China reported total of 97 deals worth $6.5 billion, the highest in Asia Pacific, according to a mergermarket report. The country was followed by Australia with 40 deals and India and South Korea each boasting of securing 39 deals from January 2011 until date.

KPMG in its latest report, titled China's pharmaceutical industry - poised for the giant leap, noted that China is now turning away from its export-oriented focus. Boosting domestic demand and consumption is now a bigger priority. With an increasing presence of an affluent population, there are calls for better services and quality of life in which healthcare reforms play a very important role.

In response to this, foreign companies are looking to spread their networks into rural areas and second and third-tier cities. Mergers with local companies have become a key strategic focus. The report also pointed out that the sector has seen a large number of innovative joint ventures, acquisitions and collaboration between multinationals and Chinese firms, largely geared to leverage the formidable reach of the domestic giants. With every big pharmaceutical company focusing on this region, China is likely to play a crucial role in the way drugs are invented, tested and regulated.

Sharing his thoughts on cross-border investments in China, Dr Ronald Ling, PricewaterhouseCoopers' Asia Healthcare Leader, said, "Given the complexities of cross-border investment into China, we've seen foreign investors playing it safe, testing the waters with small investments in familiar territory. For example, in the hospital sector, recent inbound deals have targeted operators with American ties offering western-style treatment and quality standards. In February, the IFC (a member of the World Bank Group), invested $20 million to help upgrade and expand operations of Asia Pacific Medical Group, an entity founded by US physicians and surgeons with two decades of public hospital operating experience in China.

In early 2011, a US private equity firm took a minority stake in Advanced China Healthcare, a multi-disciplinary outpatient clinic operator in China similarly founded by American physicians. Meanwhile, domestic activity has been dominated by private sector investment into high-end specialty providers, including eye, orthopaedic, aesthetics, and maternal & infants services."