Medical equipment deals briefing for Q2 2010
A summary of the report Medical Equipment Quarterly Deals
Analysis M&A and Investments Trends — Q2 2010 
17 August 2010
Mergers and acquisitions (M&A) activity decreased in the
medical equipment industry in the second quarter of 2010.
M&As and asset transactions, which include change in ownership and
control of companies or assets (GlobalData considers this value as
not a new investment into the market), witnessed a huge decrease in
deal value from $39.8 billion in Q1 2010 to $8.5 billion in Q2 2010.
Further, the number of deals also decreased from 110 deals in Q1
2010 to 78 deals in Q2 2010. The huge deal value in Q1 2010 was due
to the landmark deal of Novartis’ agreement to acquire an additional
52% stake in Alcon for $28.1 billion.
In terms of the number of deals, the most active buyers were Essilor
International with 14 M&A deals, followed by Covidien plc with eight
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 25 times in Q1 2010 to 10 times
in Q2 2010, which signifies that companies are not anticipating
short term growth prospec
The average deal value decreased from $738 million in Q1 2010 to
$128 million in Q2 2010, and the median deal value also decreased to
$32 million in Q2 2010 from $40 million in Q1 2010. The abnormal
increase in the average deal value in Q1 2010 was due to Novartis
and Merck’s separate acquisition deals worth $35.1 billion.
GlobalData expects that M&A activity will be on a rising trend as
the demand for medical devices has the potential to go high with
increasing ageing population. The slow stabilization of the economy
will also lead to an increase in M&A activity in the coming years.
According to Bhaskar Vittal, Analyst at GlobalData, “M&A activity is
likely to remain subdued for the rest of 2010 due to the economic
uncertainties in some of the European economies and slow growth in
the US. Availability of finance becomes difficult during economic
uncertainty leading to low M&A activity. Also companies will be
cautious in their approach to inorganic growth during these
New investments in medical equipment companies declined
Investments in medical equipment companies, including new investment
through equity/debt offerings and financings by private
equity/venture capital firms, reported a decrease in the investments
from $18.2 billion in Q1 2010 to $13.3 billion in Q2 2010. However,
the number of deals increased from 273 deals in Q1 2010 to 291 deals
in Q2 2010. On a year-on-year basis, the number of deals and deal
value increased by 25%, compared to the 233 deals worth $10.7
billion in Q2 2009.
Decreased financing through debt offerings
Debt offerings, including secondary offerings and private debt
placements, witnessed a decrease in deal value with $7.4 billion
raised in Q2 2010 compared to $12.9 billion in Q1 2010. Further, the
number of debt offering deals also decreased from 22 deals in Q1
2010 to 18 deals in Q2 2010. On a year-on-year basis, the number of
deals and deal value declined by 44% and 5% respectively in Q2 2010
compared to 32 deals worth $7.8 billion in Q2 2009.
Abbot Laboratories’ raising of $3 billion in three separate public
offerings of notes and Covidien’s raising of $1.5 billion in three
separate public offerings of senior notes were the major deals
recorded in Q2 2010.
Global equity offerings, including Initial Public Offerings (IPO),
secondary offerings, and Private Investment in Public Equities
(PIPEs), registered an increase in the number of deals and deal
value, reporting 85 deals worth $3.4 billion in Q2 2010, compared to
67 deals worth $1.3 billion in Q1 2010.
In the medical equipment industry, the in vitro diagnostics
market historically attracts the most funding every quarter,
accounting for 12 deals in Q2 2010. The IPO market gained momentum
with nine IPO’s worth $1.9 billion in Q2 2010, compared to five
deals worth $287 million in Q1 2010, the highlight being Trauson
Holdings’ IPO of $669.4 million in Q2 2010.
New investment by venture financing firms increased slightly
Venture financing in the medical equipment industry witnessed a
marginal increase in investments, reporting $1.5 billion in Q2 2010,
compared to $1.3 billion in Q1 2010. The number of deals also
increased from 166 deals in Q1 2010 to 171 deals in Q2 2010. Out of
the total $1.5 billion, $594 million was provided to start-up
companies; $377 million to growth stage companies; and $487 million
was provided to later stage companies. This signifies a more
positive short and long run return on investments expected by VC
firms with a low risk appetite. The in-vitro diagnostics market
garnered the most funding with $1.1 billion raised in 141 deals.
New Enterprise Associates topped the list of venture financing firms
by participating in nine financing rounds with total investment of
$953.4 million during Q3 2009 - Q2 2010.
The increase in the per capita health care expenditure in the
developing economies such as China and India, and the
regulatory/legislative framework, will provide more opportunities
for medical device manufacturers to look to these developing markets
to supplant their existing domestic and international sales.
Investments in North America decline marginally
The medical equipment industry in the North American region
witnessed a decrease in the deal value with an increase in the
number of deals, reporting 416 deals worth $13.7 billion in Q2 2010
compared to 364 deals worth $15.6 billion in Q1 2010. Further, the
European region was still able to match the last quarter investment,
despite the poor performance of public equity/debt market in May
2010 and June 2010. The region reported $2.3 billion in Q2 2010
compared to $2.4 billion in Q1 2010.
Further, Asia Pacific registered a huge increase in deal value
from $812.3 million in Q1 2010 to $2.4 billion in Q2 2010, a
staggering growth of 195% over Q1 2010. China has no regulations for
governing medical devices, and many small clinics or hospitals, out
of economic interest, are still using some instruments that are not
providing the accurate diagnosis. GlobalData expects thatafter the
new legislation regulation and the management there will be a huge
opportunity for the elimination of old defective medical devices in
the growing Chinese market.
According to Bhaskar Vittal, Analyst at GlobalData, “Investments
in North America and Europe may not increase in the near term as
emerging economies in Asia Pacific continue to attract new
investments. Higher economic growth in countries such as China and
India, supported by favorable demographics and changing regulatory
environment is expected to attract increased investments in Asia
Medical Equipment Quarterly Deals Analysis M&A and
Investments Trends — Q2 2010.
The report by GlobalData is an essential source of data and trend analysis on
the Mergers and Acquisitions (M&A) and financing in the medical
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
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
For more information see the full report details >>