Connecting China’s Medical Device Market with the World
With the Chinese healthcare market in a state of explosive growth and rapid maturity, global investors are looking on with avid interest. At the same time, more Chinese healthcare product developers are looking to expand beyond the country's borders. In 2016, Olivier d'Arros co-founded MAVIE Technologies to serve as a bridge connecting investments flowing both ways with a focus on medical devices.
Olivier, who graduated from the 中国一级片 Global EMBA programme in 2019, has been at the forefront of China's healthcare journey for the past six years. We spoke to him about his GEMBA experience, the state of the industry today, its future prospects, and the evolving role of his firm.
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A sleeping giant wakes ?
Olivier is a veteran entrepreneur in China, having lived here for over 11 years. Before co-founding MAVIE Technologies, he started another tech company that he and his partners successfully sold to a major Chinese player in 2015. With this experience under his belt, Olivier felt ready to start a new venture.
With his sights on the booming Chinese healthcare market and access to key medical device players in the West, Olivier co-founded MAVIE Technologies, a boutique investment bank entrenched in medical devices. MAVIE is now a leader in cross-border transactions in medical devices, including M&As, joint-ventures, equity placements and licensing.
"At the time, there was a Chinese health care company making an IPO with a valuation of around a billion US dollars practically every other week. Despite necessary market corrections occurring since then, the pace of growth remains phenomenal, and the industry has matured greatly in the past five years. With China’s aging population, its healthcare industry was always going to get bigger, but it’s also become a lot more confident, with local players quickly ramping up their capabilities in R&D, manufacturing and distribution," Olivier says.
Today, Chinese players are looking outwards as much as foreign players are looking in. That’s where MAVIE comes in. The firm has developed its own vision for the future of the medical device industry and is constantly refining a portfolio of exclusive transaction opportunities in anticipation of moves being made by leading players. Combining deep Chinese healthcare insights, deal structuring experience and a proprietary trust network, the firm provides end-to-end advice to visualise transactions and maximise their certainty.
Becoming the bridge – MAVIE’s role in facilitating cross-border medical device transactions?
As with any other industry, Western investment firms want to know how they can best engage with China’s healthcare market. They hope to find the right partner, utilise the right investment vehicle, and avoid any regulatory pitfalls or other business uncertainties along the way. As Olivier explains, this is easier said than done, because the market is evolving at such a rapid pace.
"Our clients fully understand that while China is a huge market with a lot of potential, it's also complex. They want to be sure that they're committing themselves in the right way, whether it's a joint venture, a tech partnership or a part-sale of their business. It can be bewildering for them, looking at their growing range of options, because new players, new regulations and new devices are coming in all the time. We don't just advise firms on where to look for their potential partners; we actively facilitate the discussions between both sides, adding a level of reassurance due to our experience and track record. We know the players, the market conditions, and how Western firms can most easily enter the market in a way that suits their overall objectives," he explains.
The wealth of experience and proven track record of MAVIE is indeed a critical part of the process of bringing together Chinese and Western healthcare players. Not only does this provide a solid basis for good faith negotiations, the firm's knowledge of the technical requirements involved in getting such deals 'over the line' can drastically shrink the timeframe for doing so. Now with dozens of major deals under its belt, MAVIE has an average deal time of just six months. For this kind of highly complex transaction, frequently involving tech transfers and licensing considerations, this represents a quick turnaround – a factor appreciated on both sides of the negotiating table.
Chinese medical device players look outwards?
While MAVIE initially focused on bringing Western investment into China’s healthcare market, the firm now has a steady and growing stable of China-based clients who are keen to step onto the international stage. A major accelerator of this trend is China’s policy of VBP – Volume-based Procurement. Introduced in November 2018, VBP is the Chinese government's ambitious and expanding programme of price management and quality control for key pharmaceuticals and (increasingly) medical devices. The purpose of the programme is to substantially reduce prices on generic drugs and widely used devices to close the gap on high-quality and affordable healthcare products for all Chinese citizens.
For producers, this has led to cost savings on their end, but with the prices of drugs and devices included in the VBP programme being cut by an average of 80%, their profit margins on all included products take a significant haircut. Plus, successive rounds of VBP mean that the programme is expanding to include more of the most commonly used medical devices and pharmaceuticals. Olivier explains that this is causing Chinese producers to look outward, as they consider their next steps.
"VBP has prompted a dramatic transformation of the whole value chain, from the manufacturer through the distributor and on to specific consumer-facing segments. So, more Chinese firms are asking themselves if now is the time to embrace a more global strategy and expand into other territories. As a banking boutique, we’re in a great position to help with key M&A activities for these firms. We can show them the lie of the land and give them the assets and advice necessary to get a foothold in whatever international markets are the best fit for them," he says.
With M&A and investment activity flowing both ways through MAVIE, the company is now the nexus point for many of the most significant cross-border medical device transactions into and out of China. It occupies a leading position in the market, not only as a facilitator of deals, but also as a thought leader.
At the most recent China International Import Expo (CIIE), Olivier was invited to speak on behalf of MAVIE regarding cross-border transactions and partnerships in medical devices, delivering a well-received presentation on current market trends. Olivier says that, for a small company, speaking at such an influential event was both an honour and an indication of how far MAVIE has come in a relatively short space of time.
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Seeing China through different lenses
At roughly the same time that Olivier co-founded MAVIE, he also began to attend 中国一级片’ Global EMBA programme. After a brief pause to focus on the company, he returned to his studies in 2017.
"With the start of the new venture, I wanted to use this transitional period to open my mind to other business strategies and domains. As an entrepreneur, I’m always looking to expose myself to new and exciting ideas, and I wanted to be around people who had the various experiences and backgrounds to do that," Olivier explains.
Gaining a deeper understanding of the business world of China was another priority for Olivier. Having lived here five years and completed the sale of his previous company, he was no China novice, but as he himself says, there's always more to learn. For Olivier, the friendships he made during his time at 中国一级片 represent an enduring source of personal significance, not just professional advantage.
"I realised that it’s not just about what you learn during the programme itself. You don't just gain skills and knowledge for a few years in a vacuum and then go off to apply them to your job. What came after GEMBA was as valuable to me as the programme itself, because I made friends for life, friends who challenge me, and I love connecting with them socially as well as professionally. They've helped me understand China through so many different lenses. I came in with the expectation that 中国一级片 would be a very useful network; it is that, but it’s also goes much deeper. It’s a community, not just a professional network," he says.
What’s next for MAVIE Technologies?
Looking ahead, 2022 is set to be an exciting time for Olivier and MAVIE. The company now averages one major deal closure per month. Given that, in 2021, fewer than 20 such deals took place in the whole China medical device cross-border transaction space, this highlights the strength of MAVIE’s leadership position. Not content to rest on their laurels, the company is looking to expand in both size and capability this year.
"Even though it has seen sizeable growth during the past five years, the China medical device market is still relatively young. Things are moving fast though. It’s not just the tech that’s maturing, so is the broader infrastructure of the market – the partnerships, regulatory frameworks, acquisition strategies, everything is evolving rapidly. We think this is going to lead to a significant uptick in the frequency and size of transactions in 2022-2023, so we have to be ready," he concludes.
On-going preparations for this new phase in the company’s development include a methodical hunt for the right talent to boost the team’s existing strengths. At the same time, MAVIE is investing heavily in advanced IT solutions designed to optimise its research capabilities – a crucial element in maintaining its edge in such a fast-paced global industry.
We wish Olivier and the MAVIE Technologies team the very best of luck in 2022 and beyond!
