The three months from April through
June, 2007 saw the announcement
of 231 mergers and acquisitions in the health care industry. The health
care technology segment’s four sectors posted a total of 124 transactions,
or 54% of the quarter’s deal volume. The health care services segment’s
nine sectors brought in the remaining 107 transactions.
This volume represents a 3% increase over the 224
transactions posted in the previous quarter, but a 16% decrease from the
276 deals announced in the year-ago quarter, Q2:06. The percentage
contribution of each sector and each segment to overall deal volume, along
with comparisons to the prior and year-ago quarters, appears in the
table on page 9 of this month's issue.
The technology segment boasted the top three sectors in terms of deal
volume: Medical Devices posted 40 transactions, followed by Biotechnology
with 36 and Pharmaceuticals with 35. Within the services segment, the
Long-Term Care sector claimed top honors with 23 deals announced. Bringing
up the rear were Rehabilitation, and Behavioral Health, which posted four
and three deals, respectively.
Based on prices revealed to date, a total of $59.1 billion was
committed to finance this M&A activity. The technology segment raised
$48.6 billion, or 82% of the quarter’s total dollars, while the services
segment accounted for the remaining $10.5 billion.
The percentage contribution of each sector to the total
number of dollars spent appears in the
chart on
page 3 of the issue. Biotechnology captured the highest percentage of
M&A dollars, with 39.8% of the total, followed by Medical Devices with
23.5% and Pharmaceuticals with 18.6%. At the other end of the scale, due
to such minuscule results, the Behavioral Health, Physician Medical Group
and Rehabilitation sectors had to be combined.
Prices in Q2:07 ranged from a low of $285,505 (Labs, MRI &
Dialysis) to a high of $15.2 billion (Biotechnology). The average price
per deal was $408.0 million (Q2:06, $366.0 million), the median price
$30.0 million (Q2:06, $20.0 million). Ten transactions came with a price
tag of $1.0 billion or more. Their combined value is $43.6 billion, or
nearly three-quarters of all M&A dollars in Q2:07. Not surprisingly, eight
of the billion-dollar deals were in the technology segment and just two in
the services segment.
The First Half of 2007
The first six months of 2007 generated a total of 455 deals in the
health care M&A market. This represents a 12% decrease from the first half
of 2006 when a total of 517 deals were announced in the health care
industry. However, the combined value of the deals in H1:07, based on
revealed prices, is $131.5 billion. This amount represents an 18% increase
over the $111.7 billion committed during the corresponding period of 2006.
With deal volume lower and dollar volume higher than the
prior period’s, the median price per deal has risen. The median price per
deal in H1:07 was $29.1 million, up 25% from the $23.3 million median
posted in H1:06. Among the deals for H1:07 are 23 billion-dollar deals
worth a total of $99.4 billion (H1:06, 17 worth $83.4 billion). If the
dollars (pounds, euros and yen) keep flowing at this pace for the rest of
the year, 2007 will emerge as a record-breaker in terms of dollar volume.
