The United States once again rejected Chinese pharmaceutical companies, and it is more difficult to go to sea

Author:Kenji Bureau Time:2022.09.20

Domestic biomedical companies are suppressed by the United States again.

On September 18, Kailei issued an announcement that the plan to acquire American company Snapdragon was terminated. Kailaiying made a motion in February this year to acquire the US company engaged in CDMO technology, but at present, due to the regulatory reasons of the United States, the acquisition plan cannot be implemented.

Kai Lai Ying said to Jianzhi Bureau: "We have learned that some other companies have been affected by CFIUS."

The "CFIUS strict investigation" referred to by Kailaiying refers to the administrative order just signed by US President Biden on September 15. Biden asked the US Investment Council (CFIUS) to strengthen the review of specific transactions that have an impact on US national security, especially funds from "competition or hostile countries".

The New York Times said that the administrative instruction aims to strengthen the United States from investing in technology in the United States. The Global Times also pointed out that the drunkard of this administrative instruction of Biden was not wine.

Kai La Ying is not the only Chinese company that has been affected by CFIUS review and strengthening. On September 15, the Nasdaq listed company F-Star issued a statement: The acquisition of F-Star's acquisition of F-Star in Hong Kong stocks has not been passed during the 30-day review period. Further extension.

Chinese Biopharmaceuticals told the Jianzhi Bureau on the 19th: "As of today, we have not received the news of the rejection of the acquisition project."

Kailai Incident

Kai Lai Ying's resolution to the acquisition of Snapdragon was terminated. Earlier than Biden's new instructions, Snapdragon had released the news of the termination of cooperation to terminate through the official website on September 9, and Biden signed the new policy on September 12.

This may indicate that related censorship has long begun to strict.

Illustration: Snapdragon issued an announcement on September 9th that Biden's movement took place on September 12

Source: Snapdragon Company's official website

For the time difference between the two cooperative companies, Kai Laiying said: "Snapdragon may have learned of the news that it cannot continue to cooperate in the negotiation with relevant departments, but we must do it after getting the official documents of the US Department of Commerce before formal formal documents will be officially done. announcement."

CFIUS is not the first time in transnational mergers and acquisitions. Established in 1975, this institution is an institution consisting of more than a dozen important departments including the US Finance, the Ministry of Justice, the Ministry of Land and Safety, the Ministry of Commerce, the Ministry of National Defense, and the State Council. It has a significant negative impact on national security.

Previously, CFIUS also suspended Chinese -funded acquisitions of American companies, but mostly occurred in non -medicine industries such as energy and chemical industry. In 2014, China Sanyi Group also brought CFIUS and then US President Barack Obama to court, eventually winning the lawsuit, becoming a legend in the internationalization of Chinese enterprises.

The pharmaceutical industry has not previously appeared in CFIUS interference acquisition. In 2018, Harbin Pharmaceutical Group acquired GNC and 2019 Yuanda Pharmaceutical and Dinghui Investment acquisition of Australian Medical Device Company SiRTEX, which successfully passed the CFIUS review.

How can Kaileying's acquisition of Snapdragon involved US national security?

Similar situations were that CFIUS asked the trader to take measures to remedy. One of the ways to remedy is to peel and sell some business or product lines in the transaction.

However, according to the information disclosed by Kaile British and Snapdragon, the two parties cannot reach an agreement on future development planning, which may be controversial to business cutting methods.

The acquisition is to get the market

It is understood that Snapdragon is a chemical technology company, which is a continuous reaction technology for chemical medicine.

This is a process that can help pharmaceutical companies to improve operating efficiency. This technology has little demand for equipment and venues, but it can shorten the material supply chain and improve the economy of production. It has a small value in the CDMO field.

Kailaiying introduced to Jianzhi Bureau: In the field of continuity of chemical medicine, Snapdragon is a better company in the United States. "But we also have this technology, and the termination of cooperation has no effect on the US business."

Kai La Ying likes Snapdragon, which may not really be purely for technology. From the perspective of public information, the large customer resources attached to Snapdragon may be the main consideration.

In the autumn of 2020, Kailaiying purchased Snapdragon's new shares for $ 7 million, becoming a major shareholder holding 18.18%of the shares. In the 2020 annual report, Kai Laiying said that within this year, he and Snapdragon completed the development of the continuous reaction process of potentially heavy drugs in a large European and American pharmaceutical company in the later stages of clinical clinical clinical, and obtained corresponding production orders. By this project, many European and American pharmaceutical factories began to ask Kailei.

Snapdragon's position in the United States is really not low. In February 2021, Snapdragon obtained US $ 1.5 million in DARPA's DARPA, so that it continued to develop continuous response technology for the development of the United States, ensure the safety of domestic supply chains, and save costs for the production of drugs in the United States.

Kai Lai Ying obviously hopes to obtain more American business with the help of Snapdragon. During the 2021 annual report, Kai Laiying has proposed that "trying Snapdragon and Boston R & D Center as the starting point, promoting the development of the Biotech market in the United States", and the intention to spend $ 57.94 million to acquire all 49 shares held by Snapdragon. In February 2022, the acquisition plan was officially launched.

In terms of routine, the two parties have evaluated the CFIUS review requirements before reaching a transaction. I didn't expect that from February to September, the situation turned sharply.

On September 12, the White House released news that Biden signed an administrative order to launch a national biotechnology and biological manufacturing plan, emphasizing "localization of biological manufacturing". Subsequently, the White House held a summit for biotechnology and biological manufacturing, announcing providing more than $ 2 billion in funds and resources to promote the president's administrative order.

On the 15th, the United States proposed a strict CFIUS review, which was consistent with the previous intention of "localization of biological manufacturing", that is, priority to ensure the integrity of the United States supply chain and ensure the safety of the United States.

"But we have 18.18%of Snapdragon's equity," said Kailaiying.

The United States no longer welcome Chinese companies

CFIUS censorship suddenly appeared in the pharmaceutical field. Obviously, the United States really used biomedicine as part of "national security".

While Biden asked CFIUS to strengthen the review, the "risk factors" of the corresponding review were explained. One of them was: specific transactions affecting the technological leadership of the national security field, including but not limited to semiconductor, artificial intelligence, biotechnology, biotechnology And biological manufacturing, quantum computing, clean energy and other fields.

The CDMO industry where Kailai is located is part of the Chinese pharmaceutical supply chain, and a large number of businesses from the world. In 2021, Pfizer handed the production of an important product to Kailee, with an order worth 5.8 billion yuan. It is speculated that this is the new crown oral medication PaxLovid, which is commonly used in the United States.

Although Biden's new instructions are not targeted at China, many media and experts interpret: The intention of drunkards is not wine.

Chinese pharmaceutical companies and CXO industries are important to develop markets in the United States. The development of the US pharmaceutical industry, strict standards, and high pharmaceutical prices, opening the US market almost means global recognition. Many Chinese companies enter the United States through the acquisition of American companies.

This road may be blocked now. The United States feels insecure.

From the "Accountability Law of Foreign Companies", to the FDA, it is about to go to Hong Kong to review the audit work of Chinese companies listed in the United States. It can be seen that it is not easy for Chinese companies to get capital and market resources in the United States.

It is time to re -evaluate Chinese innovative pharmaceutical companies that are still fighting for "going to sea."

Writing | Nicotinamide