Health Care Reform Leads To Mergers

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Health care reform has caused some unrest in the health care industry but has also led to strong deal-making and mergers.

The Wall Street Journal reports: "Mergers-and-acquisitions activity among U.S. health-care companies, which include a range of categories from drug makers to research labs to insurance companies, is on pace for one of its strongest years." The deals are being driven by two factors: "continued easy access to financing and efforts by health-care companies to find new revenue."

While such activity in the U.S. overall has tumbled, "the value of health-care deals this year is up from 2007 and 2008. Health-care M&A is at an all-time high, both as a percentage of the number of deals and the dollar value of the transactions, according to data provider Dealogic. In part because of two large combinations, nearly 30% of all U.S. mergers so far in 2009 came in health care, based on dollar value. Typically, health care represents 10% of annual deal value, says Dealogic."

Among the major deals this year was Pfizer's announcement in January that it would spend more than $68 billion to buy Wyeth and Merck & Co.'s decision in March to pay $41 billion for Schering-Plough, according to the Journal.

Some buyers "are driven by expectations of new government spending. Health-care technology companies are particularly active, given the belief that the government and hospitals will put more medical records online" (McCracken, 10/20).

This information was reprinted from kaiserhealthnews.org with kind permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery at kaiserhealthnews.org.

© Henry J. Kaiser Family Foundation. All rights reserved.

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