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2008 l Full Year l Trends Report l Healthcare

2008 Key Highlights

  • Transaction volume in 2008 increased by 16 percent over 2007 from 134 in 2007 to 156 in 2008
  • Transaction values in 2008 decreased by 9 percent over 2007, from $9.75 billion in 2007 to $8.89 billion in 2008
  • Private equity activity increased in both volume and value over 2007 levels; however, we did observe a notable decrease in PE activity during the 2nd half of the year

2008 vs. 2007 Key Trends

  • Healthcare M&A will remain active
  • Healthcare IT will continue to lead the way with strong deal volume
  • Private equity will continue to close deals even in the current credit environment but will need to be more creative
  • Strategic acquirers will continue to acquire selectively

Market Overview 2006-2008

Despite a weakening economy, 2008 was a solid year for M&A in the pharma and healthcare information and technology industry. The total volume of M&A transactions in the pharma and healthcare information and technology market for 2008 increased to 156 transactions, an increase of 16% over the previous year; however, the total value decreased to just below $9 billion, a decrease of 9%.

The most active segment for 2008 by volume was Healthcare IT, with a total of 75 transactions, or 48% of the total volume. Healthcare IT has been the most active segment for the past several years and we do not expect this to change in the upcoming year.

We observed a decrease in financial acquisitions during the second half of 2008, even though overall activity in the market as a whole remained solid throughout the year. The industry ended the year on a strong note - Q4 2008 was more active in terms of deal volume than it had been for the previous 5 years.

A notable trend for 2008 is that while the aggregate value of the industry’s top 10 deals and the ratio of transaction value/volume decreased from previous years, we observed an increase in 2008 median enterprise value. This suggests an overall increase in buyer selectivity as well as increasing activity and interest in the middle market.

Looking Ahead

We expect to see continued deal activity in the pharma and healthcare information and technology markets. These markets are less impacted by the economic downturn and may benefit from increased interest in healthcare.

 

Transaction Analysis

Transaction Volume Comparison

Purchaser Analysis

Number of Transactions