Spending on Health Care Mergers & Acquisitions
Rises 44 Percent According to New Report from
Irving Levin Associates, Inc.
October 20, 2010 09:20 AM Eastern Daylight Time
NORWALK, Conn.--(EON: Enhanced Online News)--According to a new Report from Irving Levin Associates, a
total of 230 mergers and acquisitions were announced in the health care industry during the third quarter of 2010,
virtually level with the 233 deals announced in the prior quarter. A total of $66.5 billion was committed to fund this
M&A activity, up 47% from the $45.1 billion spent in the previous quarter and up 74% from the $38.2 billion spent
in the year-ago quarter, Q3:09.
THE HEALTH CARE M&A MARKET THIRD QUARTER 2010
DOLLAR AMOUNTS BY SECTOR*
Sector Dollar Amount Percent of
Third Quarter 2010 Quarter
Biotechnology $ 28,598,250,000 43%
Pharmaceuticals 7,158,530,000 11%
Medical Devices 5,105,119,000 8%
e-Health 2,999,950,000 5%
Technology subtotal $ 43,861,849,000 67%
Hospitals $ 6,559,400,000 10%
Managed Care 3,661,600,000 6%
Labs, MRI, Dialysis 1,118,200,000 2%
Behavioral Health Care 390,000,000 >1%
Long-Term Care 355,383,000 >1%
Home Health Care 56,250,000 >1%
Physician Medical Groups — —
Rehabilitation — —
Other Services 10,530,868,000 16%
Services subtotal $ 22,671,701,000 33%
Total health care $ 66,533,550,000 100%
The increase in dollar volume over the previous quarter may be ascribed in part to a return of confidence to the
market and in part to a release of pent-up investment dollars that had been sitting on the sidelines during the
economic downturn of the past two years.
The number of deals announced in each sector of the health care industry appears in the table below, along with
comparisons to the prior quarter (Q2:10) and the year-ago quarter (Q3:09).
THE HEALTH CARE M&A MARKET Q3:10 – DEAL VOLUME BY SECTOR
Q3:10 Q2:10 % Q3:09 %
Sector Deals* Deals Change Deals Change
Hospitals 24 19 26% 20 20%
Long-Term Care 25 27 -7% 21 19%
Physician Groups 13 9 44% 9 44%
Labs, MRI, Dialysis 9 15 -40% 8 13%
Home Health Care 8 11 -27% 8 0%
Managed Care 7 3 133% 7 0%
Behavioral Health Care 2 4 -50% 5 -60%
Rehabilitation 1 4 -75% 0 N/A
Other 23 18 28% 17 35%
Services Subtotal 112 110 2% 95 18%
Medical Devices 44 44 0% 43 2%
Biotechnology 34 25 36% 42 -19%
e-Health 22 11 100% 21 5%
Pharmaceuticals 18 43 -58% 38 -53%
Technology Subtotal 118 123 -4% 144 -18%
Grand Total 230 233 -1% 239 -4%
Merger and acquisition activity has prospered in the Biotechnology sector as pharmaceutical companies look for the
next blockbuster therapy to replace revenues being lost to generic competition. Sanford Steever, Ph.D., editor of
The Health Care M&A Report observed, “With looming patent cliffs, many of the big pharma companies are
seeking to cushion the blow by acquiring promising late-stage drug candidates. At the same time, those pharma
companies that remain in the Pharmaceutical M&A market are buying copycat drug companies so they can compete
with pure-play generic drug companies.” The stakes are big: the Biotechnology and Pharmaceutical sectors account
for 23 percent of recent deal volume, but 54 percent of dollar volume in the health care M&A market.
Financial buyers such as private equity groups and REITs made a very strong showing in the third quarter merger
and acquisition market, announcing 22 deals worth a combined $14.4 billion. “During the third quarter, financial
buyers accounted for 22% of all dollars spent on health care M&A, up dramatically from the $3.8 billion, or 6% of
all dollars, spent in the prior quarter,” stated Stephen M. Monroe, managing editor at Irving Levin Associates.
“Private equity groups in particular have found many opportunities in the health care industry to deploy the capital
that has been sitting on the sidelines,” explained Mr. Monroe.
The first three quarters of 2010 registered a total of 682 deals in the health care industry with a combined value of
$144.5 billion. “Building on a strong year, health care companies have already begun to position their business for
2011 and beyond,” stated Mr. Steever. “They will continue to pursue M&A to grow their businesses, achieve
economies of scale and consolidate fragmented industries,” Mr. Steever concluded.
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.
Note: If you would like to receive this via email, please send your email address to
Irving Levin Associates, Inc.
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300