HEALTH CARE M&A VOLUME UP OVER 10% IN THE SECOND QUARTER OF 2004 ACCORDING TO NEW REPORT FROM IRVING LEVIN ASSOCIATES, INC.

NEW CANAAN, CT –July 14, 2004 – During the second quarter of 2004, M&A deal volume in the health care industry rose 11% from the previous quarter and remained flat with the year–ago quarter, Q2:03. Based on revealed prices, a total of $25.3 billion was spent to finance the second quarter’s 230 deals. While this represents a 73% drop from the $93 billion committed to fund health care M&A in Q1:04, by removing the skewing effect of the $65.5 billion Sanofi-Aventis merger, the decline is only 8% from the remaining $27.5 billion.

The Health Care M&A Market Q2:04 Deal Volume By Sector
Sector	Q2:04 Deals*	Q1:04 Deals	%Change	Q2:03 Deals	%Change
*Services:*
Hospitals	18	7	+157%	4	+350%
Long-Term Care	18	12	+50%	26	-31%
Physician Medical Groups	12	10	+20%	7	+71%
Laboratories, MRI, Dialysis	11	6	+83%	7	+57%
Managed Care	9	8	+13%	6	+50%
Behavioral Health	8	4	+100%	4	+100%
Home Health	8	6	+33%	4	+100%
Rehabilitation	0	6	NM	6	NM
Other	26	28	-7%	27	-4%
Services Subtotal	110	87	+26%	91	+21%

*Technology:*
Pharmaceuticals	45	39	+15%	41	+10%
Medical Devices	37	37	0%	45	-18%
Biotechnology	30	29	+3%	37	-19%
e-Health	8	15	-47%	16	-50%
Technology Subtotal	120	120	0%	139	-14%

Grand Total	230	207	+11%	230	0%
*Preliminary figures

In a notable departure from recent trends, the health care services segment witnessed growth in all but two sectors in Q2:04. While this segment accounted for 48% of all deals announced, it attracted 53% of all dollars spent, a sharp change from previous quarters when the technology segment could capture up to 80% of all dollars committed to the M&A market. “Changes to the Medicare law, implemented last December, are already translating into increased M&A activity in the Hospital and Behavioral Health sectors,” observed Stephen M. Monroe, managing editor at Irving Levin Associates, Inc. “The increased reimbursement flowing to these sectors has helped to make hospitals more attractive acquisition candidates.”

Pharmaceuticals remain on the forefront of M&A activity among the technology sectors. “The quest to replenish their pipelines as blockbuster drugs face patent expiration continues to send big pharma in search of new drugs, especially among the biotech firms,” stated Sanford Steever, Ph.D., editor of the Report. “To better control development of drugs in clinical trials, more pharma companies are now choosing outright acquisitions over licensing agreements.”

The first half of 2004 has witnessed nearly $120 billion being spent on approximately 440 deals in the health care M&A market. “If economic growth remains healthy without overheating, this year may very well end with an estimated 900 deals at a combined price of nearly $150 billion,” commented Mr. Monroe. “A 50 percent growth rate over 2003 would make a convincing demonstration that M&A activity has left the recession behind.”

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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