Spending on Health Care Mergers and Acquisitions Rises 44 Percent According to New Report by 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 – October 20, 2010 – According to a new Report from Irving Levin Associates, a total of 230 mergers and acquisitions were announced in the health care industry during the third quarter of 2010, virtually level with the 233 deals announced in the prior quarter. A total of $66.5 billion was committed to fund this M&A activity, up 47% from the $45.1 billion spent in the previous quarter and up 74% from the $38.2 billion spent in the year-ago quarter, Q3:09.

                     

The Health Care M&A Market Third Quarter 2010
Dollar Amounts By Sector*

Sector

Dollar Amount

Third Quarter 2010

Percent of  Quarter

Biotechnology

     $  28,598,250,000

43%

Pharmaceuticals

       7,158,530,000

11%

Medical Devices

     5,105,119,000

8%

e-Health

2,999,950,000

5%

   Technology subtotal

$  43,861,849,000 

67%

 

 

 

Hospitals

     $    6,559,400,000

10%

Managed Care

3,661,600,000

6%

Labs, MRI, Dialysis

1,118,200,000

2%

Behavioral Health Care

    390,000,000

>1%

Long-Term Care

         355,383,000

>1%

Home Health Care

         56,250,000

>1%

Physician Medical Groups

Rehabilitation

Other Services

    10,530,868,000

16%

   Services subtotal

$  22,671,701,000

33%

 

 

 

Total health care

$ 66,533,550,000

100%


            *Preliminary figures     

The increase in dollar volume over the previous quarter may be ascribed in part to a return of confidence to the market and in part to a release of pent-up investment dollars that had been sitting on the sidelines during the economic downturn of the past two years.
 
The number of deals announced in each sector of the health care industry appears in the table below, along with comparisons to the prior quarter (Q2:10) and the year-ago quarter (Q3:09).
 
The Health Care M&A Market Q3:10 – Deal Volume By Sector
 

    

                                                     Q3:10       Q2:10         %       Q3:09        %

Sector                                          Deals*       Deals    Change   Deals    Change

Services Segment:

Hospitals                                          24              19         26%          20        20%

Long-Term Care                              25              27         -7%          21        19%

Physician Groups                              13                9         44%            9        44%

Labs, MRI, Dialysis                            9              15       -40%            8        13%

Home Health Care                              8              11       -27%            8          0%

Managed Care                                   7                3       133%            7          0%

Behavioral Health Care                       2                4       -50%            5       -60%

Rehabilitation                                      1                4       -75%            0        N/A

Other                                               23              18         28%          17        35%

   Services Subtotal                         112            110           2%          95        18%

                                                                                                                       

Technology Segment:                                                                                   

Medical Devices                               44              44           0%          43          2%

Biotechnology                                   34              25         36%          42       -19%

e-Health                                           22              11       100%          21          5%

Pharmaceuticals                                18              43       -58%          38       -53%

   Technology Subtotal                    118            123         -4%        144       -18%

                                                                                                                       

Grand Total                                  230            233          -1%       239         -4%

      *Preliminary figures

 

Merger and acquisition activity has prospered in the Biotechnology sector as pharmaceutical companies look for the next blockbuster therapy to replace revenues being lost to generic competition. Sanford Steever, Ph.D., editor of The Health Care M&A Report observed, “With looming patent cliffs, many of the big pharma companies are seeking to cushion the blow by acquiring promising late-stage drug candidates. At the same time, those pharma companies that remain in the Pharmaceutical M&A market are buying copycat drug companies so they can compete with pure-play generic drug companies.” The stakes are big: the Biotechnology and Pharmaceutical sectors account for 23 percent of recent deal volume, but 54 percent of dollar volume in the health care M&A market.
 
Financial buyers such as private equity groups and REITs made a very strong showing in the third quarter merger and acquisition market, announcing 22 deals worth a combined $14.4 billion. “During the third quarter, financial buyers accounted for 22% of all dollars spent on health care M&A, up dramatically from the $3.8 billion, or 6% of all dollars, spent in the prior quarter,” stated Stephen M. Monroe, managing editor at Irving Levin Associates. “Private equity groups in particular have found many opportunities in the health care industry to deploy the capital that has been sitting on the sidelines,” explained Mr. Monroe.
 
The first three quarters of 2010 registered a total of 682 deals in the health care industry with a combined value of $144.5 billion. “Building on a strong year, health care companies have already begun to position their business for 2011 and beyond,” stated Mr. Steever. “They will continue to pursue M&A to grow their businesses, achieve economies of scale and consolidate fragmented industries,” Mr. Steever concluded.

For more information on The Health Care M&A Information Source, 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 databases, on the health care and senior housing markets.

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