BIOTECH LEADS 2008 HEALTH CARE M&A TO NEAR RECORD LEVELS ACCORDING TO NEW REPORT FROM IRVING LEVIN ASSOCIATES, INC.

 

FOR IMMEDIATE RELEASE Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
NORWALK, CT –January 16, 2009 – During 2008 and based on preliminary results, a total of 973 mergers and acquisitions were announced in 13 sectors of the health care industry, a 9% decrease from the 1,074 transactions announced in 2007. Based on prices revealed to date, a total of $223.1 billion was committed to finance the year’s 973 deals. This represents a 4% decrease from the $231.8 billion in 2007. Accordingly, 2008 is the third-largest year ever for health care M&A in terms of dollars spent, after 2006 with $268.3 billion and 2007, but ahead of 2004 with $164.3 billion and 2005 with $162.3 billion.

M&A Deal and Dollar Volume for 2008 and 2007*

                                                           Deal Volume                                                     Dollar Volume                        

Sector                                               2008        2007     % Change                                   2008                             2007          % Change

Behavioral Health                                13            13              0%                  $         166,000,000        $         59,000,000                 64%
Home Health                                       48            49             -2%                          2,400,000,000              1,700,000,000                 41%
Hospitals                                             49            58           -16%                          2,400,000,000              8,700,000,000                -72%
Laboratories, MRI, Dialysis               40            54           -26%                             457,000,000              5,500,000,000                -92%
Long-Term Care                                  94          127           -26%                          1,800,000,000            17,000,000,000                -89%
Managed Care                                     16            28           -43%                          1,800,000,000              8,800,000,000                -80%
Physician Medical Groups                 50            41            22%                             269,000,000                   98,000,000                  64%
Rehabilitation                                      27            16            69%                               35,000,000                 432,000,000                -92%
Other                                                  113         110              3%                          8,700,000,000            14,600,000,000                -40%
   Services Subtotal                            450          496             -9%                   $   18,000,000,000       $   56,889,000,000                -68%
                                                                                                                                                                                                            
Biotechnology                                   150          145              3%                   $   93,700,000,000       $   43,400,000,000               116%
E-Health                                              67            60            12%                          4,100,000,000              1,600,000,000               156%
Medical Devices                               166          193           -14%                        66,500,000,000            58,300,000,000                 14%
Pharmaceuticals                                140         180            -22%                        40,800,000,000            71,600,000,000                -43%
   Technology Subtotal                      523          578           -10%                   $ 205,100,000,000       $ 174,900,000,000                 17%
                                                                                                                                                                                                       
Grand Total                                      973       1,074             -9%                   $ 223,100,000,000       $ 231,789,000,000                  -4%

*preliminary figures

“As a result of credit gridlock during the year, health care M&A activity slowed down in the services sectors, particularly those that are real estate-intensive, such as Hospitals and Long-Term Care,” stated Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes The Health Care M&A Report. “With the markets favoring technology, however, most of the health care technology sectors in 2008 posted gains in dollar value over their prior-year levels.”

The four sectors of the health care technology segment, including Biotechnology, e-Health, Medical Devices and Pharmaceuticals, posted 523 deals, or 54% of the year’s deal volume. A combined total of $205.1 billion, up 17% from 2007 levels, was committed to the technology sector in 2008. “With $93.7 billion committed, up 116% from 2007, Biotechnology deals led the surge in health care M&A for 2008,” observed Sanford Steever, Ph.D., editor of the Report. “The 43% drop in dollar value for deals in the Pharmaceutical sector in 2008 was more than offset by the big pharma companies who were vigorously competing to acquire biotechs and biopharmas, along with their potential for generating blockbuster drugs and revenues.”

Given the relatively non-cyclical nature of health care, M&A activity in this industry has not been as severely impacted as in other parts of the economy. “We believe that, going forward, the merger and acquisition market for health care, particularly medical technology, will remain stronger than in other industries,” Mr. Steever indicated. “Despite the credit crunch and market meltdown of the past months, expectations are that purse strings will loosen and acquisition activity will pick up as we enter the second half of 2009 and the beginning of 2010.”

For more information on The Health Care M&A Information Service, The Health Care Acquisition Report or for a subscription to any Irving Levin publication, call 800-248-1668. Irving Levin Associates, Inc., established in 1948, has headquarters in Norwalk, CT. This privately held corporation publishes research reports and newsletters, and maintains merger and acquisition and venture capital databases, on the health care and senior housing markets.
 

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