Merck KGaA, Sinochem, Capio, Integrated Health
Services, MedPartners
BA Economics from Columbia College, MA in International Affairs
from Columbia University and MBA from Columbia Business
School
Jansen Jacob
Director
Over 15 years experience in life sciences sector covering research
and development, licensing and litigation support
Experienced transactions advisor, completing multiple
manufacturing divestments for pharma
Particular expertise in business strategy, commercial due
diligence, deal structuring and pharmaceutical (asset) disposals
such as R&D and manufacturing sites
Covers South Asia
Clients have included: Merck, Sanofi, Novartis, UCB
Chemistry degree from Ghandiji University, India, DPhil in
Biochemistry from Sussex University, and MBA from Oxford
Brookes University
Emerging Markets | 35 Private and Confidential
Appendix 1:
Increasing intra-EM trade
The next decade will see, barring a global disruptive event, the most rapid growth in world trade in history in terms of size and pace
Split of Global World Trade to 2020 Top 10 Countries by Trade
0
10,000
20,000
30,000
40,000
50,000
60,000
2010 2015P 2020P
Intra DM
41.7%
Intra DM
31.2%
Intra DM
25.1%
DM-EM
38.5%
DM-EM
37.4%
DM-EM
37.5%
($bn)
23%
159%
9%
34%
62%
Intra EM
19.8%
Intra EM
31.3%
Intra EM
37.5%
61%
Key Implications Trade involving EMs will rise to nearly 75% by 2020; growing intra-EM trade will increase ‘decoupling’
World trade will be increasingly driven by EMs and predominantly so within next two decades
Western companies with an international growth strategy may need to consider how they will capture the
intra-EM trade aspect of their sectors
International company strategies likely to involve development/expansion of key EM ‘hub(s)’
Source: Analyst reports, PharmaVentures analysis Source: Analyst reports, PharmaVentures analysis
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2010 2015P 2030P
DM
81.7%
DM
64.1%
DM
41.3%
($bn)
208%
60%
304%
EM
18.3%
EM
35.9%
EM
58.7%
24%
Emerging Markets | 36 Private and Confidential
Appendix 2:
EM M&A activity – 1 in 4 M&A deals now involve Emerging Markets
EM M&A activity has increased phenomenally since 2000 and will be a key plank of global M&A activity. Historically Western companies have
been taking the lead in M&A driven external development but increasingly EM companies have been expanding their acquisition activity
Source: BCG (September 2013), Thomson ONE Banker
0
20
40
60
80
100
(%)
= EM involvement
= DMs only
9% 9% 9%
91% 91% 91%
83% 75%
17% 25%
EM Share of Global M&A Activity
90-94 00-04 05-09 09-12 95-99
60%
40%
60% of all EM deals involve BRICs
M&A Activity in EMs (2010-2012)
Brazil
Russia
India
China
Deal
Volume
26%
17%
11%
47%
Deal
Volume
9%
46%
13%
32%
= BRIC countries
= Other EM countries
Emerging Markets | 37 Private and Confidential
Contact details
PharmaVentures Ltd
Web: www.pharmaventures.com
Issac Jacob
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Email: [email protected]
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Direct Line: +44 1865 332706
Mobile: + 44 7960 519 116
Email: [email protected]
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