Medical Equipment Quarterly Deals Analysis: M&A and Investment Trends - Q2 2012GlobalData
July 31, 2012
86 Pages - SKU: GBDT4861500
Additional InformationMedical Equipment Deal Value Increased 33% In Q2 2012.
GlobalData's “Medical Equipment Quarterly Deals Analysis: M&A and Investment Trends - Q2 2012” report is an essential source of data on and trend analysis of the mergers and acquisitions (M&As) and financing in the medical equipment market. The report provides detailed information on M&As, equity/debt offerings, private equity, venture financing and partnership transactions registered in the medical equipment industry in Q2 2012. The report provides detailed comparative data on the number of deals and their value in the past five quarters, categorized into deal types, segments, and geographies. The report provides information on the top private equity, venture capital and advisory firms in the medical equipment industry.
GlobalData derived the data presented in this report from proprietary in-house Medical eTrack deals database and primary and secondary research.
Some High Value Deals Increase Deal Value Considerably In Q2 2012
M&As and asset transactions, which include change in ownership and control of companies or assets (GlobalData does not consider this value as a new investment in the market), reported an increase of 33% in deal values in Q2 2012. The deal values increased to $26 billion in Q2 2012 from $20 billion in Q1 2012. However, the number deals decreased from 683 in Q1 2012 to 672 in Q2 2012. On a year-on-year basis, the number of deals was fewer and deal values smaller in Q2 2012, when compared to 781 deals worth of $71.1 billion in Q2 2011. HealthCare IT market was attracted substantial investments in Q2 2012. It recorded 38 acquisitions worth $4.8 billion in Q2 2012.
SXC Health Solutions’s acquisition of Catalyst Health Solutions for $4.4 billion, Hologic announcing the acquisition of Gen-Probe, a diagnostic test maker, for $3.7 billion, and EQT’s acquisition of BSN Medical from Montagu Private Equity for $2.3 billion and Agilent Technologies’s acquisition of Dako from EQT for $2.2 billion were some of the high value deals reported in Q2 2012.
According to Bhaskar Vittal, Analyst at GlobalData, “High value deals are expected to continue in the near to mid future as companies continue to explore inorganic growth opportunities and expand their product portfolio and reach. Most of the major medical device companies generate good free cash flows and going for a big sized deal will not put significant financial constraints on them.”
Follow-on Issue Was Prefered By Companies In Q2 2012
Global equity offerings, including initial public offerings (IPO), secondary offerings, and private investment in public equities (PIPEs), reported an increase in the number of deals and deal values in Q2 2012. The segment reported 87 deals worth $2.2 billion in Q2 2012, as compared to 62 deals worth $1.7 billion in Q1 2012. On a year-on-year basis, the number of deals increased and deal values decreased in Q2 2012, when compared with 84 deals worth $2.6 billion in Q2 2011.
In Q2 2012, companies in the industry preferred raising funds from public through secondary issues. There were 30 secondary/ follow-on offerings worth $1.8 billion in Q2 2012, as compared to 17 deals worth $1.1 billion in Q1 2012. Besides, 51 PIPE deals worth $251m were recorded in Q2 2012.
Ningbo David Medical Device Co., Ltd., Shanghai Kinetic Medical Co., Ltd., Cancer Genetics, Inc., Accelera Innovations, Inc., PN Med Group Inc. and MRI Interventions, Inc. completed initial public offerings (IPO) in Q2 2012.
Debt offerings, including secondary offerings and private debt placements, recorded a decrease in the number of deals and deal values in Q2 2012 with 16 deals worth $2.5 billion, as compared to 32 deals worth $8 billion in Q1 2012.
Venture Capital Investments Increase 5% In Q2 2012
The venture capital (VC) market reported 194 deals worth $1.5 billion in Q2 2012, as compared to 221 deals worth $1.4 billion in Q1 2012. On a year-on-year basis, the number of deals and deal values decreased in Q2 2012, when compared to 250 deals worth $2.3 billion in Q2 2011. North America remained the favorite destination for the VC investors. The region recorded 169 VC deals worth $1.3 billion in Q2 2012.
In Q2 2012, venture capital investors focused on making investments in growth and later stage companies, as they seemed to less risky. Out of the 194 deals reported in Q2 2012, 90 were start-up stage financing deals worth $321m, 67 were growth stage financing deals worth $666.5m, 25 were later stage financing deals worth $493.1m and 12 were seed stage financing deals worth $6.9m.
New Enterprise Associates topped the list of venture financing firms by participating in 13 deals worth $315.2m in the last four quarters (Q3 2011 to Q2 2012). The firm focused on investments in North America-based companies. TriVascular, Inc., Sensors for Medicine and Science, Inc., Relievant MedSystems, Inc. and Roka Bioscience, Inc. are some of the companies, which succeeded in raising the highest amount of funding from New Enterprise Associates during the same period.
The private equity (PE) market recorded an increase in the number of deals and deal values in Q2 2012 with 23 deals worth $2.9 billion in Q2 2012, as compared to 14 deals worth $395.5m in Q1 2012. EQT’s acquisition of BSN Medical from Montagu Private Equity for $2.3 billion was the only PE deal that contributed much to the deal value in Q2 2012.
According to Bhaskar Vittal, Analyst at GlobalData, “Growth in PE/VC investments in medical devices is expected to slow in the near future due to uncertain economic conditions surrounding Europe and slow growth in the US. Governments are reducing their healthcare expenditure especially in European countries such as Spain and Italy and there are concerns that other countries may follow suit. In such situations, PE/VC investments on start up companies can slow down significantly or the deals are done at cheap valuations.”
Deal Values In North America Increase In Q2 2012
North America reported an increase deal values in Q2 2012. The region recorded deals worth $18 billion in Q2 2012, as compared to $12.4 billion in Q1 2012, reflecting an increase of 43%. However, the number of deals remained unchanged with 510 deals each in Q2 2012 and Q1 2012. SXC Health, Hologic, WellPoint and Valeant Pharma were some of the active buyers in the region in Q2 2012.
Europe recorded an increase in deal values in Q2 2012 with deals worth $7.9 billion, as compared to $3.8 billion in Q1 2012. On However, the number of deals declined marginally from 159 in Q1 2012 to 158 in Q2 2012. On a year-on-year basis, the deal values were 80% less in Q2 2012 when compared to $41 billion in Q2 2011.
Asia-Pacific registered an increase in the number of deals with 86 in Q2 2012 as compared to 82 in Q1 2012. The deal values reported a decrease in Q2 2012 wit
Medical Devices is one of the attractive and fastest growing segments in the healthcare industry. While the industry reports a wide range of technological innovations at regular intervals, the speed at which they are likely to be adopted seems to be uncertain. The industry recorded a variety of technological advances in the recent years. The companies in the industry focus consistently on developing innovative products, in spite of the high capital expenditure, in order to stay ahead of their peers. External and internal factors such as government action, economic stability, regulatory environment and lack of qualified manpower to oversee operations are the major factors influencing the medical device industry and determining its growth. The industry generated revenue of over $300 billion in 2011. Medical Device Tax, which is scheduled to take effect from January 2013, is now the primary issue for companies in the industry. The trade association for medical device makers such as Abbott Laboratories (ABT) and Medtronic (MDT) commented that 2.3% excise tax on their products designed to help pay for the health care overhaul will tank sales and push employment overseas. An industry-commissioned study concluded that “under reasonable assumptions,” the tax would cost more than 43,000 US jobs and wipe as much as $6.7 billion off annual revenue of $116 billion. On June 7, 2012, U.S. House of Representatives passed a bill to repeal the tax on medical devices which would primarily apply to makers and importers of devices like pacemakers and stents, defibrillators, artificial hips and knees, surgical tools and X-ray machines.
Eurozone debt crisis is another area of concern due to which companies in the medical device industry are struggling to understand the new dynamics and are now planning to stick to the old procurement models long promoted by the World Bank and central governments. In Q2 2012, GDP decreased 0.7%, as compared to that in Q1 2012, which signals that the economy is moving from a shallow, double-dip recession into a deeper and more prolonged slump. Euro nations and developing nations including China, India and Brazil were the some of the worst hit regions in Q2 2012. China recorded its lowest GDP growth for three years of 7.6%, while India recorded a two year lowest GDP growth of 6.9%. Brazil recorded a negligible 0.8% GDP growth in Q1 2012, while the US recorded a weak 1.9% GDP growth in Q1 2012 and is expected to record a weaker 1.4% growth in Q2 2012.
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