Machinery / Industrial Parts & Tools

On September 7, according to foreign media sources, Japanese medical equipment manufacturer PHC Holdings (formerly Panasonic Healthcare) will be listed on the Tokyo Stock Exchange on October 14, raising up to 197.7 billion yen (about 11.7 billion yen). Yuan Renminbi). Data show that PHC will issue up to 53.4 million shares, which will be Japan's largest IPO this year. Based on PHC's indicated price of 3,700 yen per share, the company's market value will reach 452 billion yen (approximately 26.5 billion yuan).

Public information shows that in 2014, the US private equity firm KKR&Co spin-off and acquired the health care department of the Panasonic Group for US$1.67 billion, and the PHC Holding Group was independent from the Panasonic Group. After that, PHC successively acquired part of the business of well-known global companies such as Bayer and Thermo Fisher. At present, the PHC Group has formed a medical equipment manufacturer focusing on the three major businesses of diabetes business, diagnostics and life sciences, and healthcare.

So, what is the history behind the PHC, which will be listed at the highest annual IPO after the spin-off and independence 7 years? After acquiring part of the businesses of Bayer and Thermo Fisher, can their expansion in overseas markets proceed smoothly? With the current global diabetes, life sciences, and diagnostics business markets being gradually occupied by large and well-known companies, where will the development of PHC go?

PHC raises 1.8 billion US dollars to be listed in October

Become Japan's largest annual IPO

A few days ago, according to foreign media sources, the Japanese medical equipment manufacturer PHC Holdings Group will be listed on the Tokyo Stock Exchange on October 14, raising up to 197.7 billion yen (about 11.7 billion yuan). Data show that PHC will issue up to 53.4 million shares, which will be Japan's largest IPO this year.

Based on PHC's indicated price of 3,700 yen per share, the company's market value will reach 452 billion yen (approximately 26.5 billion yuan). However, the final price will be decided on October 6, and the price range will be announced on September 28.

According to data, KKR currently holds 45.77% of PHC shares, and Mitsui & Co. and Panasonic Group hold 20.17% and 10.79% of the shares, respectively. Goldman Sachs, Bank of America, JP Morgan Chase, Morgan Stanley, KKR, Sumitomo Mitsui Financial Group and Mizuho Financial Group are the joint global coordinators of this offering.

PHC said that it plans to use the IPO proceeds to strengthen the distribution and logistics network in the field of diabetes management, increase production capacity in the field of diagnosis and life sciences, and repay loans. It is reported that PHC's IPO will be Japan's largest IPO since the SoftBank Group's telecommunications business was listed for US$21 billion in December 2018.

Public information shows that the history of PHC can be traced back to Matsushita Shou Electronics Co., Ltd., which was established in 1969. After decades of development, in 2007, Matsushita Electric Industrial Co., Ltd. transferred its healthcare business to Matsushita Shikoku Electronics Co., Ltd., and was renamed Matsushita Healthcare Co., Ltd. in 2010. In 2012, it merged with Panasonic Holdings Co., Ltd. to form the Healthcare Division.

Until 2014, the US private equity firm KKR&Co spin-off and acquired the health care department of the Panasonic Group for $1.67 billion, and PHC was independent from the Panasonic Group. After the spin-off, PHC acquired Bayer's diabetes diagnosis business and Thermo Fisher's anatomical pathology business in 2016 and 2019, respectively. And in 2018, the company name was changed from Panasonic Healthcare Holdings Co., Ltd to PHC Holdings Corporation.

According to relevant data from Japan, the Japanese IPO raised approximately US$3.4 billion in 2021, a significant increase from the US$804 million in the same period in 2020. It is reported that after the announcement of Prime Minister Yoshihide Suga's resignation last week, the Japanese stock market is facing a rising trend, which will trigger people's optimism about new policies to stimulate the economy.

PHC acquired for 1 billion euros

Bayer Diabetes Business

In January 2016, Panasonic Healthcare (the name was not changed to PHC Holdings Corporation at that time) announced that it had completed the acquisition of Bayer’s diabetes care business at a price of 1 billion euros (approximately 7.6 billion yuan). For Ascensia Diabetes Care.

It is reported that Ascensia Diabetes Care is a global professional diabetes care company dedicated to providing high-quality solutions and precision tools, and has a series of products, including the leading CONTOUR blood glucose meter product portfolio. These products combine advanced technology and user-friendly features to meet the needs of diabetics. After the sale to Panasonic Healthcare through Bayer and the completion of the transaction, Ascensia Diabetes Care and Panasonic Healthcare worked together to develop, manufacture, market and sell blood glucose monitors and blood glucose meters for patients with diabetes in more than 125 countries and regions.

At that time, Hidehito Kotani, president of Panasonic Healthcare, stated that the company's goal was to ensure that all patients in need had access to high-quality technology and diabetes care solutions. The merger of Panasonic Healthcare and Ascensia Diabetes Care will greatly help achieve this goal and, together with KKR, will provide world-class products to more patients in more places around the world. Hidehito Kotani added: "We are very looking forward to expanding this business and innovating new solutions at this important node in the diabetes care industry."

Ascensia Diabetes Care believes that Matsushita Medical has always been a pioneer in the development of key diabetes care products. The company’s cooperation with it is a unique opportunity to expand the company’s business and better serve patients, customers and partners around the world.

Screenshot from PHC official website

Nowadays, as diabetes cases increase year by year, early diagnosis and effective treatment are more important than ever. Through the cooperation with Ascensia Diabetes Care, PHC has greatly improved the accuracy and humanization of the blood glucose monitoring system, and provided patients with a data link solution that can be used safely. Star products represented by the CONTOUR®NEXT series have been produced.

PHC acquired for $1.14 billion

Thermo Fisher's anatomical pathology business

By January 2019, PHC announced that it had signed a definitive agreement with Thermo Fisher to acquire its anatomical pathology business for approximately US$1.14 billion. According to the agreement, PHC will formally take over Thermo Fisher’s anatomical pathology business in the second quarter of 2019.

Public information shows that Thermo Fisher is a leader in the field of global scientific services, with approximately 50,000 employees in 50 countries. Its business mainly includes four major sectors: life sciences, analytical instruments (industrial and applied sciences), clinical diagnostics, laboratories and services. Its operating income in the third quarter of 2018 increased by 16% to 5.92 billion U.S. dollars. The anatomical pathology business is part of its clinical diagnosis department, and its main business is the sale of microscope slides, centrifuges and other instruments used to diagnose diseases. According to Thermo Fisher's announcement, the annual revenue of this business segment is approximately US$350 million.

It is reported that the anatomical pathology sold at that time was a relatively mature business of Thermo Fisher Scientific, but due to the price pressure of CMS (Medical Insurance and Service Center), the number of customers it served was gradually shrinking. Thermo Fisher’s management has been repeatedly weighing its business composition. For these non-core assets, Thermo Fisher has offered preferential “discounted prices” to attract potential buyers. In view of the fact that the growth of the anatomical pathology business is lower than the company's average growth rate, and the technological content is not competitive, in order to cope with the rapidly growing medical market, Thermo Fisher decided to sell this business to PHC.

As for PHC, the acquisition of Thermo Fisher's anatomical pathology business is an important step in expanding its business and expanding its business portfolio. At that time, PHC CEO Hidehito Kotani believed that Thermo Fisher’s anatomical pathology business had a strong customer base in the global hospital market, especially in the United States, and was a solid business with good growth potential. "We believe it will create value for our stakeholders and become an integral part of our growing diagnostic and healthcare products."

At that time, for PHC, getting rid of the weak development of Japan's local economy and seeking business growth through overseas development became the focus of its work at that time. Taking Thermo Fisher's anatomical pathology as a breakthrough point, it is a great opportunity for PHC to open the overseas market represented by the United States.

Today, PHC has more than 9,700 employees worldwide. The company conducts R&D activities globally through R&D centers in the United States and Japan, providing patients, healthcare professionals, and researchers in more than 125 countries with diabetes management and life sciences. And diagnostics and products and services for enhanced healthcare solutions.

According to data from the IPO application data, PHC's revenue for the fiscal year ended March this year was $2.8 billion. And it will be officially listed on the Tokyo Full Volume Exchange in October. Based on the PHC's indicated price of 3,700 yen per share, the company's market value will reach 4.1 billion U.S. dollars (452 billion yen).

However, the world’s three major areas of diabetes, life sciences, and diagnostics have been occupied by world-renowned machinery companies such as Medtronic, Roche, and Abbott. Can the PHC, which is listed on the highest IPO in Japan in 2021, learn from these Will the giants get a piece of the pie?