FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
Fax: 203-846-8300
pressreleases@levinassociates.com
HEALTH CARE M&A DOLLAR VOLUME SURGES IN THE SECOND QUARTER OF 2003 ACCORDING TO NEW REPORT FROM IRVING LEVIN ASSOCIATES, INC.
NEW CANAAN, CT –July 23, 2003 – During the second quarter of 2003, M&A deal volume in the health care industry remained basically flat, with a 2% dip in transactions from the first quarter of 2003 and a 7% decrease from the second quarter of 2002. The size of deals grew dramatically, however: Based on revealed prices, a total of $18.1 billion was spent to finance the second quarter’s 222 deals, up nearly 40% from the $13.2 billion spent in the first quarter to fund 227 transactions.
The Health Care M&A Market Q2:03 Deal Volume By Sector
Sector
Q2:03
Deals*
Q1:03
Deals
%Change
Q2:02
Deals
%Change
Services:
Long-Term Care
25
27
-7%
20
+25%
Laboratories
7
7
0%
13
-46%
Managed Care
6
6
0%
14
-57%
Rehabilitation
6
3
+100%
6
0%
Physician Medical Groups
5
5
0%
10
-50%
Behavioral Health
4
2
+100%
4
0%
Home Health
4
14
-71%
18
-78%
Hospitals
4
4
0%
11
-64%
Other
26
27
-4%
39
-33%
Services Subtotal
87
95
-8%
135
-36%
Technology:
Medical Devices
45
40
+13%
35
+29%
Pharmaceuticals
39
50
-22%
28
+39%
Biotechnology
35
31
+13%
21
+67%
e-Health
16
11
+45%
19
-16%
Technology Subtotal
135
132
+2%
103
+31%
Grand Total
222
227
-2%
238
-7%
*Preliminary figures
As the markets regained their footing this year, one sector of health care, biotechnology, has attracted the most interest and the most capital. Already this year it has captured 41% of the $31.1 billion spent to finance nearly 450 deals in the first six months of 2003. The year’s two largest deals in health care to date also involve biotech companies: Idec Pharmaceuticals is buying Biogen for $6.8 billion, and Johnson & Johnson is buying Scios for $2.7 billion.
Just three sectors of the health care industry, biotechnology, medical devices and pharmaceuticals, accounted for 53% of all health care M&A deals announced in the second quarter. “We are seeing a shift from health care services to technology as investors seek to capitalize on the potential returns of biotech, pharma and medical device companies,” stated Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes The Health Care M&A Report. “Despite the current low levels of mergers and acquisitions in health care services, we expect that investor interest, and M&A deals, will grow as the shift in demographics led by the baby boomers drives additional demand for services,” added Sanford Steever, Ph.D., editor of the Report.
For the third quarter in a row, the long-term care sector led health care services in terms of number of transactions with 25 deals. “Not only will the graying of America favor activity in long-term care and home health, among other sectors, it will also focus more attention on managed care deals, as payors attempt to balance the increased use of the health care system by a large, elderly population,” commented Mr. Monroe. “Deal volume in long-term care has also surged as facility portfolios have been realigned.”
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.
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