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At The Deal LLC's Healthcare Dealmaking Symposium Tuesday afternoon, a panel of private equity professionals discussed healthcare dealmaking. Benjamin Edmands, a managing director at CCMP Advisors, said: "If you look back over the last 20 to 30 years, we've either overfunded or underfunded healthcare pretty significantly. "Two years ago, people were lured into thinking it's a really safe place, but our point of view is that it's a pretty cyclical sector," he continued. "We actually see more opportunities than we did two years ago."
Todd Davis, the co-founder of Cowen Healthcare Royalty Partners, said that investors are looking at European deals because of reform in the U.S. "When you have the rules of the game potentially changing, it causes a lot of disruption. Every industry needs to know what to base its forecasting on, and there's more predictability in Europe right now," Davis explained. Aron Dantzig, a managing director at Fortress Investments, said that healthcare investments are still defensive plays. However, he said, "that doesn't mean you can go into just any healthcare company. In this market people are willing to accept a lot less return in order to avoid risk. It's made the senior secured lending market one of the most compelling stories this year. That's one of the places we see opportunities." On the M&A front, Dantzig highlighted trade sales as one of the most compelling opportunities in the current market. "In spite of the markets, the war chests of the big pharmaceuticals are only growing, as is the demand for approved drugs," he said. "It's all about putting more products in the basket. Even in these credit markets, two huge deals will get financed -- there is an overarching need for product. People who have products will get bought." Tadd Wessel, a director at OrbiMed Advisors, expanded on the need of Big Pharma to expand their pipeline of new drugs. "The sales corps [of the large players] are tens of thousands strong, so they can't afford for products to just go away," he said. "The world is on sale here; consolidation is a natural evolution of the space." - George White Categories Deal Video
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