Healthcare M&As: Volume Up; Value Down

The $2.6 billion acquisition of Boston Biomedical by Dainippon Sunitomo Pharmaceutical and the $2.5 billion acquisition of Inhibitex by Bristol-Myers Squibb were the largest mergers and acquisitions in the healthcare industry during the first quarter of 2012.

Despite those blockbuster deals, the dollar value of M&A activity in the first quarter of this year dropped by 47% to $28.9 billion compared to first quarter 2011 activity. However, the total number of deals increased by 9% to 274, according to Norwalk, CT-based Irving Levin Associates Inc.

The volume increase is good news because it demonstrates that strategic and financial buyers are in the market and willing to invest capital, explains Sanford Steever, editor of The Health Care M&A Report. He notes, however, that 2012 is an election year and that may slow activity.

The technology sector, including pharma and biotechs, accounted for 44% of the deals (121) and 70% of the dollar value ($20.3 billion) for the current first quarter. A dearth of blockbuster deals saw the dollar value of the services sector, which includes long term care and hospitals, fall by 63% to $8.5 billion.

Biotechnology ($10.5 billion), pharmaceuticals ($6 billion), medical devices ($3.2 billion), and long-term care ($1.7 billion) were the leading market segments in terms of dollar value. Biotechnology and pharmaceuticals captured 19% of the deal volume and 57% of the dollar value of first quarter M&As.