Investment Banking Activity in Healthcare Sector: Thomson Reuters

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INVESTMENT BANKING FEES

Fees for global investment banking services in the healthcare sector, from M&A advisory to capital markets underwriting, amount to US$1.5 billion so far during 2013, registering a 6% increase over the same period last year and accounting for 4.4% of total global investment banking fees earned so far this year. Fees from equity capital markets underwriting are driving activity in the sector, totalling US$530.2 million and accounting for 35% of healthcare fees earned so far this year, up from 27% this time last year. Fees generated from advisory work on completed M&A transactions total US$494.5 million, down 22% from the same period last year and accounting for 33% of the healthcare fee pool. Debt capital markets underwriting fees in the sector have experienced the biggest incline from last year, up 58% to US$294.3 million, while fees from syndicated lending fell 10% to US$190.1 million.

JP Morgan took the most investment banking fees in the healthcare sector so far during 2013, with US$180.2 million or 12% of overall wallet-share. Goldman Sachs earned second place in the fee ranking with US$150.7 million, or a 10% cut.

MERGERS & ACQUISITIONS

Announced M&A transactions in the healthcare sector total US$87.3 billion so far this year, up 31% over the same period in 2012 when deals reached US$66.8 billion. Healthcare is the 5th most targeted industry year-to-date, accounting for 9.5% of worldwide announced M&A compared to 6.5% last year at this time. Two healthcare mega deals have been announced so far this year. Thermo Fisher Scientific's $15.4 billion bid for Life Technologies Corp is the largest deal in the sector, and the largest biotech deal since Sanofi’s US$23.5 billion acquisition of Genzyme Corp in 2010. Pfizer's planned US$10.6 billion exchange offer for its 80% interest in Zoetis was announced in May.

The pharmaceuticals and biotechnology sectors together account for 71% of healthcare M&A so far this year, compared with 48% during year-to-date 2012. The United States is the most active nation, with 71% of all healthcare M&A involving a US-based target and 68% involving a US buyer. Ireland and China are the next most popular targets, accounting for 7.8% and 2.8% of sector activity, respectively.

Goldman Sachs has advised on three of the top five worldwide healthcare deals this year and leads the financial advisor rankings in the sector with $36.4 billion from 11 deals. JP Morgan follows in second place with US$33.5 billion.

EQUITY CAPITAL MARKETS

Equity and equity-linked issuance by companies in the healthcare sector accounts for 4.8% of global equity capital markets activity so far this year. Healthcare companies have raised US$16.5 billion, a 39% increase over the same period in 2012 (US$11.8 billion). Follow-on offerings account for 61% of activity, while IPOs and convertible offerings account for 25% and 14%, respectively. The largest transaction so far so far during 2013 is Zoetis Inc’s initial public offering in January, which raised US$2.6 billion.

Four of the top five ECM deals in the healthcare sector involve US issuers. Bolstered by these deals, the US is the most active nation for issuance in the healthcare sector, with 74% of the market. The next most active nation is China, with 9 deals totalling US$1.1 billion and accounting for 6.5% of the sector.

JP Morgan tops the year-to-date healthcare ECM league table, with 16% of the market. Barclays takes second place with an 11% share.

DEBT CAPITAL MARKETS

Bond issuance in the healthcare sector totals US$39.5 billion from 55 issues so far during 2013, a 53% increase over the same period last year. It marks the strongest annual start for bond issuance in the healthcare sector since 2009 (US$85.2 billion). The largest deal so far this year is Merck & Co’s US$6.5 billion offering in May.

Healthcare DCM accounted for 1.5% of total global debt capital markets activity so far during 2013. Issuance from the United States totalled US$31.3 billion and accounted for 79% of activity so far this year, while issuance from the France accounted for 8%.

JP Morgan took the top spot in the 2013 global healthcare debt ranking, with US$5.1 billion for a 13.0% share of the market. Bank of America Merrill Lynch earned second place with their 12.6% share.

Source - Thomson Reuters

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