The pharmaceutical industry is currently witnessing a surge in merger and acquisition (M&A) activities, largely driven by favorable government policies and increasing market demandRecent announcements from several companies, including Qianjin Pharmaceutical, China Resources Sanjiu, Bid Pharma, and Shenlian Biotech, indicate a robust environment for strategic moves within the sectorIndustry observers note that this trend is reflective of a critical phase in the evolution of the pharmaceutical landscape, where competition is not solely about individual products or technologies, but more about the ability to integrate pipelines and enhance product offerings across diverse therapeutic areas.

One case exemplifying this trend is that of Qianjin Pharmaceutical, which, on February 10, announced plans to purchase a 28.92% stake in Qianjin Xiangjiang Pharmaceutical from Zhuzhou Guotou and Liebang Kangtai through the issuance of sharesIn addition, they aim to acquire a 68% stake in Qianjin Xieli Pharmaceutical through a mix of cash payments and newly issued sharesThis move illustrates their strategy to consolidate their position in the market by enhancing their product pipeline.

Similarly, TianShili Holdings made headlines on August 5, 2024, unveiling a deal where its controlling stakeholder, TianShili Group, will transfer a total of 418 million shares—representing 28% of the company's total equity—to China Resources Sanjiu through an agreementThis shift in control underscores a pivotal moment for TianShili, as it transitions from one major player to anotherWith this acquisition, China Resources Sanjiu aims to leverage synergies within the traditional Chinese medicine sector, focusing on areas such as herb growing, innovative research and development (R&D), and intelligent manufacturing, thereby reinforcing its competitive edge across the entire industry chain.

Additionally, as part of its strategic growth initiatives, Bid Pharma announced on January 2025 its investment in Zhuhai Weibo Investment Co., which is set to acquire 100% of Combi-Blocks, Inc

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This transaction aligns with Bid Pharma's goal to strengthen its core business competitiveness, increase market share, and diversify its product offerings, thereby providing new momentum for its international business ventures.

Alongside these corporate maneuvers, the establishment of industry-focused M&A investment funds is gaining momentumLocal governments are actively formulating supportive policies and assembling acquisition fundsFor instance, as proposed in December 2024, a biopharmaceutical industry M&A fund worth 10 billion yuan is set to support listed companies in their restructuring efforts, promoting the integration of the industry chain and facilitating transformation and upgrades within the sectorAnother notable development is the Shanghai biopharmaceutical acquisition fund initiated by the Shanghai Shishi Group with an initial investment scale of 5.01 billion yuan, attracting participation from various investors, including municipal mother funds and leading enterprises like Shanghai Pharmaceutical.

Moreover, regions like Guangxi and Chengdu are showing enthusiasm for supporting the biopharmaceutical sectorThe Guangxi Food and Drug Administration has introduced ten measures aimed at optimizing the technological review mechanism for medical devices and promoting the export of pharmaceuticals and medical devicesThese efforts are designed to bolster the province's pharmaceutical industry development and stimulate a strong performance in the first quarterThe measures encompass areas such as supporting R&D innovation, enhancing the quality and effectiveness of clinical research, and fostering a complete industrial ecosystem.

Additionally, companies are increasingly investing in health industry venture capital fundsSinopharm Group's subsidiary, Zhongheng Yixin, announced its participation as a limited partner in the Chengdu Hongsheng Venture Capital I private equity investment fund, which is primarily focused on mid to late-stage biopharmaceutical projects, including innovations in medical devices and digital healthcare

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Similarly, Cofe Medical has also engaged as a limited partner, investing self-raised funds primarily in the life and health sectors.

Experts in the industry maintain that engaging in M&A activities is an effective strategy for addressing overcapacity issues and enhancing industrial efficiencyOver recent years, the national government has unveiled numerous favorable policies to support the M&A landscape, encompassing optimization of restructuring conditions, lowering operational barriers, diversifying payment methods, establishing industry M&A funds, and incentivizing listed companies to pursue mergersCities like Beijing, Shanghai, and Shenzhen, among others, have introduced corresponding policies or organized events aimed at encouraging enterprises to actively pursue M&A as a means to strengthen their industry chain and foster high-quality regional economic development.

Additionally, industry insiders argue that M&A activities tend to enhance the influence of leading firms regarding clients, suppliers, and brand perception, thus contributing to a rise in industry concentrationTop-tier companies are expected to extend their value chains through strategic acquisitions, unlocking prospects for future growthThe pace of M&A in critical upstream research and life science sectors is anticipated to accelerate even further in the coming years.

Pacific Securities suggests that the current wave of mergers and acquisitions in the pharmaceutical sector is a consequence of a confluence among market forces, policy guidance, industry demands, and corporate strategic directionAs the healthcare sector evolves rapidly, industry concentration continues to climb; leading companies are pursuing acquisitions not only to expand market share but also to reinforce their influence in the marketplaceThrough M&A, firms are also able to swiftly fill gaps in their portfolios, achieving a diversified operational framework.

Within the context of identifying appealing targets for acquisition, Pacific Securities highlights that companies equipped with differentiated technological platforms tend to attract more interest

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