Global healthcare firms eye emerging markets for M&A
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Businesses in the health sector are increasingly turning to mergers and acquisitions in high growth economies to fuel growth, new research finds.
Some 72 per cent of healthcare respondents in the Cross-border M&A: Perspectives on a changing world survey are focusing M&A strategies on high growth economies, law firm Clifford Chance reveals.
The move towards high growth economies comes at the detriment of domestic (14 per cent) and global developed (14 per cent) markets.
The survey of 400 companies with annual revenues in excess of $1 billion across a range of regions and industry sectors picked out the healthcare trend, and shows that small and medium-sized companies in the developed world are now less likely to be acquisition targets.
Further findings show that 52 per cent of healthcare respondents are looking for growth through M&A to 'develop the core business’ and 'diversify risk portfolios'.
Some 45 per cent of those healthcare businesses surveyed identify minority investments as the preferred deal structure. Limited availability of financing and asset price volatility are cited as reasons to pursue this option, with joint ventures raised as a 'useful vehicle' to gain access to new markets.
Peter Dieners, global head of healthcare, life science and chemicals sector group at Clifford Chance, comments, 'Although we have seen great standardisation across the regulatory environment in many fields, governments cling tightly to their own healthcare policies.
'Even in the EU, which has pioneered the “single market” concept leading to unprecedented harmonisation, every country's culture and economic conditions continue to be primary influences on the strategy of healthcare companies.'
China, South East Asia and Japan are seen as the most difficult regulatory regimes in the healthcare sector, according to the survey.