Chinese biotech sector is blowing hot as M&A and IPO deals surge amid Covid-19 pandemic

IPO deals in the broad health care sector have surpassed all of 2019 volume amid a surge in demand from investors

Many US dollar investment funds have been looking for opportunities, with five buyers chasing one target on average: Datasite

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The Covid-19 pandemic has raised awareness on the importance of health care and increased the allure of biotech assets among global investors: Photo: AFP

Published: 7:15pm, 9 Sep 2020Updated: 7:35pm, 9 Sep 2020

China’s biotechnology merger and acquisition (M&A) transactions have almost doubled this year, with interest perking up among investors amid a global rush to develop a cure for the Covid-19 disease.

Some 19 deals worth US$3.1 billion were recorded in the sector that focuses on the research and development of novel drugs and medical devices from January to June this year, compared to 16 transactions totalling US$1.74 billion in the preceding six months, according to data compiled by Mergermarket.

In the IPO market, 19 deals in the broad health care industries worth US$3.9 billion were recorded in the year’s first half, it said. The volume has surpassed US$3.8 billion from 16 transactions in all of last year.

“Many US dollar investment funds have been eager to grab hold of opportunities in biotech,” said Toto Ku, head of Greater China at Datasite, which operates virtual data rooms for sellers and buyers to discuss deals in a secure environment. “On average, we saw five companies pursuing one M&A target.”

Some of the biggest biotech listings in Hong Kong since April 2018. SCMP

China stood out in the M&A market because investors have a new understanding of the importance of health amid the pandemic, said Zhu Jielun, chief financial officer in Shanghai at I-Mab Biopharma. Investors are also scouring for values in China amid efforts to fix its creaking health care system.

“Many investors have reallocated money from cyclical industries to health care,” said Zhu. “Even if there will be a slowdown in the rest of the year, capital-market fundraising in the sector will reach a historical high.”

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