Review and Prospect of M & A activities in China’s medical and health service industry from 2016 to 2021 From PWC

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PwC released the review and Prospect of M & A activities in China’s medical and health service industry from 2016 to 2021, which pointed out that the scale of medical service transactions exceeded 100 billion in 2021, reaching the highest level in six years. China’s medical and health undertakings are in the stage of vigorous development, and the investment in the medical and health industry returns to the source of value step by step.

In 2021, the transaction scale and number increased significantly

The report shows that from 2016 to 2021, the total transaction volume of China’s medical and health service industry exceeded 300 billion yuan, and the number of transactions exceeded 1500. In 2021, the overall disclosed transaction scale exceeded 100 billion yuan, and the disclosed transaction amount increased by 85% compared with 2020; The number of transactions reached 458, nearly doubling from 2020.

The average disclosed transaction scale of the medical service industry has increased for three consecutive years. The amount of a single disclosed transaction in 2021 was about 260 million yuan, an increase of 20% over 2020. In terms of large-scale transactions, there were 28 transactions of more than 1 billion yuan in the whole year, an increase of 17 compared with 2020, and the transaction amount increased by 52% year-on-year to 64.8 billion yuan.

The rapid growth of the medical and health industry benefits from the improvement of both supply and demand in China’s medical and health market. From the supply side, from 2016 to 2021, the number of medical and health institutions in China increased from 983000 to 1033000, and the number of medical institutions increased steadily. The aging of population structure, the growth of the proportion of people with chronic diseases, the improvement of residents’ health awareness and other factors continue to promote the growth of basic medical and health needs.

Relying on rich three-dimensional medical resources and huge market demand, the Yangtze River Delta, Dawan district and Beijing have always been active trading areas. The annual trading amount of Beijing, Shanghai, Guangdong Province and Zhejiang Province exceeded 10 billion, contributing nearly 70% of the trading amount and 65% of the trading volume.

Qian Liqiang, executive partner of PwC’s M & A services in mainland China and Hong Kong and M & A services in the medical industry, said that in the opening year of the 14th five year plan, the promulgation of the opinions on promoting the high-quality development of public hospitals in 2021 has built a new system for the regional development of medical institutions and set a new goal for the development of medical and health undertakings. With the formation and implementation of a number of specific implementation schemes, the development of the medical and health industry has entered a new situation, and the development theme of the industry has evolved from scale expansion to quality and efficiency improvement. This change indicates that from drugs, equipment consumables to medical services will gradually return to the source of value.

The trading volume of the three tracks increased significantly

According to the relative maturity, the development of each sub track of the domestic medical and health industry is ranked as follows: hospitals and clinics, out of hospital health management services and digital medicine. In 2021, the number and scale of M & A transactions in all sectors increased significantly.

In 2021, the hospital restructuring entered the final sprint stage, the large-scale expansion and resale of social run hospitals accelerated, and the amount and quantity of M & A transactions increased. In 2021, hospitals and clinics disclosed 138 transactions, with a transaction scale of more than 30 billion yuan. Various specialized courses have diversified development, and Ophthalmology, medical beauty and stomatology with consumption attribute continue to lead; Oncology, assisted reproduction, brain and other specialties with relatively rigid needs, strong treatment attributes and high technical requirements have emerged and gradually attracted capital attention.

The scale of M & A transactions of out of hospital health management increased in fluctuation. In 2021, the disclosed transaction amount of out of hospital health management was 24.4 billion yuan, accounting for 22% of the total investment in the medical and health service industry. There were 105 disclosed transactions, and the number of transactions doubled compared with 2020. The field of out of hospital third-party medical testing, rehabilitation and elderly care has attracted capital’s attention. Among them, due to the continuous impact of the epidemic, third-party medical testing has surged in the number and amount of transactions. In 2021, the number of third-party testing transactions accounted for more than 60% of the number of out of hospital health management transactions, and the transaction amount reached 24.4 billion yuan, accounting for 69% of the overall amount of out of hospital health management.

In 2021, the digital medical investment increased to 57.4 billion yuan, more than four times that of 12.6 billion yuan in 2019, accounting for nearly 50% of the total investment in the medical and health service industry. Digital medicine is a hot field in the whole year, in which online diagnosis and treatment, medical big data and medical AI investment and financing are active.

Digitization is reshaping the pattern of the medical and health industry in an all-round way. The normalization of the epidemic has consolidated the market value of remote diagnosis and treatment and driven the growth of a new round of digital medical sector. Digitization drives a new round of reform and innovation in medical services and technology from the bottom, so as to more efficiently meet the needs of people’s health management and diagnosis and treatment. With the implementation of digital medical products and services such as smart hospital construction, remote monitoring and diagnosis and treatment services, auxiliary diagnosis and treatment system development and surgical robots, the boundary of medical and health ecology will continue to extend, the forms of medicine, equipment and services will be diversified and integrated, and the opportunities of blue Ocean subdivision track will continue to emerge.

Qian Liqiang said that looking forward to the future, the capital market will pay more attention to the quality and efficiency of diagnosis and treatment. The normalization of epidemic prevention and control and remote diagnosis and treatment will be interdependent. Digitization will continue to penetrate all links of medical services, and the reform of medical and health formats will be carried out simultaneously. Innovation has become the core internal driving force of industry leading enterprises, and investors will help enterprises realize sustainable value creation in the process of exploring track opportunities and accelerating industrial integration.

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