At The Deal LLC's Healthcare Dealmaking Symposium Tuesday morning, a group of private equity professionals spoke about the M&A landscape in the sector.
Dr. Craig Frances, a managing director at Summit Partners, commented, "If you look at price and structure, both have changed dramatically since June 2007. ... We'll never see those debt levels again."
Continue reading below
Apax Partners' Buddy Gumina agreed, adding that the debt market troubles took longer to seep into healthcare M&A than they did in other sectors, but those troubles have definitely now arrived.
"A year ago people were saying that markets were closed except for healthcare or energy," he said. "Now the markets are closed to most everything."
Adam Berger, the head of M&A at Leerink Swann LLC, added that "2008 was the best year for biopharma deals in the last 10 years. However, it's the lack of ability to get financing that's driving dealmaking. A lot of it is born out of desperation.
"These companies need capital to get to the next stage of development," Berger continued, "but debt markets and VCs aren't there, so there's many more companies for sale, which is leading buyers to be a lot more picky."
"Although the consumer has been spending more money on healthcare than ever before," said Frances, "this is a cycle where healthcare and healthcare dealmaking is being affected. ... Most people are thinking this is going to be a bad year and hoping that things will be better in 2010." - George White
See additional comments from Apax's Gumina
