The Health Care M&A Monthly: 2012 M&A = Maybe & Almost -

Year Posts 1,063 Deals, But Only $143.3 Billion Total Spend

Busy, but not the best. That’s how 2012 looks now that it is receding in the rear view mirror. While 2011 boasted strong results in health care mergers and acquisitions—a healthy gain in dollar volume over the year before and slightly lower deal volume—2012 went the opposite direction, with the highest deal volume since 2007 but the lowest total dollars spent since 2003. Compared with the strong numbers posted in 2011, last year’s deal volume rose 6.9%, but its dollar values crashed by 38%.

Call it the Semi-Great Recession, brought on by the presidential election, fears of falling off the fiscal cliff on January 1, 2013, and all manner of bad feelings toward Congress and ObamaCare. During the 10-year period from 2003 through 2012, last year ranks second in terms of deal volume, with 1,063 deals announced, compared with 2007’s high of 1,079. But in dollar terms, 2012 ranks ninth in the most recent decade, with its admittedly preliminary total of $143.3 billion topping only 2003’s $94.2 billion spend. The chart on page 3 shows figures for each  year.

Billion-dollar deals were fewer and far smaller in size in 2012, for one thing. As noted in our December issue, just 31 buyers spent $1 billion or more last year, compared with 34 billion-dollar buyers in 2011. And dollar volume in this billion-dollar club plummeted 37% year-over-year, from nearly $138 billion in 2011 to just $87 billion in 2012.

2012 Category Winners and Losers

The health care technology category as a whole accounted for 42.2% of all health care deals in 2012, currently pegged at 449. Despite the looming tax increases set to kick in in 2013, the Medical Devices sector saw the greatest activity in the category, with 143 deals that totalled nearly $25 billion. In terms of deal volume, Biotechnology was second, with 106 deals announced, followed by Pharmaceuticals with 101 deals and eHealth close behind with 99 deals. In terms of dollar value, however, Pharmaceuticals far outstripped the Biotechnology sector with a total of $38.4 billion, compared with just $18.6 billion in Biotech deals. For all its activity, the eHealth sector mustered a mere $5.2 billion in spending.

Year-over-year, the technology category posted a 1.8% increase in the number of deals, versus 2011. Biotech and eHealth gained ground in the percentage of deals announced, up 32.5% and 35.6%, respectively, compared with 2011 totals. Medical Devices and Pharmaceuticals each lost ground, with the number of deals in 2012 representing a decrease of 17.3% and 12.2%, respectively. Across all sectors, the technology category saw a 41.6% drop in dollar volume, with Medical Devices seeming to run off its own fiscal cliff, down 62.0% from the year before. A good portion of that decrease in dollar value may be laid to the tax on medical devices set to kick in this month. Post-election, some U.S. senators signed public petitions asking for a reprieve for the industry, to no avail. The category may stay soft throughout 2013........Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today