In terms of length, in 2017, State controlled Eletrobrás reached approximately 65,000 kilometers of electric power transmission lines with voltage higher than or equal to 230 kV, representing almost half of this type of lines in Brazil[1].
In a 2013 report, it is said that Private companies:~35 out of 45 companies in the transmission systems. o-existence between state-controlled and private companies. There are no limitations on the foreign ownership of electricity companies; however, every company must be incorporated under Brazilian law[2].
Note: Furnas, CHESF, Eletrosul are majorly owned by Eletrobrás[3].
Note: CEMIG is controlled by The State of Minas Gerais[4].
Colombian firms
The second on the list of companies with largest transmission lines, CTEEP, is controlled by ISA, a Colombian state-owned company [5].
More recently, in March 2015, Empresa de Energía de Bogotá (EEB) entered the Brazilian market with the acquisition of a 51 per cent equity share each in four Brazilian power transmission companies. Under the deal, which cost EEB about USD170 billion, the company acquired Transenergía Renovável S.A., Transenergía São Paulo S.A., Goiás Transmissão S.A. and MGE Transmissão S.A. With this, the company acquired 1,094 km of power transmission network established at 500 kV, 345 kV, 230 kV and 138 kV, located in the states of Espírito Santo, Goias, Mato Grosso, Mato Grosso Do Sul, Minas Gerais and Sao Paulo. The remaining 49 per cent stake in the four Brazilian concessionaries is held by Furnas Central Electric SA (Furnas), a subsidiary of Eletrobras. In April 2015, EPM acquired a 22.14 per cent stake in Brazil-based local transmission utility Transmissora Aliança de Energía Eléctrica S.A. (TAESA) for BRL1.53 billion.[6]
The Colombian state-owned ISA Group is already an established player in Brazil’s transmission sector. In December 2016, ISA further strengthened its position by acquiring a 41.6 per cent equity stake in the transmission developer Transmissora Aliança De Energia Elétrica SA (TAESA), which currently holds 33 transmission concessions comprising 11,000 km of high voltage power lines in Brazil. In a BRL1.06 billion deal, ISA has acquired 26 per cent of TAESA’s ordinary shares and 14.9 per cent of its capital stock from Brazilian equity firms Fundo de Investimento em Participações Coliseu (FIP Coliseu) and Fundo de Investimento em Ações Taurus (FIP Taurus) 19.
Another acquisition deal that took place recently—in May 2017—in Brazil was for the concessionaire Interligação Elétrica Norte e Nordeste (IENNE). Under this, Companhia de Transmissão de Energia Elétrica Paulista (CTEEP)—a Brazil-based subsidiary of ISA—exercised its rights to acquire the entire equity interest of IENNE from Spain’s Isolux and local power company Construções e Participações S.A (Cymi Holding). Isolux holds a 50 per cent equity share and Cymi owns a 25 per cent equity share in IENNE. The deal cost CTEEP about BRL96.75 million, under which CTEEP purchased 164 million ordinary shares in IENNE from Isolux and 81.8 million ordinary shares from Rio de Janeiro-based Cymi Holding19.
The lack of talents has been a well-recognized problem for China’s biotech industry[1]. China lacks seasoned experts with at least 10 years’ industry experience, say insiders. Companies are especially keen on experience in translational medicine, early-stage clinical trials and antibody manufacturing. Start-up biotech firms need experienced managers at every level, from clinical trials to drug manufacturing processes, to help build their companies[2].
This path from multinational drug company to biotech is clearly seen in the bios of many of the more ambitious start-up founders. Returnees with a few years under their belt in China and an ability to effectively navigate the system are far more valuable to employers than new arrivals. It becomes fairly common that multinational biopharma firms are finding themselves battling Chinese biotechnology startups to attract talent38,[3]. Those startups flush with cash from venture-capital financing are willing to pay top dollar (and upsides with options).
Trials
In terms of conducting trials, a historical lack of clinical research infrastructure in China has led to problems adhering to Good Clinical Practice, the international gold standard for maintaining ethical and quality standards in clinical trials. As an example, nearly all clinical research sites in China are hospitals, as there are no private practices. Because of that, clinical trial participants are treated exactly the same way as regular patients. That’s a problem because study staff — who are regular hospital employees — don’t have experience complying with Good Clinical Practice, putting the trial’s integrity, not to mention patient protection, at risk[4],[5].
Meanwhile, the rapid growth of Wuxi AppTex (and its affiliated Wuxi Biologics) has made itself one of the largest CRO/CMO players in the world[6], helping to facilitate drug discovery/development/manufacturing globally.
Launches
As most Chinese biotech startups are still in the r&d stage, only a few were approved recently. The most relevant example here might be the PD-1/PD-L1 space.
CFDA has long been seen as “slow” in terms of new drug approvals. A 2016 discussion quoted that usually a new drug needs 5-10 years for approval[7].
However, for the recent domestic PD-1 drugs for cancer, the approval speed was amazingly fast. Junshi won the first made-in-China PD-1 drug approval by NMPA (formerly CFDA) in December 2018[8]. Ten days later, the second PD-1 drug by Innovent was approved[9]. Each took 284 and 255 days respectively[10].
Two foreign PD-1 drugs, Merck’s Keytruda and Bristol-Myers Squibb’s Opdivo, were approved earlier in 2018. During 18Q3, Keytrude and Opdivo recorded ¥150 and ¥190 million in sales respectively[11].
Junshi started its sales in February 2019 and recorded nearly ¥80 million in the first quarter[12]. Innovent’s PD-1 launched its sales in March 2019 and finished the first quarter with $9.9 million in revenue, both of which are deemed as successful in media reports[13].
According to IMS, China’s spending in medicine has been growing fast, reaching $137 billion in 2018[1].
Another research database shows that in 2018, China’ exports in medicine was $17.4 billion[2] and imports was $29.6 billion[3].
Although they might use different sources/measures, we could roughly estimate that in 2018, non-import medicine consumption was 137-29.6 = 107.4 billion and domestic medicine production was 107.4+17.4 = 124.8 billion.
Therefore, 86% of Chinese drug companies’ production was for the domestic market while 14% was for exports in 2018.
For the more modern (or newly funded) innovative biotech/drug companies in China, they are targeting the global markets. Usually they will divide the commercial rights by regions and retain the greater china rights while sell the rest (another source of funding). Some innovative drug candidates’ global rights ex china have already been licensed/acquired by western/US pharmaceutical companies. Most Chinese biotech companies don’t have the capability to develop/commercialize outside the greater china area.
UBS summarized in its China’s biotech report – “Oncology: A driving force for innovation in Chinese biotech”.
An article by Pharmacodia in 2017 said the top 3 therapeutic areas for biologics in China are cancer, rheumatoid arthritis (RA), hepatitis B virus (HBV)[1].
Another bluebook in 2017 outlined the five focus areas for China’s biotechnologies[2]: 1) vaccines, 2) mAb and protein drugs for cancer, cardiovascular, neurodegenerative, diabetes, autoimmune diseases, 3) diagnostics and screening for major diseases, 4) gene therapies, cell therapies, 5) regenerative medicine
China suffers from an unusually high incidence of cancer, which has been the country’s leading cause of death since 2010. Nearly all companies (five out of six) went onto HKSE in 2018 are investing in oncology (except for Hua Medicine focusing on diabetes).
Among all the cancers, lung cancer is the most targeted disease due to the high incidence rate in China.
Globally, oncology is also the No.1 focus for the overall industry, accounting for more than 1/3 of the total pipeline, according to a 2018 report[3].
To develop cancer treatments, biotech companies usually focus on developments in mAbs (monoclonal antibodies), immuno-oncology, CAR-T therapies, etc.
Other breakthrough researches & developments including Qinghaosu (or Artemisinin), discovered by the team led by Youyou Tu to fight malaria.
The (generic drug) industry began to consolidate during the 1960s and 1970s, and Teva emerged as the largest and most dynamic firm in the sector, thanks primarily to Eli Hurvitz, who served as CEO from 1976 to 2002 and as chairman from 2002 to 2010.
Opportunity knocked on Teva’s door when the U.S. Congress passed the Hatch-Waxman Act in 1984. The legislation created incentives for generic drug companies to challenge other firms’ patents, even before they expired, with the goal of reducing the cost of drugs in the U.S. Hurvitz positioned Teva to use Hatch-Waxman as its springboard to becoming a major player in the generics sector.
“Teva succeeded in its strategy,” says Steven Tepper, an Israeli analyst who has been following Teva for many years. “It not only worked really hard at getting its production costs down, it also developed considerable expertise in the legal aspects of the generic drugs business — how to be the first to file for generic versions of patented drugs [the law awarded a period of exclusivity to the first generic version, during which time profit margins would be higher], and how to manage the testing and licensing process. Later, Teva became adept at acquiring other companies and integrating them into the group.”
The strategy worked so well that today, Teva is the largest generic drug company in the world. Achieving this designation was a conscious decision on the part of Teva’s leadership: It was achieved via a series of large acquisitions over a five-year period, beginning with IVAX, an American rival bought for US$7.4 billion in January 2006; Barr (also in the U.S.) for US$7.46 billion in December 2008; German company Ratiopharm in March 2010 for US$5 billion, and Cephalon in May 2011 for US$6.8 billion.
“Levin was instrumental in bringing Michael Hayden to Teva as head of R&D, and together they formulated a corporate strategy for Teva that distinguished it from its competitors and also explains why Teva had to acquire either Mylan or Allergan,”
“Levin and Hayden sought to marry Teva’s proven capabilities in the efficient production of generic drugs with the company’s in-house R&D capabilities, themselves enhanced by a series of acquisitions. The goal is to turn generic drugs into specialty products, for instance by giving them a special formulation or method of application — something that doesn’t change the essence of the drug, but de-commoditizes it and allows for a higher price, higher margins and hence greater profitability.”
– Steven Tepper, pharma and biomed analyst at Migdal Capital Markets and regarded as a top Israeli analyst in this sector
The number of ‘ethical’ or proprietary drugs coming off patents in the next few years is going to be much smaller than has been the case over the past decade or so
The drug producers are facing a rapid process of concentration among their main buyers — especially in the critical U.S. market, where there are now three dominant companies. This, in turn, is forcing the manufacturers to consolidate their ranks, so as to better match the greater bargaining clout of their customers. The entire pharma industry is caught up in a whirlwind of enormous deals. Data from Thomson Reuters shows that as of July 23 — prior to Teva’s Allergan acquisition — M&A deals in the health care industry so far this year totaled almost $400 billion and were up some 80% over the equivalent period of 2014
With Copaxone’s patents going to expire, Teva needs to find supports to drive the growth or to make-up the hole – manage the “patent cliff” and the stock price
There were three acquisition targets: Sandoz (Novartis), Mylan and Actavis (Allergan).
April 8, 2015: Mylan offers to buy Perrigo for about $29 billion in cash and stock in a move that some analysts suggested was an effort to help fend off a $40 billion acquisition by larger rival Teva Pharmaceuticals Industries
April 24, 2015: Mylan goes hostile with a sweetened bid of $60 plus 2.2 Mylan shares, valuing Perrigo at $31 billion; Perrigo rejects offer
July 23, 2015: Dutch foundation linked to Mylan adopts poison pill in efforts to block takeover by Teva, citing potential job losses
July 27, 2015: Teva drops its hostile pursuit of Mylan, decides to buy Allergan Plc’s generic business in a deal worth $40.5 billion
Aug. 13, 2015: Mylan lowers the percentage of Perrigo shares it needs to control the company to just over 50 percent from its original plan of 80 percent
Sept. 14, 2015: Mylan launches a tender offer in a move to lure Perrigo investors to support its take-over efforts
Sept. 17, 2015: Perrigo recommends shareholders to reject Mylan’s tender offer, which was set to expire on Nov. 13, saying it substantially undervalued the company
Oct. 22, 2015: Perrigo announces its plans to lay off 6 percent of its global workforce and buy back shares worth $2 billion
Nov. 13, 2015: Mylan fails $26 billion bid in tender offer as it was unable to secure at least half of Perrigo’s shares
Teva said its offer should be more attractive to Mylan shareholders than the proposed purchase of Perrigo, representing a 48 percent premium to the company’s share price before speculation of a deal surfaced on March 10. When Teva made the proposal, Mylan shares were up 8.9 percent at $74.12 in afternoon Nasdaq trading, while Teva rose 2.0 percent to $64.55 on the New York Stock Exchange. Perrigo fell 2.2 percent to $193.79. (Reuters)
The number of shared bikes reached its largest in September 2017 (2.35 million; then new deployments were suspended). Other cities also set the cap (Shanghai 1.5 million, Guangzhou 0.9 million, Nanjing 0.45 million).
By and large, the financing activities paused (as described in part 2) in the bike-sharing space. And the $3 billion valuation for both mobike and ofo was not attractive. Capital markets were developing way ahead of the business.
What is more, the economic model was still in the “testing stage” (to put it nicely).
M&A?
The most obvious way to end the war and to make the industry profitable was a merger between ofo and mobike.
Similar talks must have been held for several times, especially in the summer of 2017. But before a merger, there would probably be a winner.
Investors from both sides probably have been talked about this privately for long. In June 2017, a discussion between Xiaohu Zhu (GSR Ventures), ofo’s backer from Series A, and Pony Ma (Tencent), mobike’s lead investors for Series D&E, was leaked and posted on the internet.
They were trying to claim ofo and mobike as the No.1 bike-sharing company respectively.
Discussion between GSR and Tencent leaders | Source: tech.sina.com.cn
At the end of 2017, ofo CEO had the last conversation with Xiaohu Zhu (GSR Ventures) about the merger. One month after the last attempt, Xiaohu Zhu sold his position to Ali, together with his veto power.
Alibaba got the power it wanted in ofo (to counter Didi/Tencent)
To some extent, mobike and ofo are offering an alternative to Didi’s ride-hailing services, especially short-distance rides; they also wanted to march into the broader ride-sharing space
When most bike-sharing startups are facing difficulties on the capital market, the ones who had more prestigious backers seemed fine, namely ofo and mobike.
Series D
mobike raised $215 million Series D led by Tencent in January, with Ctrip and Huazhu joining as new investors; Foxconn and Temasek also came onboard later, adding at least another $85 million (the round aka “friends of Sequoia China and Hillhouse”)
This was the first time Ali officially invested in this field. I guess they felt the valuation was too high. While Tencent had mobike and Didi had ofo, Ali needed to find its unique angle and set its footprint in the space. Sesame scores is one of Ant Financial’s unique offering in the market place; yet ofo might be the first time users felt the tangible benefits of high Sesame scores.
Tencent had its unique angle as well: Mini-programs 小程序 in WeChat. mobike launched its mini-program in February 2017.
(Besides, there are battles between payments, cloud computing, data and traffic)
Series E
The crazy financing has made ofo and mobike the clear winners at that time. I guess most investors believed that who had the most money would win the game.
ofo has Didi which is big, but mobike’s Tencent is one of the deepest pockets in China. When Ant Financial only provided a minority funding to ofo (as Didi was the biggest investor), some may felt that Ali was still not determined to join the race – then mobike would win.
