The Vietnamese version is available here.

The recently announced Nissha – USM Healthcare transaction is drawing attention – not only as a healthcare M&A deal, but also as a clear example of how global supply chains are being restructured across Asia.

In this article, Vilasia’s Ngu Truong and Nam Trinh examine the transaction beyond its surface, highlighting how strategic considerations – including “China Plus One”, technology integration, and CDMO expansion – are shaping investment decisions in Vietnam’s medical device sector.

Through a detailed analysis of valuation approaches, regulatory considerations, and post-M&A integration challenges, the article shows how investors are increasingly pricing future growth potential rather than current financial performance, while also navigating a multi-layered legal and compliance framework.

The article also offers practical insights for Vietnamese companies engaging with Japanese investors, from due diligence expectations to transaction structuring and post-deal governance.

The article was originally published in Vietnamese in The Saigon Times on April 2, 2026.

Nissha – USM Healthcare: When M&A Becomes a Supply Chain Strategy

Truong Huu Ngu – Trinh Ngoc Nam (*)

The acquisition by Japan’s Nissha of a 60% stake in USM Healthcare may, at first glance, appear to be a conventional healthcare M&A transaction. Viewed in the broader context of global supply chains, however, it offers a clear illustration of how multinational corporations are repositioning manufacturing footprints across Asia.

USM is widely regarded as Vietnam’s only manufacturer of coronary stents. The value of the transaction therefore lies not merely in the company’s current revenue or asset base, but in its technological capabilities and its position within the regional healthcare value chain.

Against the backdrop of the “China Plus One” strategy, many industrial groups are actively diversifying production away from China. Vietnam has emerged as a compelling alternative, supported by competitive costs, an extensive network of free trade agreements, and growing localisation capabilities. From this perspective, Nissha is not simply acquiring a company; it is securing technology and a strategic position within the regional healthcare supply chain.

Valuation: Buying the Future, Not the Past

A notable feature of the transaction is its valuation approach.

In technology and medical device transactions, buyers typically do not rely primarily on current earnings. Instead, they focus on long-term growth potential—across products, markets, and underlying technologies.

Nissha’s use of the discounted cash flow (DCF) method reflects this approach. For listed companies in Japan, disclosure of valuation methodologies in M&A transactions forms part of broader transparency obligations to shareholders and regulators. As a result, Japanese acquirers often engage independent valuation firms and disclose the basis of their valuation.

The DCF method allows the business to be assessed based on projected future cash flows rather than historical financial performance—an important distinction in the case of USM Healthcare. Publicly available data indicates that the company’s recent profits have been modest. If valuation were based solely on conventional metrics such as P/E multiples or net asset value, the implied valuation would likely be significantly lower.

DCF supports a different investment thesis: USM’s value lies in its growth potential once integrated into Nissha’s global customer network and its ability to scale within a contract development and manufacturing organisation (CDMO) model.

In substance, Nissha is not paying for USM’s current state. It is pricing the future performance that the business can achieve within its broader ecosystem.

An Open Market—But Not Without Barriers

Vietnam’s medical device sector is relatively open to foreign investment and, unlike pharmaceuticals, is not subject to foreign ownership caps. That said, openness does not equate to simplicity.

A transaction such as Nissha–USM must navigate multiple regulatory layers: foreign investment procedures for acquiring a controlling stake, potential economic concentration (antitrust) filings, sector-specific regulatory requirements for medical devices, cross-border capital payment rules, and the accurate handling of tax obligations arising from share transfers.

The legal environment may be more accommodating than in certain other sectors, but successful execution still depends on careful structuring and disciplined process management.

Where Value Is Really Created: Post-Transaction Integration

In many M&A transactions, the principal risks do not lie at signing, but in post-closing integration.

For USM Healthcare, maintaining eligibility for existing incentives requires continued compliance with research and development criteria. In addition, regulatory approvals—particularly market authorisation licences for higher-risk medical devices—must be carefully managed throughout the transition period.

This underscores a broader point: post-acquisition value is not determined solely by the share purchase agreement, but by the effectiveness of integration and ongoing governance.

A Transaction Structurally Simpler Than Precedents

Compared with earlier healthcare transactions in Vietnam—such as Taisho’s investment in Hau Giang Pharma, ASKA’s in Ha Tay Pharma, or Abbott’s acquisition of Glomed—the Nissha–USM transaction appears structurally more straightforward.

USM is not a public company, eliminating the need for complex public tender offer procedures. The medical device sector does not impose foreign ownership restrictions comparable to those in pharmaceuticals. Moreover, the acquisition was executed in a single step sufficient to secure control, rather than through gradual stake accumulation.

Nevertheless, “simpler” does not mean “simple”. Experience from prior transactions shows that outcomes continue to depend heavily on preparation quality, the depth of due diligence, and the parties’ ability to manage risk throughout the process.

Working with Japanese Investors: Practical Considerations

Several practical observations can be drawn from this transaction and comparable precedents involving Japanese investors.

First, the “ringi” decision-making process should be properly understood. Investment decisions typically require multiple layers of internal approval, which may extend timelines beyond initial expectations. However, once approved, Japanese investors tend to demonstrate a high degree of commitment and consistency.

Second, due diligence standards are typically rigorous. Japanese investors place significant emphasis on transparency and documentation, requiring target companies to prepare comprehensive records—particularly in heavily regulated sectors such as medical devices.

Third, transaction documentation must be carefully structured to allocate post-closing risk. Representations and warranties, conditions precedent, indemnities, escrow arrangements, and earn-out mechanisms all play a central role.

Fourth, regulatory diligence in the medical device sector is particularly critical. The status of product registrations (especially for higher-risk classifications), pricing declaration obligations, post-market surveillance requirements, and certifications such as ISO 13485 can all directly affect enterprise value.

Fifth, cross-border healthcare transactions typically require coordinated, multi-disciplinary advisory teams. Legal, tax, financial, and industry expertise must be integrated to address overlapping technical and regulatory issues.

Finally, integration into a multinational group will inevitably increase intra-group transactions. Advance planning for transfer pricing compliance is therefore essential in the post-acquisition phase.

A Broader Shift in Vietnam’s M&A Market

The Nissha–USM transaction reflects a broader trend in Vietnam’s M&A landscape: enterprise value is increasingly driven by technology, data, and research capabilities rather than by current financial performance alone.

As a result, the central question in modern M&A is no longer simply “What is this company worth?” but rather “Where does this transaction position the buyer within the global value chain?”

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(*) Vilasia Law Firm