Medical Equipment Annual Deals Analysis 2010
Medical Equipment Annual Deals Analysis 2010
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Investments In The Medical Equipment Market Plummet In 2009
GlobalData's "Medical Equipment Annual Deals Analysis 2010" report is an essential source of data and trend analysis on mergers and acquisitions (M&A) and financing in the medical equipment market. The report provides detailed information on M&A, equity/debt offerings, private equity (PE), venture financing and partnership transactions registered in the medical equipment industry in 2009. The report includes detailed comparative data on the number of deals and their value in the last four quarters, subdivided by deal types, segments, and geographies. Additionally, the report provides information on the top PE, venture capital (VC), and advisory firms in the medical equipment industry.
Data presented in this report is derived from GlobalData's proprietary in-house Medical eTrack deals database as well as primary and secondary research.
Decreased Investments In The Medical Equipment Industry In 2009
Global investments in the medical equipment declined by 15%, registering $73.8 billion in 2009 compared to $86.9 billion in 2008. The decrease in investments can primarily be attributed to the concentration of medical equipment companies on organic growth opportunities because of the uncertain economic outlook. Growing economic concern also led to a decrease in investments in 2009, after high business consolidation activity in 2008. The first quarter of 2009 garnered the most investments, reporting $24.9 billion in spite of the economic uncertainty. Further, the number of medical equipment deals increased from 1,675 deals in 2008 to 1,790 deals in 2009. The industry witnessed a compound annual growth rate (CAGR) of 11.1% in the number of deals from 2005 to 2009.
Mergers & Acquisitions In The Medical Equipment Decreased By 57% In 2009
M&A including asset transactions in the medical equipment industry witnessed a decrease of 57% in the deal value, reporting $18.7 billion in 2009 compared to $43.1 billion in 2008. This signifies that most companies are taking a skeptical approach to the business integration process due to the uncertain market conditions, after high consolidation activity in 2008. Abbott Laboratories' $2.8 billion acquisition of Advanced Medical Optics and Agilent Technologies' $1.5 billion acquisition of Varian are the two largest deals of the year. Further, the number of deals decreased from 528 deals in 2008 to 487 deals in 2009. M&A activity was dominant in the in vitro diagnostics segment, registering 88 deals worth $6.6 billion, followed by the healthcare IT segment with 79 deals worth $905 million in 2009.
GlobalData expects that the M&A activity in the medical equipment industry will regain its momentum with factors such as the increasing ageing population, greenfield manufacturing and joint ventures/acquisition of local companies, which will provide potential entry strategies into the largest emerging economies, such as China and India.
According to Akanksha Jain, Analyst at GlobalData, "The lackluster stock market performance, which saw the stock prices of several big device companies nosedive, along with turbulent economic conditions, kept most companies away from betting on small companies."
Financing Activity Surged Through Debt Offerings In 2009
Debt offerings, including secondary offerings and private debt placements, were the most prominent among all financing activities in the medical equipment market, with around $39.8 billion raised in 2009 compared to $20.8 billion in 2008. Further, the number of deals also increased, reporting 114 deals in 2009 compared to 89 deals in 2008. The in vitro diagnostics market segment was the lead runner, reporting $17.7 billion from 38 deals in 2009.
Public debt offerings contributed the most to the deal value, with $31.5 billion reported in 2009 compared to $15 billion in 2008, driven by flourishing first quarter investments in 2009 with several big ticket deals: Novartis' offering of notes and bonds for $5 billion; Abbott Laboratories' $3 billion public offering of notes; Eli Lilly's public offering of notes for $2 billion; and Bayer's $1.7 billion public offering of notes.
According to Akanksha Jain, Analyst at GlobalData, "Cheap interest rates saw a large number of companies favoring debt offerings for raising capital in 2009, and the trend is likely to continue for the better part of 2010. Even as the Fed hikes interest rates in the coming months, following a slow recovery in the US, it will take time for them to return to the high levels of the pre-2008 period, consequently making debt a lucrative financing option in the near future."
Further, global equity offerings, including initial public offerings (IPOs), secondary offerings and private investment in public equities (PIPE), increased from $6.5 billion in 2008 to $7.8 billion in 2009. This can be primarily attributed to the positive trend of the economic recovery in the last two quarters of 2009. Following the positive trend, IPOs in Q4 2009 saw a good run, registering 14 IPO deals worth $1.1 billion in Q4 2009, compared to five deals worth $427.3 million in Q3 2009. This signifies that the market is gaining investor confidence and companies are floating shares in the market. In 2009, the number of deals largely registered in the PIPE market reporting 204 deals, with primary focus on the North American market.
Private Equity And Venture Financing Investments Declined In 2009
PE investments in the medical equipment industry declined by 72%, registering $3.2 billion in 2009, compared to $11.29 billion in 2008. The growing concern over the return on investment (ROI) by PE investors, due to the uncertain market conditions, has resulted in the medical equipment market seeing a decline in investments. Further, institutional buyouts decreased from $4.8 billion in 2008 to $1.1 billion in 2009 and direct investments by PE firms also decreased from 14 deals worth $1.2 billion in 2009 to 11 deals worth $487 million in 2009. Diagnostic imaging companies garnered the greatest amount of funding from PE investors during 2009, with $832.5 million raised from seven deals. In second place, the in vitro diagnostics market accumulated $748.1 million in PE funding during 2009.
Furthermore, venture financing activity declined by 25%, reporting $4 billion in 2009 compared to $5.3 billion in 2008, demonstrating the cautious movement by venture capitalists in the medical equipment industry. The number of deals also decreased marginally from 123 deals in 2008 to 118 deals in 2009. Some of the companies that gained funding from venture capitalists in 2009 were Small Bone Innovations, an orthopedic devices company, which raised $101 million; Zogenix, a drug delivery services company, which raised $71 million; and Pacific Biosciences, a cardiovascular devices company, which raised $68 million. Versat Venture Management LLC emerged as the top VC firm by providing financing for 12 medical equipment companies worth $210 million during 2009.
GlobalData expects that VC investments in the medical equipment industry will become more promising in the years ahead, as concentrated large scale research and development (R&D) investments occur in the sector.
According to Akanksha Jain, Analyst at GlobalData, "Overall the investors are expected to remain bullish on the medical device sector in 2010, given the increased focus on healthcare in most geographical areas. It is likely that the sector will see more early stage funding, as valuations of late development stage companies continue to deter investors in the future."
North America, Eurpore and Asia Pacific Investments Decreased In 2009
The medical equipment industry saw a decline in investments in almost all of the regions in 2009. North America registered a decrease in investment from $56 billion in 2008 to $52 billion in 2008; European investments decreased from $23.8 billion in 2008 to $16.8 billion in 2009; and investments in the Asia-Pacific decreased to $3.9 billion in 2009 to $5.3 billion in 2008. This signifies that the overall global market was under tremendous pressure due to a decrease in financing activity and tumbling global economic indicators during the global financial market turmoil of 2008-2009.
GlobalData expects the medical equipment market will become more promising, as many western companies are looking out for an investment options in large emerging economies such as China and India, which already have more promising GDP growth. For more details, please vist http://www.reportreserve.com/reportdet.php?company=GlobalData&reportid=10043
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