Medical Equipment Quarterly Deals Analysis Q4 2009
Medical Equipment Quarterly Deals Analysis Q4 2009
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GlobalData's "Medical Equipment Quarterly Deals Analysis Q4 2009" report is an essential source of data and trend analysis on the 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, Venture Financing and Partnership transactions registered in the medical equipment industry in Q4 2009. The report portrays detailed comparative data on the number of deals and their value in the last five quarters subdivided by deal types, segments, and geographies. Additionally, the report provides information on the top private equity, venture capital, 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 and primary and secondary research.
Marginal Increase In Investments In The Medical Equipment Industry In Q4 2009
Investments in medical equipment industry remained steady at $18.07 billion in Q4 2009. This indicates that the trend is moving towards more concentrated effort on core activities, which is reflecting the stability and defensive nature of the companies in the medical equipment industry. The number of deals also increased from 448 deals in Q3 2009 to 490 deals in Q4 2009. On a year-on-year basis, the medical equipment market has seen a rapid increase of 108%, registering $18 billion in Q4 2009 compared to $8.7 billion in Q4 2008. The number of medical equipment deals also increased to 490 deals in Q4 2009 from 443 deals in Q4 2008.
Further, the quarter has seen a considerable decrease in the average deal value and a marginal increase in the median value of deals in the Medical Equipment industry, reporting $108 million and $30 million respectively, compared to $201 million and $23 million in Q3 2009. This might be due to the fact that acquirers were keen on targeting low value acquisitions to increase and enhance their products in the market.
Mergers & Acquisitions In The Medical Equipment Decreased By 26% In Q4 2009
Mergers and acquisitions, including asset transactions, in the medical equipment industry witnessed a decline of 26% in investments to reach $4.2 billion in Q4 2009 from $5.7 billion in Q3 2009. This signifies that most of the companies are having a skeptical approach in business integration process due to the current market conditions, after a huge consolidation activity in Q3 2009. However, the number of deals increased marginally to 125 deals in Q4 2009 from 116 deals in Q3 2009. Ethicon's proposed acquisition of Acclarent for $785 million; Stryker's $525 million acquisition of Ascent Healthcare Solutions; and Sonova Holding's acquisition of Advanced Bionics for $510 million were some of the big ticket M&A deals registered in Q4 2009. GlobalData expects that the M&A activity in the medical equipment industry will regain its momentum with ageing population, coupled with greenfield manufacturing and joint ventures/acquisition of local companies will provide potential entry strategies into the largest economies, such as China and India.
In terms of the number of deals, the most active buyers were Stryker Corporation with four M&A deals, followed by Danaher Corporation, GE Healthcare, and Kimberly-Clark Corporation with two deals each in Q4 2009.
The average P/E (price earnings ratio) of acquired medical equipment companies, which reflects the willingness of investors to pay for a company's earnings, decreased from 14 times in Q3 2009 to 12 times in Q4 2009. This indicates that investors are anticipating lower earnings growth in the medical equipment industry in the short run.
According to Akanksha Jain, Analyst at GlobalData, "Deadlock over the healthcare reform and continued dismal unemployment rates in the US is likely to push medical device companies into adopting the wait-and-watch stance over the next few months."
Increased Financing Through Debt Offerings In Q4 2009
Debt offerings, including secondary offerings and private debt placements, became the most prominent among all financing activities in the medical equipment market with around $8.6 billion raised in Q4 2009 as compared to $6.7 billion in Q3 2009. The increase in investments can primarily be attributed to major companies, such as Boston Scientific Corporation, Zimmer Holdings, Inc., Quest Diagnostics Incorporated and Thermo Fisher Scientific Inc., which raised over $4.5 billion in debt market in Q4 2009. Boston Scientific's $2 billion public offering of senior notes was the major debt offering deal reported in Q4 2009.
According to Akanksha Jain, Analyst at GlobalData, "Weak global equity market coupled with low prevailing interest rates has made debt offerings a lucrative source of funding for medical device companies over the past quarter."
Further, global equity offerings, including initial public offerings, secondary offerings, and private investment in public equities, decreased from $3.3 billion in Q3 2009 to $2.5 billion in Q4 2009. IPO activity became apparent with 11 deals worth $944 million in Q4 2009, compared to no deals in Q3 2009. This signifies that the market is gaining investor confidence and companies are floating shares in to the market. On a year-on-year basis equity capital also increased to $2.5 billion in Q4 2009 from $ 953.4 million in Q4 2008.
Private Equity Investments Surged By 166% In Q4 2009
Medical equipment companies pulled more than $1.7 billion in private equity financing during Q4 2009, representing a 166% increase from the $649 million invested in medical equipment companies during Q3 2009. The surge was led by secondary buy outs, with $872 million in Q4 2009. The number of private equity deals also increased from 10 deals in Q3 2009 to 16 deals in Q4 2009. This was primarily driven by regained investor confidence in the most promising medical equipment industry, which is providing more investment and return on investment opportunities. Cardiovascular device companies garnered the greatest amount of funding during the fourth quarter of 2009, with $430 million raised in three deals.
On the other side, venture capital market saw a decrease in investments from $1.2 billion in Q3 2009 to $974.7 million in Q4 2009. The number of deals also decreased marginally from 123 deals in Q3 2009 to 118 deals in Q4 2009. Some major companies that squeezed out venture capital in Q4 2009 were TransEnterix, Inc., a medical device company, which raised $55 million; Lux Biosciences, Inc., a biotechnology company, which secured $50 million. Versat Venture Management LLC emerged as top venture capital firm by providing financing for 12 medical equipment companies worth $210 million during the period Q1 2009 - Q4 2009.
Asia Pacific Investments Increased Rapidly In Q4 2009
Medical equipment industry had seen a rapid increase in investments in the Asia-Pacific region in Q4 2009, after a continuous drop-out of investments since Q1 2009. The region recorded $1.3 billion of investments in Q4 2009, compared to $646 million in Q3 2009. Further, Europe and North America registered a decrease in investments in Q4 2009. Europe experienced a 14% decline in investments, with $1.9 billion reported in Q4 2009 as compared to $2.2 billion in Q3 2009. Investments in the North American region fell 19% to reach $14.5 billion reported in Q4 2009
According to Akanksha Jain, Analyst at GlobalData, "As developing economies in Asia such as China and India emerge out of recession much faster than their counterparts in the West, medical device companies are looking at increasing their investments in these markets. A positive outlook on the future GDP growth for 2010 is also driving investments in the region." For more details, please vist http://www.reportreserve.com/reportdet.php?company=GlobalData&reportid=10038
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