THIRD QUARTER 2004 HEALTH CARE M&A DOLLARS 11% HIGHER THAN LAST YEAR ACCORDING TO NEW REPORT FROM IRVING LEVIN ASSOCIATES, INC.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
Fax: 203-846-8300
pressreleases@levinassociates.com
THIRD QUARTER 2004 HEALTH CARE M&A DOLLARS 11% HIGHER THAN LAST YEAR ACCORDING TO NEW REPORT FROM IRVING LEVIN ASSOCIATES, INC.
NEW CANAAN, CT –OCTOBER 4, 2004 – During the third quarter of 2004, M&A deal volume in the health care industry fell just 6% from the previous quarter and 8% from the year–ago quarter, Q3:03. Based on revealed prices, a total of $21 billion was spent to finance the third quarter’s 216 deals. While this represents an 18% drop from the $25.6 billion committed to fund health care M&A in Q2:04, it is an 11% increase over the $19 billion spent in the year-ago quarter.

The Health Care M&A Market Q3:04 Deal Volume By Sector  
Sector
Q3:04
Deals*
Q2:04
Deals
%Change
Q3:03
Deals
%Change
Services:

 

 

Long-Term Care
25
19
+32%
25
0%
Hospitals
18
17
+6%
19
-5%
Managed Care
11
9
+22%
10
+10%
Laboratories, MRI, Dialysis
9
11
-18%
14
-36%
Behavioral Health
7
8
-13%
0
NM
Home Health
7
7
0%
4
+75%
Physician Medical Groups
4
12
-67%
5
-20%
Rehabilitation
3
0
NM
4
-25%
Other
26
29
-10%
37
-30%
Services Subtotal
110
112
-2%
118
-7%

Technology:

 

 

Pharmaceuticals
48
45
+7%
31
+55%
Medical Devices
30
35
-14%
38
-21%
Biotechnology
15
30
-50%
34
-56%
e-Health
13
8
-63%
13
0%
Technology Subtotal
106
118
-10%
116
-9%

 

 


Grand Total
216
230
-6%
234
-8%
*Preliminary figures
 Pharmaceuticals captured the largest percentage of deal volume (22%) and dollar amounts (47%) in Q3:04. “With big pharmas’ own pipeline of new drugs dwindling, and generics nibbling at their heels, searches for the next blockbuster are taking them more and more to biotechnology companies, and drugs at earlier stages of development,” stated Stephen M. Monroe, managing editor at Irving Levin Associates, Inc. “The cost of acquiring a promising technology or drug platform from a biotech may be cheaper than internal development.”

Within the services segment, the Hospital sector was particularly active, attracting a total of $3.9 billion for the acquisition of 61 acute-care hospitals. “Not only did Tenet Healthcare’s divestiture program impact the M&A market, so too did the recapitalization of two medium-size hospital managers,” observed Sanford Steever, Ph.D., editor of the Report. “These deals were undertaken to provide these companies with capital for further growth and to insulate them from the vagaries of the public markets.”

The first three quarters of 2004 have witnessed $140 billion being spent on approximately 652 deals in the health care M&A market. “Despite the effect of election jitters and oil prices on the economy during the fourth quarter, this year may very well end with an estimated 850 deals at a combined value of nearly $160 billion,” commented Mr. Monroe. “This level of activity signals the amount of fragmentation still present in the health care industry, and the opportunities available for further consolidation.”

For more information on The Health Care M&A Report, or for a subscription to any Irving Levin publication, call 800-248-1668. Irving Levin Associates, Inc., established in 1948, has headquarters in New Canaan, 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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