This is why Chinese companies are suddenly targeting Australian healthcare businesses
- Details
- Category: China
- Created: Monday, 25 May 2020 20:04
- Written by Chris Pash - Business Insider
Chinese companies have suddenly taken an interest Australian healthcare companies, going from nothing to spending $5.5 billion on 16 deals over the last three years.
About 80% of the deals are by privately owned Chinese companies seeking the Australian advantage, including advanced technology application, quality care facilities, strong management systems and that clean, green and healthy image Australian-branded products have in China.
Many have health sector experience back in China and they have shown a willingness to make repeat investments.
The significance of the sums being spent in Australia becomes clear when comparing the local spend to the $US4.7 billion ($A5.7 billion) Chinese investment into the much bigger US health, pharma and biotech market over three years.
According to a study by KPMG and The University of Sydney Business School, the investment surge is concentrated in the health supplement and medical treatment sectors. So far, there has been no significant investment in pharmaceuticals, biotechnology or aged care.
And there’s more to come.
“As China’s aged care industry develops and its medical treatment sector matures there will be a greater need for these qualities and more demand for the businesses providing them,” says Doug Ferguson, Head of Asia & International Markets at KPMG Australia.
“For Australian companies, Chinese investment presents an opportunity to access capital and new markets with new supply chains with established local partners. The outcome of increased investment will be a highly competitive Australian healthcare sector that can accelerate exports as well as continue private sector investment in research and improve technological capabilities.”
The price for healthcare increased by 6% last year, according to analysis by Macquarie Wealth Management.
And the Chinese government has started the process to make it easier for foreign pharmaceutical companies to get approvals to sell their drugs in China where approvals can take a long time because of capacity bottlenecks for certified clinical trials.
The KPMG report, Demystifying Chinese Investment in Australian Healthcare, says $2.55 billion was invested in Australia in 2015, $1.35 billion in 2016 and $1.58 billion in 2017 through several very large deals.
Among them was the $930 million acquisition of hospital operator Healthe Care, Australia’s third largest corporate private hospital operator, in 2015 and the acquisition of vitamins and supplements maker Swisse Wellness for more than $1.5 billion.
Major deals in 2017 included the $800 million investment in Ansell’s Sex Wellness Division by Humanwell Healthcare and CITIC capital, and the $337 million in PRP Diagnostic Imaging by Hengkang Medical Group.
China’s central government’s Healthy China 2030 plan provides a clear framework for the country’s health sector development priorities. China’s healthcare spending is expected to grow by 8.1% a year over the next five years.
“The patterns that are emerging in China’s domestic healthcare sector are likely to strengthen investment demand in the coming years as healthcare assets become a key component of many Chinese investor’s portfolios,” says Jenny Yao, KPMG China’s Head of Healthcare
The list of reasons given by Chinese companies for choosing to invest in Australia include:
- Mature business services and technology
- Australia is ranked by Chinese first among English-speaking countries as a destination ahead of Canada, the UK and US
- A small time zone difference with China (2-3 hours)
- Stable political environment
- Low sovereign risks
- A transparent regulatory environment
- Long-term economic growth
- Cultural diversity
Hans Hendrischke, Professor of Chinese Business & Management at the University of Sydney Business School, says rising income, reforms to public healthcare and new consumer preferences for the ageing all suit Australian exporters.
“Rather than general health services, many Chinese companies seek to invest in specialist services, such as oncology, radiology, ophthalmology, IVF, and aged care,” he says.
“These services are replicable in the Chinese market and customised to fit the specific needs of China’s middle-to-high end consumer markets. Australian healthcare brands have an initial advantage in China due to their reputation for high quality products with consumers.”
Source : https://www.businessinsider.com.au/this-is-why-chinese-companies-are-suddenly-targeting-australian-healthcare-businesses-2018-2/amp
