Heath Care M&A Activity for 2010 Remains Strong, 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 20, 2011 – During 2010 and based on preliminary results, a total of 913 mergers and acquisitions were announced in 13 sectors of the health care industry, a 3% decrease from the 945 transactions announced in 2009. Based on prices revealed to date, a total of $206.5 billion was committed to finance the year’s 913 deals. This represents an 11% decrease from the $232.2 billion in 2009. In terms of dollars committed to M&A deals, 2010 is the fifth-largest year of the past 10 years.

M&A Deal and Dollar Volume for 2010 and 2009*

 

Deal Volume

Dollar Volume

 

 

Sector

2010

2009

% Change

2010

 

2009

 

% Change

Behavioral Health

7

11

-36%

$3,491,000,000

 

$79,659,000

 

4,280%

Home Health

41

42

-2%

1,405,083,000

 

140,997,000

 

896%

Hospitals

75

53

42%

17,442,095,000

 

1,813,300,000

 

860%

Laboratories, MRI, Dialysis

39

30

30%

2,230,061,950

 

90,457,000

 

2,365%

Long-Term Care

103

88

17%

11,735,704,464

 

2,918,175,000

 

302%

Managed Care

13

15

-13%

4,093,323,000

 

850,000,000

 

380%

Physician Medical Groups

60

41

46%

425,439,000

 

99,100,000

 

329%

Rehabilitation

12

11

9%

236,890,000

 

22,085,000

 

973%

Other

91

78

16%

23,014,518,522

 

6,276,251,881

 

267%

   Services Subtotal

441

369

20%

$64,074,114,936

 

$12,290,024,881

 

421%

Biotechnology

110

193

-43%

$55,951,409,000

 

$47,445,849,040

 

18%

E-Health

73

69

6%

6,893,651,063

 

11,534,925,000

 

-40%

Medical Devices

165

176

-6%

41,493,789,929

 

13,820,275,951

 

200%

Pharmaceuticals

124

138

-10%

38,101,480,000

 

147,122,047,185

 

-74%

   Technology Subtotal

472

576

-18%

$142,440,330,892

 

$219,923,097,176

 

-35%

Grand Total

913

945

-3%

$206,514,445,828

 

$232,213,112,057

 

-11%

*2010 Preliminary Figures

 

 

 

 

 

 

 

 

The year-over-year results are skewed by two mega-deals in the 2009 Pharmaceutical industry worth a combined total of $109.1 billion, Pfizer’s $68.0 billion acquisition of Wyeth and Merck & Co.’s $41.1 billion acquisition of Schering-Plough Corp. Controlling for these two deals, both announced just before the generational market bottom in March 2009, shows that the health care M&A market continues to climb out of the Great Recession with a full head of steam.
 
“The passage of health care reform in March 2010 has allowed providers of health care services to pencil out clearer projections of their revenues and cash flows. This aids them in turn in determining more acceptable valuations of businesses they wish to buy or sell,” stated Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes The Health Care M&A Report. “The thawing of credit has further facilitated the great surge of health care services M&A activity during 2010, with spending up 421% over the comparable levels in 2009. Private equity has also been swift to return to the market to put to use money which had been sitting on the sidelines, and to find well-priced deals before the market gets much hotter.” Activity in the Hospital sector, generally perceived to be the focus of the health care delivery system, is forecast to remain strong for 2011.
 
The health care technology segment, including Biotechnology, e-Health, Medical Devices and Pharmaceuticals, posted 472 deals, or 52% of the year’s deal volume, worth $142.4 billion. “If we remove 2009’s two mega-deals from the mix, spending on Pharmaceutical M&A was essentially flat from 2009 into 2010,” observed Sanford Steever, Ph.D., editor of the Report. “During 2010, pharma companies pursued deals in the biotech sector to find new sources of revenue to replace what is being lost to the expiration of patent protection and exclusivity on their blockbuster drugs.” Going forward in 2011, the big pharma companies will continue to focus on biotechnology companies for new, hard-to-copy products, and their potentially blockbuster sales.
 
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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