FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
NORWALK, CT – April 19, 2011 – During the first quarter of 2011 and based on revealed prices, a total of $54.4 billion was spent to finance mergers and acquisitions in the health care industry, up 65% from the $32.9 billion spent in the first quarter of 2010. However, deal volume slipped somewhat during the same period, with a 16% decrease in transactions from the fourth quarter of 2010 and an 8% dip from the year-ago quarter, Q1:10. By annualizing the first quarter 2011 dollar figure, we project that nearly $220.0 billion will be spent in 2011 for M&A activity in the health care industry.
The Health Care M&A Market First Quarter 2011
Dollar Amounts By Sector*
Sector
Dollar Amount
First Quarter 2011
Percent of Quarter
Pharmaceuticals
$ 13,497,800,000
24%
Medical Devices
11,694,000,000
21%
Biotechnology
6,722,700,000
12%
E-Health
182,800,000
>1%
Technology subtotal
$ 31,097,300,000
57%
Long-Term Care
$ 12,596,800,000
23%
Laboratories, MRI & Dialysis
2,533,200,000
5%
Hospitals
1,927,300,000
4%
Rehabilitation
1,304,800,000
2%
Home Health
58,000,000
>1%
Behavioral Health
28,000,000
>1%
Physician Medical Groups
14,600,000
>1%
Managed Care
—
—
Other Services
4,893,200,000
9%
Services subtotal
$ 23,355,900,000
43%
Total health care
$ 54,453,200,000
100%
*Preliminary figures
The Health Care M&A Market Q1:11 – Deal Volume By Sector
Q1:11 Q4:10 % Q1:10 %
Sector Deals* Deals Change Deals Change
Services Segment:
Long-Term Care 27 35 -23% 20 35%
Physician Groups 18 29 -38% 12 50%
Hospitals 23 24 -4% 9 156%
Home Health Care 5 7 -29% 14 -64%
Labs, MRI, Dialysis 11 7 57% 8 38%
Rehabilitation 2 5 -60% 2 0%
Behavioral Health Care 4 2 100% 0 NM
Managed Care 1 1 0% 2 -50%
Other 26 24 8% 26 0%
Services Subtotal 117 134 -13% 93 26%
Technology Segment:
Medical Devices 37 42 -12% 41 -10%
Pharmaceuticals 20 27 -26% 39 -49%
Biotechnology 23 26 -12% 30 -23%
e-Health 12 19 -37% 23 -48%
Technology Subtotal 92 114 -19% 133 -31%
Grand Total 209 248 -16% 226 -8%
*Preliminary figures
The search for new drugs to treat the elderly and housing facilities to take care of them propelled M&A activity in the two busiest sectors during the quarter, Pharmaceuticals and Long-Term Care. “As patent cliffs loom, pharmaceutical companies are paying up to acquire promising drug candidates in clinical trials that have been developed by biotech companies. Buyers are banking on the novelty of these drugs and their difficulty of replication to restore revenues that are being lost to generic copy-cat drugs,” observed Sanford Steever, editor of The Health Care M&A Report. “With renewed sources of capital and novel ways to structure their investments at their disposal, buyers of seniors housing facilities have increased their portfolios so they can accommodate the influx of residents and their health care needs as the population continues to age and retire. The real estate investment trusts have been particularly active in Long-Term Care M&A,” noted Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes the Report.
Recent health care reform has had an impact on M&A activity in other individual sectors of the health care industry. The acquisition of Physician Medical Groups by Hospitals has increased as providers attempt to build the accountable care organizations proposed in the legislation while acquisition activity in the Managed Care sector continues to lag due to remaining uncertainties over reimbursement issues and the durability of reform. “While government reform has shown its ability to influence mergers and acquisitions in the health care industry,” noted Mr. Steever, “the market continues to respond to fundamental forces such as the consolidation of fragmented providers, the containment of exploding health care costs and the need to better integrate different facets of the health care delivery system. Policy makers may debate, but the M&A market continues to reshape the health care landscape.”
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 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.
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