China's medical device industry's annual M&A scale exceeds US$10 billion

According to Thomson Reuters data,2018China's medical device industry M&A scale reached in the year108.93US dollars, with significant growth in overseas M&A, overseas M&A events27times, and the M&A amount reached74.66US dollars, a year-on-year increase of464%。With the acceleration of industry consolidation, market concentration will further increase.

Chinese medical device companies are mainly located in the eastern coastal cities

According to the statistics of YaZhiwang, domestic medical device companies are mainly concentrated in the Pearl River Delta, Yangtze River Delta and Bohai Rim regions,As of2019year4month, there were about1.88ten thousandmedical device companies nationwide,3743companies,2558companies and1852companies respectively. The top three provinces and cities in terms of the number of medical device companies are Guangdong, Jiangsu and Beijing,

Fromthe regional distribution of listed companies(includingAshares and Hong Kong stocks), as of2018year-end, Guangdong province had the most listed companies, with17companies, followed by Beijing and Shanghai, with8companies and7companies respectively. The top three provinces and cities in terms of the number of medical device companies are Guangdong, Jiangsu and Beijing,

FromRegional distribution of listed companies' revenueIn terms of2018year,58listed medical device companies (includingAshares and Hong Kong stocks) achieved revenue of1136.8billion yuanamong which Guangdong province17listed companies achieved revenue of344.85billion yuan, accounting for30.3%Shandong Province4listed companies achieved revenue of236.39billion yuan, accounting for20.8%。

Domestic medical device companies are relatively small in size and have low market concentration.

Compared with international medical device giants, domestic medical device companies are relatively small in scale,2018year,The total revenue of the top ten listed companies in China's medical device industry is666.6billion yuan, only one-third of the revenue of Medtronic, an international medical device giant.

In terms of market concentration, the top ten medical device companies in China2018year's total revenue was666.6billion yuan, with a total market share of12.6%Market concentration is still far lower than international levels.

The reasons for the low market concentration in China's medical device industry are mainly due to the relatively single product lines of domestic companies in specific segments, which have not yet formed a comprehensive strength with significant economies of scale. There are many product categories and manufacturers in specific fields, resulting in relatively dispersed industry concentration.

——Domestic companies accelerate overseas M&A, and the process of concentration accelerates.

In recent years, with the ceiling effect of the medical device market segment becoming apparent, cross-border M&A has become the main way to achieve growth in corporate business acquisitions. In recent years, the M&A process in China's medical device industry has accelerated significantly,The industry's M&A scale increased from2014year's28.2US dollars,125items to2018year's108.93US dollars,205items.

In addition, the number of overseas M&A targets in China has increased significantly. According to Thomson Reuters data,2018China's overseas M&A scale increased sharply in the year,2018In the year, the number of overseas M&A events by mainland China companies was27times, a year-on-year increase of35%and the M&A amount reached74.66US dollars, a year-on-year increase of464%。

With the acceleration of consolidation in China's medical device industry, cross-border and cross-industry M&A is accelerating, and market concentration will further increase.