Shanghai Fosun Pharmaceutical Group Co. Ltd. (SHE: 600196; HKSE: 02196) is planning to acquire a slew of Israeli medical devices companies, a year after acquiring Alma Lasers Ltd. at a value of $240 million. "Maybe one day the company will only be Alma, and it will concentrate all of Fosun Pharmaceuticals' medical devices activity from Israel," Fosun Pharmaceuticals CEO Yao Fang told "Globes". "We've already begun due diligence on several Israeli medical devices companies."
Yao said, "China is innovative, but because it was oriented toward manufacturing for so many years, it is more innovative in developing manufacturing methods and less in developing the products themselves. We have a thriving academe with applied research institutes, but the two ends do not meet, and we need to makes foreign acquisitions, including in Israel."
Fosun Pharmaceuticals is one of China's big pharma companies, with development and manufacturing services, focusing on generics, biosimilars, diagnostics, and healthcare services. It was founded by four students in 1992, and has been making acquisitions around the world. Acquisitions include US diagnostic kit maker Saladax Biomedical Inc. for $22.5 million; Britain's Oxford Immunotec Global plc (Nasdaq: OXFD), which it took public; and it has invested in two drug companies.
"Our classic cooperation is to invest in start-ups developing products that are relevant to China. We launch the products in China at our expense, because we know the market, while the start-ups have the marketing rights to the rest of the world," says Yao. He adds that Fosun Pharmaceuticals can open doors for clinical trials in China and obtaining marketing approval easily and cheaply.
"Globes": Are you interested in marketing products to other countries at this time?
Yao: "That is a goal for a later stage. Initially, our main competition is inside China. Later, we might acquire the full rights. We might acquire the whole company, we might go hand in hand to take over the global market. Either way, we're interested in long-term relationships. We're strategic, not financial, investors.
"I won't invest in a company that wants to be sold to a third party in the short term. If an entrepreneur is seeking an exit, I'd prefer to acquire the whole company from him. On the other hand, we have no intention of taking out the technology from you and moving the development centers to China. We won't take over activity against a company's wishes. We build relationships. Other companies in China are seeking also seeking financial investments; we're not a single bloc."
What can Alma Laser expect, besides becoming your medical devices arm?
"The first year was spent running joint operations. We're very new to Israel, and they are new to us. When we acquired Alma Lasers, the aesthetics markets was changing, companies merged and Israel's Lumenis Ltd. (Nasdaq: LMNS) held an IPO. We need to rethink our advantages in the changing market, and we now think that we should enter the laser surgery market, in addition to the aesthetic market.
"We rely on the team headed by [Alma Lasers CEO] Ziv Karni and its innovative capabilities, but we're also seeking new technologies."
Fosun Pharmaceuticals recently appointed Daniel Cohen to head its Israeli office and to seek innovative technologies in medical devices in general and in lasers in particular.
Alma Lasers plans to establish aesthetic medical centers at Chinese hospitals, and possibly later expand to surgical practice. The company has also hired new sales staff in the US. "If all goes according to plan, we can float Alma Lasers on the stock market and its employees will finally be able to exercise their options. I believe that this will happen within four years," says Yao.
Fosun Pharmaceuticals financed its acquisition of Alma Lasers from a syndicate led by HSBC Holding plc (LSE: HSBA; HKSE: 005; NYSE, Paris: HBC). "This is the first time that a Chinese company acquired such a large Israeli life sciences company," says HSBC Israel CEO Michael Israel. "Fosun is an HSBC customer in China, where we are the largest foreign bank. That is true in Israel, too. I strongly hope that Fosun will continue to make acquisitions in Israel, as they have announced. China is becoming an increasingly dominant factor in the global economy."
Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2014
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