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Health care M&A spending grows in Q2

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It seems the health care industry was busy wheeling and dealing in the second quarter of 2013, with an emphasis on deal value of mergers and acquisitions, according to a report by Irving Levin Associates, Inc.

Health care M&A activity was up 10 percent in the second quarter, with 223 deals announced. What’s shocking, however, is that the value of deals rose from $14.9 billion in the first quarter to $52.6 billion in the second quarter, a 252 percent jump. 

Three sectors posted declines, however. Behavioral health care (-43 percent), eHealth (-63 percent) and hospitals (-32 percent). 

The report states that it’s important to note that the eHealth sector is seeing a definite slowdown from the M&A frenzy that occurred in the second quarter of 2012, when 24 deals were announced. 

“The health care merger and acquisition market is held hostage to the onset of the Affordable Care Act,” said Lisa E. Phillips, editor of The Health Care M&A Report. “Some services sectors, such as home health and hospice, long-term care, physician medical groups and rehabilitation, are seeing continued activity, thanks to the move toward accountable care organizations.”

The biotechnology sector and pharmaceutical companies also saw continued activity. Biotech M&A activity was up 55 percent with 17 announced deals. Meanwhile, pharmaceuticals experienced 30 deals, with 15 of those involving the rights to drugs still in clinical trials, rights to commercialize drugs in new geographic markets or the intellectual property rights to promising early-stage drugs. 

“Expect the biotech and pharmaceuticals sector to stay active,” Phillips said. “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 health care technology sector through the end of the year.”


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