Invest in an evolving global hospital market

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Global deals activity has gotten off to a slow start in 2012, with softer volumes and smaller deal sizes reflecting continued economic uncertainty in global markets. In the second edition of Global Healthcare Deals Quarterly we explore that although volume declines are more moderate in healthcare than the global trend, median deal size is down more sharply, reflecting a 16% contraction from the prior two years.

Contributing factors likely to include:

• risk aversion ahead of the uncertain impact of health reform initiatives in the United States and United Kingdom;
• the cooling impact of lower value assigned to incremental innovation in the Medtech sector; and
• conservatism ahead of a coming patent cliff.

While still early, we review recent strength in Russian healthcare M&A and weakness in the United Kingdom as likely to persist due to fundamentals underlying those two deal markets.

While timing of a recovery is uncertain, we are maintaining our more bullish outlook as strong corporate balance sheets amidst historically low returns on cash coupled with significant private equity dry powder support a rebound in M&A activity in 2012.