Hospital mergers, acquisition rise 33 percent in fourth quarter of 2001

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There were 184 announced mergers and acquisitions in the fourth quarter of 2001, valued at $27.4 billion, compared with 182 such deals, valued at $7.9 billion,

in the third quarter of 2001, according to Irving Levin Associates, New Canaan, Connecticut. Of the fourth quarter 2001 total, about 81 percent was in the healthcare technology segment, including the pharmaceuticals, biotechnology, medical device, and e-health sectors. The remaining $5.2 billion represented acquisitions in the healthcare services segment, which is dominated by the managed care and hospitals sectors.

The 24 deals in the hospitals sector in the fourth quarter of 2001 represented a 33 percent increase over the 18 deals in the third quarter of 2001 and a 20 percent increase over the 20 deals in the fourth quarter of 2000. The managed care sector saw four deals in the fourth quarter of 2001, representing no change from the third quarter of 2001 and a 67 percent drop from the 12 deals in the fourth quarter of 2000.

In the healthcare technology segment, the biotechnology sector saw 26 deals in the fourth quarter of 2001, down 4 percent from the 27 deals in the third quarter of 2001 and down 24 percent from the 34 deals in the fourth quarter of 2000. Three biotechnology deals with prices above $1 billion during the fourth quarter of 2001 included Amgen's acquisition of Immunex for $16 billion, Millennium Pharmaceutical's purchase of COR Therapeutics for $2 billion, and MedImmune's acquisition of Aviron for $1.5 billion. The pharmaceuticals sector had 22 deals in the fourth quarter of 2001, down 19 percent from the 27 deals in both the third quarter of 2001 and the fourth quarter of 2000. Irving Levin Associates expects continued activity in the biotechnology sector and increased activity in the pharmaceuticals sector as large pharmaceutical companies with slowing growth rates look toward the acquisition market to propel earnings growth into 2003.

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GROWTH IN SELECTED HEALTH OCCUPATIONS, 2000-10

Irving Levin Associates expects healthcare services transactions to increase in 2002, especially in sectors such as long-term care and home health care, both of which had been depressed for the past few years after changes in payment were enacted.