Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
Health Care
Merger And Acquisition Activity Reaches Five-Year High In 2005, According To
Irving Levin Associates, Inc.
NORWALK, CT – January 12, 2006 – According to a new Report from
Irving Levin Associates, with fourth quarter results now in, a total of 964
mergers and acquisitions were announced in the health care industry during
2005. This figure represents the highest level of deal volume in the past
five years. Furthermore, based on preliminary figures, a total of $158.7
billion was committed during 2005 to fund this M&A activity, an amount
second only to 2004’s $164.4 billion total in the past five-year period.
The Health Care M&A Market
Fourth Quarter 2005 And
Full-Year 2005 Dollar Amounts By Sector*
Sector
Dollar Amount Fourth Quarter
2005
Percent of Quarter
Dollar Amount Full-Year 2005
Percent of Year
Managed Care
$ 533,500,000
<1%
$ 19,100,000,000
12%
Long-Term
Care
3,500,000,000
6%
6,600,000,000
4%
Labs, MRI,
Dialysis
174,800,000
<1%
6,450,000,000
4%
Hospitals
241,600,000
<1%
2,830,000,000
2%
Behavioral
Health Care
413,300,000
<1%
1,173,500,000
<1%
Physician
Medical Groups
1,000,000,000
2%
1,100,000,000
<1%
Home Health
Care
10,700,000
<1%
496,400,000
<1%
Rehabilitation
2,500,000
<1%
93,425,000
<1%
Other
Services
1,700,000,000
3%
8,000,000,000
5%
Services
subtotal
$ 7,576,400,000
13%
$ 45,843,235,000
29%
Pharmaceuticals
$ 10,400,000,000
18%
$ 46,500,000,000
29%
Medical
Devices
32,400,000,000
57%
39,300,000,000
25%
Biotechnology
6,300,000,000
11%
22,400,000,000
14%
e-Health
375,000,000
<1%
4,100,000,000
3%
Technology subtotal
$ 49,475,000,000
87%
$ 112,900,000,000
71%
Total health
care
$ 57,051,400,000
100%
$ 158,743,235,000
100%
*Preliminary
figures
“The lion’s
share of M&A dollars, 71% of the year’s total, were spent in the four health
care technology sectors we cover: Biotechnology, e-Health, Medical Devices
and Pharmaceuticals,” observed Stephen M. Monroe, Managing Editor at
Irving Levin Associates. “The year also produced 27 billion-dollar deals,
worth a combined total of $110 billion, at a rate of one every two weeks.
Nineteen of these mega-transactions, worth a total of $82 billion, were in
the technology sectors with the remaining $28 billion dedicated to eight
deals in the services sectors.”
“The Biotechnology and Pharmaceutical sectors saw strong M&A
activity in 2005 as the established big pharma companies positioned
themselves for drug patent expirations in 2006 and the resulting competition
from generic pharma companies as certain blockbuster drugs lose
exclusivity,” observed Sanford Steever, Ph.D., editor of the Report.
The Health Care M&A Market
Fourth Quarter 2005 And
Full-Year 2005 Deal Volume By Sector*
Sector
Deal Volume Q4:05
Percent of Quarter
Deal Volume 2005
Percent of Year
Long-Term Care
39
18%
126
13%
Home Health
Care
17
8%
72
7%
Hospitals
13
6%
53
5%
Labs, MRI,
Dialysis
6
3%
38
4%
Physician
Medical Groups
6
3%
34
4%
Managed Care
4
2%
30
3%
Behavioral
Health Care
10
4%
24
2%
Rehabilitation
1
<1%
9
<1%
Other Services
29
13%
136
14%
Services
subtotal
125
57%
522
54%
Medical
Devices
28
13%
141
15%
Pharmaceuticals
30
14%
128
13%
Biotechnology
25
11%
113
12%
e-Health
13
6%
60
6%
Technology
subtotal
96
43%
442
46%
Total health
care
221
100%
964
100%
*Preliminary figures
Both in the
fourth quarter and the year as a whole, the health care services segment saw
greater deal volume than the technology segment. Particularly active was the
Long-Term Care sector, which benefited from the longest bull market in that
industry in recent history. And while Managed Care saw more modest deal
volume, it accounted for the greatest number of dollars committed to
any health care services sector, $19.1 billion. “As the reimbursement
environment evolves, with the implementation of Medicare Part D this year,
health care insurers are undertaking mergers and acquisitions both to avoid
challenges and to take advantage of the opportunities that the drug benefit
offers Medicare recipients,” stated Mr. Monroe.
Among the technology sectors, Pharmaceuticals normally
captures the greatest deal volume, but in 2005 it trailed Medical Devices.
“Viewed from another standpoint, however, Pharmaceuticals remains the main
driver in the health care technology M&A,” observed Dr. Steever.
“Pharmaceutical companies bought not only other pharma companies but also
biotech firms with late-stage drug candidates and technology platforms to
fill dwindling development pipelines and replace shrinking revenue streams
as their proprietary drugs go off patent in 2006.”
“With the abundance of capital seeking investment, interest
rates stable for the near future and the stock market improving, the current
year should see a continuation of the robust M&A activity of the past two
years,” predicted Mr. Monroe. “The fundamentals of the market are all in
place.”
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 its 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.
Click here to get more information or to order any of our
Publications.
Since 1948, Irving
Levin Associates, Inc. has been the leading source of information
and investment research on mergers and acquisitions in the
Behavioral Health Care, Biotech, e-Health, Home Health Care,
Hospitals, Laboratories, MRI and Dialysis, Long Term Care, Managed
Care, Medical Devices, Pharmaceuticals, Physician Medical Groups,
Rehabilitation and other health care markets.
