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The dollar value of the deals announced in the fourth
quarter 2002 was $12.1 billion, compared with $68 billion in the third
quarter. However, if Pfizer’s
proposed acquisition of Pharmacia for $60 billion is removed from the third
quarter statistics, the value of the fourth quarter’s transactions
increased by approximately 50%. For
the full year, approximately $101 billion was spent in the health care
M&A market, up from $75.3 billion in 2001. “With health care consuming an ever greater share of the
U.S. economy, and health care spending growing at three times the rate of
inflation, it makes sense that the health care M&A market would attract
a high level of investment interest,” stated Stephen M. Monroe, managing
editor at Irving Levin Associates, Inc., which publishes The
Health Care M&A Report.
During the fourth quarter 2002 nearly 50% of the funds
expended and 37% of the transaction activity was in the pharmaceutical and
medical device segments, the two segments that have dominated the M&A
volume for several quarters. “As
patents on many blockbuster drugs expire, large and small pharmaceutical
companies have been looking at acquisitions to bring them complementary
products as well as increased earnings, and we expect this trend to continue
in 2003,” stated Sanford B. Steever, Ph.D., editor of the Report.
There has also been an increase in cross border
transactions, with two of the three largest deals in the fourth quarter
involving U.S. companies acquiring foreign firms.
In the quarter’s largest transaction, GE Medical Systems announced
the purchase of Instrumentarium Corp., Finland’s largest medical equipment
maker with $1.1 billion of revenues, for $2.06 billion.
In the second largest transaction, Merck & Co. purchased the
remaining 49% interest in Banyu Pharmaceutical Co., one of the top 10
pharmaceutical companies in Japan, which gave Merck full control over the
company.
In the health services segment, the beleaguered long-term
care sector led the pack in the fourth quarter with 20 transactions.
Many of the sales represent divestitures from companies that are in
the process of restructuring, and this trend should continue in 2003.
The largest health services transaction was the announced $1.125
billion acquisition of Health MidWest by HCA Inc., which beat out nine other
bidders for the nonprofit operator of 14 hospitals with 2,550 beds.
It will be the largest acquisition by HCA in several years.
For more information on The
Health Care M&A Report, or for a subscription to any Irving Levin
publications, 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.
Click here to get more information or to order any of our
Publications.
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