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 Skyrockets In The First Quarter Of 2004 According To New Report From Irving Levin Associates, Inc.
NEW CANAAN, CT –April 27, 2004 – During the first quarter of 2004, M&A deal volume in the health care industry dropped 14% from the 234 deals in the fourth quarter of 2003 and 12% from the 229 deals in the first quarter of 2003. The dollar size of deals surged dramatically, however. Based on revealed prices, a total of $92.3 billion was spent to finance the first quarter’s 201 deals, nearly equal with the $92.8 billion spent in all of 2003 to finance that year’s 923 transactions.
The Health Care M&A Market Q1:04 Deal Volume By Sector
Sector
Q1:04
Deals*
Q4:03
Deals
%Change
Q1:03
Deals
%Change
Services:
Long-Term Care
11
25
-56%
27
-59%
Physician Medical Groups
10
10
0%
5
+100%
Managed Care
8
7
+14%
6
+33%
Hospitals
7
11
-36%
4
+75%
Home Health
6
3
+100%
14
-57%
Laboratories
6
9
-33%
7
-14%
Rehabilitation
6
4
+50%
3
+100%
Behavioral Health
4
4
0%
3
+33%
Other
25
29
-14%
29
-14%
Services Subtotal
83
102
-19%
98
-15%
Technology:
Pharmaceuticals
39
49
-20%
51
-24%
Medical Devices
36
42
-14%
39
-8%
Biotechnology
29
27
+7%
30
-3%
e-Health
14
14
-0%
11
+27%
Technology Subtotal
118
132
-11%
131
-10%
Grand Total
201
234
-14%
229
-12%
*Preliminary figures
Of the $92.3 billion committed in Q1:04, one deal, Sanofi-Synthelabo SA’s proposed acquisition of Aventis SA, now valued at $65 billion, accounts for 70% of the total amount committed in the first quarter to finance health care M&A activity. This deal, which creates the world’s third largest pharmaceutical company, will likely cast its shadow over the market for the remainder of the year.
Three sectors of the health care industry, pharmaceuticals, medical devices and biotechnology, accounted for 52% of all health care M&A deals announced and 94% of all dollars committed in the first quarter. “The continuing focus on health care technology reflects investors’ desire 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. “The on-going shift in demographics led by babyboomers will drive additional demand for health care services which will lead in turn to increased investor interest and M&A activity in various sectors of health care services,” added Sanford Steever, Ph.D., editor of the Report.
Recent changes to the Medicare law, enacted last December, have already begun to impact M&A activity in the managed care sector, which showed increases in deal volume over both the prior and the year-ago quarters. “With greater reimbursement flowing into the managed care sector, many companies will return to the Medicare Advantage market,” commented Mr. Monroe. “Further consolidation will occur in this fragmented sector as companies attempt to gain efficiencies and control costs through mergers and acquisitions.”
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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