PHARMA THRUSTS HEALTH CARE M&A MARKET TO NEW RECORD IN FIRST QUARTER, 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 – April 15, 2009 – According to a new Report from Irving Levin Associates, a total of 199 mergers and acquisitions were announced in the health care industry during the first quarter of 2009, a 13% decrease from the 230 deals announced in the prior quarter. Based on preliminary figures, however, a total of $127.4 billion was committed to fund the first quarter’s M&A activity, the highest level of dollars ever spent during a single quarter. This breaks the previous record of $118.4 billion set nearly 10 years ago in the fourth quarter of 1999.
 
The Health Care M&A Market First Quarter 2009
Dollar Amounts By Sector*
Sector
Dollar Amount
First Quarter 2009
Percent of  Quarter
Pharmaceuticals
  $  112,846,231,500
89%
Biotechnology
10,236,795,000
8%
Medical Devices
     3,023,314,650
2%
e-Health
47,000,000
<1%
   Technology subtotal
$  126,153,341,150 
99%
 
 
 
Hospitals
$         493,700,000
<1%
Long-Term Care
     410,731,000
<1%
Labs, MRI, Dialysis
14,727,000
<1%
Behavioral Health Care
6,759,000
<1%
Rehabilitation
6,600,000
<1%
Home Health Care
  500,000
<1%
Managed Care
—
<1%
Physician Medical Groups
—
<1%
Other Services
    302,000,000
<1%
   Services subtotal
$      1,235,017,000
1%
 
 
 
Total health care
$  127,388,358,150
100%
                        *Preliminary Figures
 
The health care technology segment attracted the largest amount of capital, capturing nearly 99 cents out of every dollar invested in health care M&A. The major driver of this activity was the Pharmaceutical sector, which by itself accounted for 89% of the first quarter’s dollar volume.

The number of deals announced in each sector of the health care industry appears in the chart below, along with comparisons to the prior quarter (Q4:08) and the year-ago quarter (Q1:08).
 

The Health Care M&A Market Q1:09 – Deal Volume By Sector
 
 
 
 
 
 
 
 
 
 
 
 
Q1:09
Q4:08
%
Q1:08
%
Sector 
Deals*
Deals
Change
Deals
Change
 
 
 
 
 
 
 
 
Services Segment:
 
 
 
 
 
 
Long-Term Care
5
26
-42%
30
-50%
 
Hospitals 
12
17
-29%
10
20%
 
Labs, MRI, Dialysis
8
8
0%
10
-20%
 
Physician Groups
8
16
-50%
12
-33%
 
Home Health Care
7
9
-22%
10
-30%
 
Behavioral Health Care 
5
3
67%
3
67%
 
Rehabilitation
3
9
-67%
6
-50%
 
Managed Care
1
3
-67%
7
-86%
 
Other
14
22
-36%
25
-44%
 
   Services Subtotal
73
113
-35%
113
-35%
 
Technology Segment:
 
 
 
 
 
 
Biotechnology 
45
40
13%
29
55%
 
Pharmaceuticals 
37
29
28%
34
9%
 
Medical Devices  
35
35
0%
37
-5%
 
e-Health
9
13
-31%
15
-40%
 
   Technology Subtotal   
126
117
8%
115
10%
 
Grand Total  
199
230
-13%
228
-13%
 
      *Preliminary figures
 
 
 
 
 
 
 

The Pharmaceutical sector saw the announcement of two multi-billion dollar deals in the first quarter, Pfizer’s $68.0 billion purchase of Wyeth and Merck’s $41.0 billion acquisition of Schering-Plough. “Despite exaggerated reports of its weakness, the current market has demonstrated the capacity to put together and finance two mega-deals,” stated Sanford Steever, Ph.D., editor of The Health Care M&A Report. “Buoyed by strong cash flow, big pharma companies still have the resources, the strategic vision and the will to continue making transformative deals,” added Mr. Steever.

The recent acquisition activity in the technology sectors of the health care industry has been funded from internal resources and supplemented by bankers and other investors willing to finance mergers, acquisitions and takeovers. “Pharma, biotech and medical device companies have relied on their own cash flow and their ability to go to the credit markets to access the capital required for large deals,” commented Stephen M. Monroe, managing editor at Irving Levin Associates. “As stimulus money works its way into the system, banks and other investors are well positioned to offer financing for deal making to these health care technology companies.”

“The demand for health care products and services remains strong, and can only rise as demographics shift towards an older population,” summarized Mr. Steever. “While not every quarter can be a record breaker, the increasingly large and central role that health care plays in the economy will help ensure robust M&A activity in the industry.”

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 and is online at www.levinassociates.com. 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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