HEALTH CARE M&A ACTIVITY WEAKENS IN THE FIRST QUARTER OF 2003
According to Irving Levin Associates, Inc.
NEW CANAAN
,
CT
–
April 25, 2003
–
During the
first quarter of 2003, all activity on Wall Street slowed down from
previous years, as investors waited for the economy to turn around and for
the war in
Iraq
to end, and health care merger and acquisition
activity was no exception. With
almost all segments reporting decreases in deal volume, there were a total
of 218 publicly announced health care mergers and acquisitions in the
first quarter 2003, representing a 24% decrease from the previous quarter
but a 3% increase over the first quarter in 2002. |
|
Based on those deals with disclosed prices, the dollar value
of the transactions announced in the first quarter 2003 was $13.5 billion,
or approximately 10% more than the $12.3 billion in the fourth quarter 2002
and 82% more than the $7.4 billion in the first quarter 2002.
More than 90% of the dollars committed were in the health care
technology segment, with the deal value evenly split among pharmaceuticals,
medical devices and biotechnology. Just
three transactions represented 51% of the total amount spent in the first
quarter, including Johnson & Johnson’s $2.7 billion acquisition of
Sunnyvale, California-based Scios, a biotechnology company that discovers,
develops and manufactures human therapeutics based on the company’s
strengths in protein-based and small-molecule drug discovery.
The other two billion-dollar deals involved foreign entities as the
selling company.
The health care services segment posted a 37% drop in
M&A activity compared with the fourth quarter 2002, but just a 1% drop
from the year-ago quarter. “This
is the second lowest level of quarterly activity we have seen in nearly 10
years in the services segment, partly caused by an unprecedented plunge in
hospital mergers and acquisitions,” stated
Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which
publishes The Health Care M&A Report. “During
2002, there were an average of 15 hospital deals per quarter, compared with
just four in this year’s first quarter, and it is still unclear whether
the first quarter of this year is a fluke or represents a real change in the
market,” added Sanford Steever, Ph.D., editor of the Report.
The long-term care sector led health care services in terms
of number of transactions for the second quarter in a row with 22 deals, and
the home health care sector, after floundering for several years, is seeing
renewed interest from investors and companies seeking to expand.
“Activity in the long-term care market has been strong in the past
few quarters as financially distressed operators and lenders continue to
shed properties that no longer have a strategic fit,” commented Mr.
Monroe.
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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