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Healthcare M&A activity has increased in the second quarter of 2013, despite this quarter yielding worse results than the same period in 2012, says business intelligence firm.

By Anonymous on Jul 31, 2013

Through ‘The Health Care M&A report’, Irving Levin Associates demonstrates that the original total spend for health care M&A activity in the second quarter of 2013 was $52.6 billion, an increase of $37.7 billion from the first period of this financial year. When compared with second quarter of 2012, deal value was steady in the same period for this year although its volume increased by 10% since the previous period.  

With 17 more deals announced in the second quarter of 2013, the biotechnology sector experienced a strong increase in M&A deals of about 55%. 11 deals were created by other biotech companies while five acquisitions were from pharmaceutical companies looking to improve their product pipelines. These transactions also encompassed Ares Life Sciences, a private equity firm, purchasing Antigen Laboratories, a biotech company.

Additionally, the pharmaceutical industry also bought other drug manufacturing companies or specific assets of those businesses, during the second quarter of 2013. 15 out of 30 deals declared in this sector concerned the rights to drugs still in the clinical trial stage, privileges to commercialize medicines in new markets around the world and the intellectual property claims to favourable early-stage treatment.

Editor of ‘The Health Care M&A Report’ Lisa Phillips commented on this development saying, “Expect the Biotech and Pharmaceuticals sector to stay active. Investors are paying a lot more attention, thanks to the surge in the biotech IPO market this year. Valuations are a bit crazy right now, with Onyx Pharmaceuticals looking for more than $120 per share. How that deal plays out will set the tone for the healthcare technology sector through the end of the year.”

However, unlike the biotech and pharmaceutical industries, other sectors in health care M&A have experienced a decline in the second quarter of this year. For example, the eHealth sector, which was subject to a 63% decline, had only six deals in this 2013 quarter as compared with 24 in the second period of 2012. The hospital sector (-32%) was affected by economic strains caused by weak inpatient volumes while analysts in the report state that Medicare reimbursement reductions have created an uncertain atmosphere, especially for non-profits.